Is Imitating Others The Path to Your Success?
It’s been said that “imitation is the sincerest form of flattery”. And “sincerest” is usually referenced as highest or greatest, which is why others seek to emulate.
Frequently in business, companies try to benchmark themselves to others and, if they are not achieving comparable objectives (usually financial), they seek to imitate.
Consider this case study we recently found online:
In xxxx , Distributor recognized that it could not sell to all customers in the same way. And large customers faced increasing price pressures in their procurement. Distributor reasoned that its big customers did not appreciate Distributor’s strengths in providing services enabling superior total cost of product ownership.
It formed a services group in xxxx“to bring the competence of Distributor to the customer” by providing value-in-use analyses of MRO (maintenance, repair, operating) supplies.
- Deliver measured savings and improvements to clients.
- Leverage knowledge, technology, and experience.
- Deliver client results quickly.
Value analysis often goes un-quantified. Suppliers short-circuit the quantification, and consequently lose economic leverage, as they implement value drivers:
- cycle time
- delivery
- confidence
- lead time
- application analysis
- product standardization
- quantity discounts
- lot sizes
Acquisition and possession costs can add 43% to the direct purchase cost of materials.11
- Paperwork, extra costs, and opportunities for error plagued unplanned purchase processes, but value analysis eventually cut unplanned purchase costs by about a third.
Cost-reduction strategies:
Potential total cost reduction strategies for the customer, with an overall cost reduction impact of 10% to 20%.
- Product: 5-10% savings opportunity
- supplier rationalization and consolidation
- product/manufacturer standardization
- usage analysis
- Acquisition: 10-30% savings opportunity
- electronic commerce implementation
- procurement process reengineering
- transaction consolidation
- Possession: 10-50% savings opportunity
- inventory data standardization
- inventory control process optimization
- enterprise asset management system implementation