Business and competition

How to beat your competition at their own game

by Dani Kaplan

Giant chain stores with tremendous purchasing power are creating new business realities for smaller companies and Mom-and-Pop stores by selling products below cost. This forces some of their competitors who cannot compete to go out of business, while others have to completely change their business model to survive.

Many of these companies that use creative thinking and change their business models can stand up against the giants and beat them at their own game.

One of my consulting clients, a distributor who has been in business since the turn of the century had to face the new business reality of tough competition from a giant chain store who opened new stores in his backyard. Realizing they needed to change the business model to meet today’s business challenges, management decided they needed to mainstream their operations, lower operating costs and implement a just-in-time inventory system at all of their branches in order to stay competitive.

Not having real-time information between the branches and the headquarters was the first obstacle management had to overcome in order to achieve their goal of just-in-time inventory.

The first challenge the distributor faced was finding the right software supplier that would not only provide the right software solution, but would also partner to help meet the company’s current and future expansion plans. The second challenge was converting the branches’ data to the headquarters host computer.

Meeting the challenge
Changing from departmental computer systems to a centralized computer system was the first step to achieving the just-in-time inventory goal at all branches. Having real-time inventory status at all locations enabled headquarters to achieve rapid response to low-level inventory, and helped avoid overstocking.

The branches, having the ability to view other branches inventory in real-time mode, could ship products directly from other locations when needed. Achieving the just-in-time inventory goal helped the distributor lower operating costs, sell at competitive prices and provide better customer service.

The next step after mainstreaming operations was to implement Web commerce strategy that would allow the distributor to show the product catalog, track buying trends and update the headquarters’ computer with the new Web orders in real-time mode.

Starting a new night shift gave the distributor’s clients, many of whom were contactors, the ability to stop at the branch early in the morning on the way to the jobsite, pick up their Web orders from the night before, while their car engines were running, and drive away within minutes.

Beating the giant
Although mainstreaming their operations and enabling an e-commerce strategy improved the distributor’s dwindling business, they were still treading water. The giant chain store in the distributor’s backyard began to sell some of the same accessories my client sold, but below their cost.

By selling the accessories below the distributor’s cost, the giant chain store hoped its clients would buy other, more profitable products that the distributor also sold.

Facing the giant chain store’s challenge, the distributor’s management team decided to match the giant chain stores prices for the accessories they were selling, provide their customers with better service, and retain their loyalty.

Beating giant chain stores at their own game turned the distributor into one-stop shop where its clients could purchase everything they needed at very competitive prices and get better customer service.

Beating the competition
Giant chain stores that are creating part of today’s challenging business environment can only be beaten with creative thinking. Implementing new ideas helped the distributor meet the giant’s challenge. The distributor also increased its number of nationwide branches by 35 percent using just-in-time inventory and matching its competitor’s lower price on accessories.

Since 1980, Dani Kaplan has helped businesses just like yours stay competitive with Distribution Management Software Solutions that can offer a global view of your customers, inventories, finances and sales. For free articles on how to mainstream your operations, lower operating costs, and implement a just-in-time inventory system that results in substantial savings and improved productivity go to: http://www.smcdata.com/articles.html.

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