Product Leadership through Operational Excellence

In the fast changing and highly competitive world, building brands and maintaining brand leadership calls for an uncanny ability to re-write the rules of marketing as well as business. From each of the market leaders be it in computers, electronics, fashion, retail or any industry, one can identify the overall strategy that has made them the game changers.

Wal-Mart, Mac Donald’s, GE, Dell, IBM, Apple, Nokia, Sony, IKEA, Nike are some of the global brands that have built as well as managed to retain and continually grow their brand leadership. It makes a very insightful study for marketing management and business management students to understand how these Organizations have managed to become what they are.

Marketing or building a brand is no longer limited to the 4 Ps of marketing theory. Organizations have realized the need to be customer centric and build the entire Organization to be centered around and sensitive to the customer satisfaction. Highest quality of product, service, pricing are the basics that are taken for granted. What makes a difference is the value proposition that each of these Organizations build into their product or service offering and their relentless enthusiasm to excel in the chosen value model continually.

Going one step further, it would be important to understand how to build and excel in the chosen value proposition over a long period. The Organizations base their operating model, business processes as well as their structure and internal culture to suit the chosen strategy. Dell has been a global leader in PC & Laptop segment. In the early stages, the market leaders like IBM, Apple and others concentrated on building the product features and technology. In the second stage they realized the importance of providing service support. The products were not necessarily cheap but excellent in terms of configuration, architecture and after sales service support. At this stage, Michael Dell saw a huge opportunity to make a unique offer to the customers and stand apart from the rest of the competition. Dell proposed to sell directly to the customers, allow customers to choose custom configuration and order their machines online. Apart from this, the prices were a lot cheaper when compared to similar configuration offered by competition. The products were as innovative and strong in architecture as the ones offered by others. Thus with direct selling and lowering prices, DELL instantly made a mark and captured a huge segment of the market. Through further product innovation, it continued to grow the brand in the global market.

How did Dell manage to offer this value proposition and earn profits consistently?. The answer lies in the operating model that was implemented by the Organization. Dell has built a very strong and efficient customer ordering process. At the sales side, it has eliminated the entire set of dealers, stockiest and other sales channels by offering direct ordering through internet. At the back end, the production is taken up on receipt of the customer order, thus avoiding stocking and inventory holding in the pipeline. The manufacturing process is based on ‘Build to Order’ model rather than ‘Build to Stock’ model followed by others in the market. Going further, Dell has tied up with the vendors to offer the parts on VMI-Vendor managed inventory basis. The vendors inventory hubs are located adjacent to the manufacturing plants whereby DELL can draw the parts ‘Just In Time’ for production, thus eliminating inventory of raw materials. Thus DELL has minimized its logistics costs and is able to pass on the price advantage as the chosen value proposition to its customers. To ensure the entire system works, the Organization has built seamless processes integrated with technology and systems. Besides the entire operational culture at all levels and all functions is tuned to and focused on customer satisfaction.

Thus we see that it calls for the Organization to build operating model that can deliver the chosen value proposition and practice operational excellence to be able to keep up its promise to the customer.


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