Some hope in these though days. Louis Columbus wrote a nice commentary on the Product Configurator Blog. His idea: Offering customizable products may pay a big dividend in a recession. While Louis probably is biased in his view – he works for configuration system provider CINCOM Systems -- his thoughts still make a good and valid argument.
His arguments include not just product configuration systems for one-of-a-kind products, i.e. the typical mass customization situation, but also using configurators to better match an assortment with customer preferences (as in the MVM application in the previous posting).
Louis sees three key factors that favor the adoption of sales and product configuration are emerging even in these difficult economic times (with my comments in italics):
"First, there a greater need than ever to sell to customers how they want to buy. Sounds so fundamental yet it is so difficult for manufacturers to change how they sell – because those practices and processes get engrained into a company and they are difficult to change." The recent crisis may finally facilitate the change management process required within companies when moving from a conventional sales approach to a customized one.
"Second, there’s more of a focus on how to capture complex orders right the first time than ever before. Driven by the increasing coordination that distributed order management, ERP, logistics and supply chain systems provide to deliver greater responsiveness to customers; manufacturers are no longer staying complacent with multiple versions of an order. Instead there’s a greater intensity of focus on product configuration as a means to capturing a complex, build-to-order, configure-to-order or engineer-to-order product requirements thoroughly and completely the first time." Again, when times are tough, you focus on efficiencies. And while implementing a product configuration system (or a match-to-order system as MVM is offering) comes at a cost, it can have savings that are many times larger than the investment – despite offering better customer service at the same time.
"Third, product configuration has proven to be the single greatest differentiator for companies intend on making their entire brands and unique value propositions more focused on being customer-centric. Look at Dell, HP, IBM, GE and even Lexus to see examples of how product configuration can be used for accentuate and strength a brand." No further comment – despite that the company names quoted by Louis are also a sign that just offering product configuration is not enough. Just think of Dell's ongoing challenges to re-invent the company for a time where getting exactly the right computer matching to your needs is not a large advantage for customers anymore (as any machine can do almost everything what you want to do).
Conclusion: "Product configuration strategies open new avenues of selling and give competitive companies the ability to stay strong." Well said, Louis!
Thanks for the feedback, Louis! I totally agree with this perspective and are looking on an exciting 2009!
Posted by: Frank Piller | January 17, 2009 at 12:12 PM
I am honored you have given me so much attention in your blog and thanks for the kind words too. What led me to write such an inspirational post was seeing the drastic differences between companies who are letting the onslaught of negative news stop them from improving versus those charging forward to make positive change to their product configuration strategies. Now I do work for Cincom but this is not necesarily about buying more software, it's about finding the courage to step up, change, and better align to how customers want to buy. It's about delivering on the promise of mass customization.
So instead of a recession, it's better to look at this economic condition as a race. You can see it when you visit companies struggling with how to keep up the pace with how their customers are changing. Product configuration, done efficiently, can significantly improve profitability. I think the bottom line is that companies need to realize the path out of the recession for themselves is greater responsiveness, faster response times, and staying relevant by staying current with their customers' changing approaches to buying.
Thanks again and have a nice weekend!
Posted by: Louis Columbus | January 17, 2009 at 11:37 AM