The Customer Connection
The Strategic Disconnect
By Tom Wallace
Some years ago, Ollie Wight was teaching a public seminar. An early part
of the session was devoted to self-introductions by attendees. Here's what
happened when a marketing vice president introduced himself: Marketing VP:
"Hi. I'm Joe Smith. I'm the vice president of marketing with the Acme
Widget Company."
Ollie: "I'm not familiar with the widget business. Who's your competition?"
Marketing VP: "Manufacturing."
At the time I thought it was humorous. But I've encountered this kind of
situation too many times to think it's just a funny story. It's too widespread.
Jim Burlingame, formerly executive vice president at Twin Disc and a past
international president of APICS, claimed, "Ninety-five percent of
all marketing-manufacturing relationships are adversarial." Jim's number
may not be accurate to four decimal places; maybe the percentage is 88 or
98.6. But Jim's point is right on the mark. The national average is that
people on the commercial side of the business-marketing and sales-normally
do not have warm, friendly, supportive relationships with the folks in operations-manufacturing,
purchasing, materials, logistics-vice versa.
Why is this so? Why do these people hassle each other instead of devoting
their time and mental energies to serving the customers? Well, there are
a lot of reasons: functional silo organizations, left-brain versus right-brain
personalities, unenlightened leadership that pits one group against the
other, and quite a few more. I'd like to focus on perhaps the most important
reason: misaligned strategies.
The strategic disconnect
In most companies, the marketing strategy and the manufacturing strategy
are not closely aligned. In fact, they're often totally disconnected.
Let's say the marketing strategy in Company A calls for more product offerings,
for additional line extensions, for more choices for the customers. However,
Company A's manufacturing strategy is to be "the low-cost producer."
Well, in almost all companies, broad product lines are in direct conflict
with low cost and low inventories.
But the marketing strategy says to offer lots of products to make the customers
happy. The result: unhappy marketers-because manufacturing won't support
their strategy-and unhappy manufacturing people because marketing is demanding
something they can't deliver.
Similar examples abound: customers demanding even shorter lead times but
manufacturing geared up to achieve high efficiencies through long runs;
marketing developing high-ticket, upmarket products with attributes difficult
for manufacturing to produce with its current equipment; the company entering
a highly seasonal business without the logistics expertise and infrastructure
to handle it well.
It's not terribly difficult to change the marketing strategy. It can be
as simple as doing some focused market research; developing the plans; perhaps
signing up a new ad agency; and there you are.
Changing the manufacturing strategy is much more difficult. It usually requires
changing the manufacturing and operations infrastructure, which means getting
involved with equipment, brick and mortar-and that takes time and costs
money. And in the interim, things don't get better; they get worse.
The measurement gap
In many companies, manufacturing performance is evaluated largely via internally
focused measurements: overhead absorption, inventory investment, efficiencies
and utilization factors, throughput, and the like. How many of these metrics
directly address what the customers care about? Do the customers really
care about how well we're absorbing our overhead, turning our inventory
or generating earned hours?
Customers care about things like defect-free products, available when they
want them, in short lead time, in the quantity they need. Since sales and
marketing people are "on the firing line" with the customers,
these factors are very important to them also. Thus manufacturing and marketing
are operating to two different sets of values-the measurement gap.
Is it any wonder that so many marketing-manufacturing relationships are
adversarial? This strategic disconnect is one of the main causes.
And I promise you that this situation will not get any better by itself.
Customers are becoming more demanding-and this covers the entire spectrum
of customers from power retailers like Wal-Mart and Home Depot to equipment
manufacturers such as Boeing and the machine tool people. The high bar goes
higher almost quarterly, and the sales and marketing people must respond
to those pressures-or lose business.
Now the good news
So how does a company go about rectifying this problem? Well, for openers,
recognize that "being nice to each other" won't get the job done.
I submit that what's needed are better processes.
One example is quality function deployment (QFD-see this column in the December
1993 issue) This approach helps companies to derive the business and marketing
strategies directly from "the voice of the customer" and to derive
the manufacturing strategy directly from them. This can ensure an aligned
set of strategies over the long run, as long as the process remains in use.
Another powerful tool is sales and operations planning (see this column
in the August 1994 issue). This enables both top management and middle management,
working in cross-functional teams, to continuously balance demand and supply-so
that customers can be satisfied in the most effective and efficient way.
If serving, satisfying and delighting the customers is viewed as everyone's
job, then doesn't it follow that how performance is measured-from one department
to another-should be more similar than different? You bet it does. Look
for major differences among departments in how performance is evaluated.
Then align them to focus on the customer.
Adversarial relationships among teammates are the pits. It's like running
a race with an albatross around your neck. Or an 800-pound gorilla. Let's
get rid of the albatrosses and the gorillas-and work together harmoniously
to provide world-class service to the customers.
Tom Wallace is an independent consultant based in Cincinnati. He is
the author of Customer Driven Strategy: Winning Through Operational Excellence
(1992) and editor/author of The Instant Access Guide to World Class Manufacturing
(1994). Tom is co-director and a Distinguished Fellow of the Ohio State
University's Center for Excellence in Manufacturing Management.
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