Mixed Mode Demand: Solutions for Differentiation
This post takes you step by step into the world of solutions for differentiation. It links the Age of the Customer needs to a very specific set of practices, tools, and techniques that will put you at the top of your industry when it comes to differentiation. Before going there, we want to set the stage with some of the key principles that have enabled companies to master this shift. It starts with the types of demand that manufacturers commonly face, and a series of best practices enablers that will unlock the doors to a successful, high-performance outcome. Each of these falls on a step-wise scale of product and process differentiation driven by customer, market, and industry factors. In The Age of the Customer, each of these four types of demand may be relevant to your business model, and there are proven best practices for each:
1. Standard (MTS) – The volume and predictability of demand enables a fully pre-defined product that meets customer needs with ZERO variation. This does not mean ‘commodity’ – they may be very specialized, pre-engineered to meet and satisfy all customer expectations. Note: this does NOT imply that they are ‘on the shelf’ inventory (although this may be part of your customer responsiveness/service posture).
2. Fully Configurable (ATO) – The product is fully pre-engineered and all components are standardized; and the final customer solution is determined through a process of selecting the ideal mix of features/options, pricing, lead-time, and other ‘configuration’ choices. During the sales cycle, they are tailored to meet specific end-customer needs by matching choices to a set of pre-defined characteristics ('assemble to order'). They have a dynamic final product definition much like a ‘window sticker’ on a car. Configuration during the selection and selling process is critical to efficient, high-quality practices.
3. Modified Configurable (DTO) – This type of demand is often referred to as “same-as except” which means that a Type 1 or 2 product requires further adaptation to meet a specific industry or customer need. The ability to offer these ‘design to order’ variations/adaptions opens doors to many new product applications and market needs; BUT if not properly aligned with best practices it may cause disruptions, margin erosion, and customer dissatisfaction. This type of demand requires a new breed of cognitive product selling and dynamic configuration, design support, and equipment life cycle service.
4. Engineered/Systems (ETO) – These “solutions” are the high-value-add product offerings to meet very specific customer/market needs by applying core engineering and product capabilities. This is a key differentiator when best practices are in place, because it leverages your deepest domain expertise at every stage of the equipment life cycle. Pre-designed components are ‘packaged’ and engineered, often with very specialized enhancements, to meet a highly demanding specification. These specs may include technical and commercial requirements. Best practices require a smooth and seamless collaboration throughout the entire sales and service life cycle.
Each of these types of demand can be mastered to provide a highly satisfying customer engagement experience AND an efficient and well-controlled manufacturing and service outcome. Ensuring the correct response to each type of demand is the key to performance in the Age of the Customer.