Friday, October 06, 2006

Is it Time to Reposition Your Enterprise?

It was back in the 1970s when the weighing industry last went through a major change—the electronic scale entered the marketplace. This was a technological breakthrough that was very profitable and grew the industry to new heights.

Now, some 30 plus years later, the weighing industry is once again on the cusp of major change. But this time it isn’t going to be a new technology to up-tick the profits. This time it’s going to take some creative moves just to make sure our companies survive.

The man was right who said, “Those who take no care for the future, soon sorrow for the present.” And to prepare for the future is neither simple nor logical. No blueprints or instruction booklets or problem-solving hotlines come with it. It’s tough.

Scale dealers are under ever-increasing pressure by end users that impose onerous terms and conditions and make unreasonable price demands. These days, the end users are asking more and more from scale dealers, but they still expect you to cut your prices while demanding terms in their favor.

What’s a dealer to do? If you are losing ground in terms of market share and earnings, “repositioning” your enterprise may be the path to renewal.

I think dealers need to create a distinctive strategy that will get them out of depending on the sale of new products where there are only marginal changes in market position. The bottom line for a product-driven strategy is best product wins! But in today’s world, end users basically don’t give a rip about what hardware they use as long as they get the data needed to optimize their operations. In the end user’s mind, a scale is a scale is a scale. In fact, according to some dealers I’ve talked to, the end users of today go out their way to make the buying of scales a commodity purchase.

Perhaps it’s time for you to tilt the playing field to your advantage and change the rules of play; because selling more products at lower and lower prices certainly won’t ensure survival of an organization.

That’s why I believe that those in the weighing industry have to start doing some air castling about where they go from here. I know that many of you have already begun to change the way you do business, and if not, then you certainly need to think about it. The fact is you can’t live on hardware sales alone. You have to grow your business in service and value-added capabilities. You have to build something around the scale, otherwise it’s just “my scale is better than your scale.”

One area that is a natural playing field for scale dealers, it seems to me, is systems integration. You may already be doing this, but not getting paid for it.

One of the significant trends in the manufacturing and production processing companies is that they no longer have in-house process and control engineers. Most companies don’t replace them as they retire, and generally turn these engineering functions to other departments, usually IT.

As technology companies differentiate themselves by becoming ever more specialized, no firm can deliver from in-house resources everything they need. Many corporations are therefore calling in “solution providers” or system integrators to coordinate the work of several vendors in order to deliver one contiguous system. The system components may include temperature, pressure/flow, controls, sensors, material handling, as well as the weighing devices.

This is a good opportunity for you. If your customers don’t have the expertise (and they probably don’t), then they need to get if from you or a consultant (guess who they are using). As I mentioned earlier, end users are looking for data. Capturing this information and doing something with it is very valuable to them, even if they treat the hardware as a commodity, the data and information is valuable.

Today’s end users want solutions to complex problems. They want the pieces of automation to fit together to meet their needs. They don’t necessarily care about the uniqueness of the technology they use.

Not only can you integrate the appropriate components for your customers’ automated manufacturing processes, you can help them with their regulatory requirements. Who knows regulatory compliance—HB 133, HB-44 and ISO 17025—better than you do? You can help highly regulated customers validate that they indeed have a good process and their measurement devices are in spec.

By taking on the job of systems integrator, you get paid for your know-how. If you don’t have the expertise in a particular segment, you can collaborate with those who do, acting much like a subcontractor. After all, you probably know more about this customer whom you’ve served for umpteen years than any consultant. Who would know their needs better than you?
If you already act as a system integrator, we’d like to hear about how you got started and some unique experiences. — Dave Mathieu, Managing Editor