Driving Value Proposition through Operations Excellence

Leadership at the market place doesn’t come by easily. Organizations have got to work towards it by innovating their product and value proposition all the time. Establishing customer relationship with a long term perspective becomes imperative. Today the customers are highly knowledgeable and demanding. The rules of the game have changed along with the change in the way that the Organizations operate.

No doubt the customers expect innovation in the product and the best quality; they also expect to pay the right price. The fact that the Organizations need to find ways to keep their costs low in order to be competitive in the market has been understood by one and all. However, how well Organization designs and implements process efficiency goes a long way in steering the Organization towards market leadership too.

Corporate companies and the new age brand leaders like IBM, HP, Dell, GE, Phillips, Xerox as well as automotive companies including Ford, GM, Toyota, Honda and others like Wal-Mart have increasingly focused on growing their product leadership at the markets and internally they have voted for operational excellency as a part of their Organizational culture.

Using new methods of working, leveraging on technology, most of these organizations have changed their operational processes as well as their business model in tune with their product strategies. The result has been the birth of seamless supply chain that has brought together suppliers, manufacturers, transporters, logistics providers, warehouses as well as all the intermediaries involved in the entire supply chain on one virtual platform, eliminating a huge amount of tasks and duplication of work at all levels. Further technology has automated a lot of decisions as well as tasks leading to huge reduction of resources as well as time and cost while increasing the efficiency of the entire supply chain.

Let us look at a simple case of what happens at Wal-Mart with a normal transaction. When a customer makes a purchase, the system automatically calls for a replenishment of the stock of the particular item from the forward stocking location into the shelf. Further, end of the day, SKU wise sales data gets transmitted to its suppliers who in turn process the information along with their inventory and as per pre planned re-order levels, generate new shipping orders, which is processed and the shipment is delivered to Wal-Mart within a few hours or as per pre planned delivery schedule.

RFID tagging eliminates any need for manual checking and inspection at Wal-Mart’s end. Such automation has eliminated the need for resources to be employed both at Wal-Mart as well as its supplier’s end. There is a huge saving in terms of space, resources and time for re-ordering, processing and shipment from supplier’s end as well as in warding, inspecting, stocking and replenishing the bins at the showroom. Similarly multiple warehouses and stocking points at different stages are eliminated paving way for huge amount of savings. Usage of technology has not been limited only to a few functions or areas of supply chain, but encompasses the entire supply chain including payment process too. As per the agreed terms, the system triggers payment either on the due date or at the point of sales at the counter and generates a cheque automatically or directs the finance to release online payment.

If you wonder how it is that Wal-Mart is able to price its products aggressively and continue to lead through its pricing strategy, the answer lies in its ability to find ways to optimize its operations and processes to bring down the costs. These Organizations work with single minded focus on retaining their leadership and improving their value proposition and relevance to their customers at all times.


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