Earlier posts have discussed many aspects of your production, or what your production process needs to handle. Here we cover the rest of the topic.
You know what to make, your suppliers are under contract, you know your cost of production and your logistics are getting the product to your market in good time. Sounds like a recipe for profits.
Unless your cost to support your market is not also under control. You provide a guarantee, and a 100% success rate just isn’t possible. So what does it cost you to support your warranty?
Maybe your product works better if the buyer uses it with more skill – so you need to provide some training. Unless you can turn that into a value-add product and charge for it, you will have to cover that cost. Even if you can charge for some parts there are likely to be things that you can’t charge for. Did you include those items when you calculated your margin?
Can your team keep up as your production levels grow? Perhaps you bring in updated equipment, or new techniques with the older equipment – are your current staff trained in order to maximise your investment in the new technology? The cost of excessive failures or hiring new staff could far exceed the cost of providing some training.
Have you considered what quality you will deliver? Rolls Royce aim to deliver the very best, regardless of cost. Others like Mercedes Benz, Ferrari and the like aim for the best and pay scant attention to cost. The companies that manufacture the vehicles most of us drive are constrained by cost – they deliver the best they can within the assigned budget. That’s not suggesting that the popular manufacturers don’t deliver a quality item – there are plenty of 20+ year old cars driving around to illustrate that. What it does illustrate is that you don’t need to aim for 100% to be successful.
For example I’m told that in a country near Europe a few years ago the law was that on vacating he home at the end of the lease it was common that the now ex-tenant was required to paint the building. One enterprising paint company produced a low-cost, low-quality paint that cornered this market by allowing the tenant’s contract to be fulfilled at the lowest possible cost.
You have to understand your market, what problem it has and how you solve it, and there is only one way to really understand it.
You need some way for the market to give you feedback – before they vote with their money and stop buying from you. You can ask them after every purchase, you can establish loyalty programs and quiz your members, you can hold competitions and give prizes for the best new idea, you can establish an online meeting place/forum and monitor comments – you can do many things, the only thing you can’t do is “Nothing”.
By the way – if you already do all of these things and more: you still need to do better next year. Why? Because your competitors will. You have to do better to maintain your market leadership position, or even more than that if it is you that needs to catch up.