Is Amazon in your business future?
Breaking news! Amazon is looking for an east coast headquarters.
Boston plans to be it.
Which means what if you are a Boston business?
- If you can’t beat ’em, join ’emBut to join, you must perform. And that means speed.
How do you become faster, more responsive?
You shorten your cycle time.
And shore up the supporting elements that interface with that time.
For example: your pick and pack and ship sequence can be performed 60 minutes from when an order was received, but only if you have the correct data to do so.
Do your IT, IS, and logistics people know the exact calculations to convert IT, data, and system metrics into cycle time metrics? If not, how can you make cycle time promises to your customers with confidence?
Do your people know which order anomalies are not allowed in your company because they are too disruptive – or are you trying to accommodate all customers all the time? If you’re always accommodating changes, how do you make cycle time promises to your customers with confidence?
Do your supply chain and operations management understand how adherence to out-of-date policies affects cycle time metrics? If not, how can you make cycle time promises?
These questions point to potential areas of concern. Remember, Amazon is a tech company that sells and moves stuff as rapidly as possible. The tech emphasis on time makes it tough for a company with a traditional mindset to compete because it sells and moves stuff. It also uses technology. This vast strategic difference is captured in your cycle time metrics.
You need to strategically align your technology, processes, and the controlling metrics to optimize time. We often measure the cycle time of each process part as well as the total process time during a pilot. But how often do other, “more interesting” metrics shift our focus later? How often do we let these other metrics pull our performance off track?
Only with metrics proven to drive process performance to the same desired end state through the entire supply chain can you get aligned to your goal of being more responsive.
- We’re really good at what we doDoes that mean you can compete in a responsive way? Do you even need to be responsive?
It depends on your customer base. If your customers require ever shorter cycle times, then yes, you will be competing with Amazon even if there isn’t an obvious challenge today. Your customers will still want Amazon-type service.
However, your customers may not value responsiveness as much as another factor.
Many firms mistakenly believe that they must compete against Amazon on time. However, the firm’s customers really want something else – perhaps agility (easy accommodation of changing demand) or reliability (perfect order according to each and every contract term). To find out, ask.
If your customers cannot figure out how you provide the value they want, you’ll compete on cost and speed. Why? Because it is all they have to compare you on.
So differentiate yourself based on the service you really provide. Create metrics that drive your processes toward your company goals, not Amazon’s. Align your processes with your company strategy.
At the end of the day, the question is not “How do we compete with Amazon?”
The question is, “What do our customers value?”
Build on that to differentiate and compete in ways even Amazon will appreciate.
Key words and concepts: Amazon, supply chain, metrics, agile, responsive, reliable, supply chain strategy, competitiveness, SCOR
About the author: Cynthia Kalina-Kaminsky with Process & Strategy consults with and provides training for organizations eager to increase their competitive value by helping enable growth, align performance, make and move product (even when the product is electrons). She is teaching SCOR (Supply Chain Operations Reference model) in Baton Rouge this October. SCOR is the framework Fortune 500 companies use to increase their performance.
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