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Published: April 9, 2002

 
 

From Solutions to Symbiosis: Blending with Your Customers

Throughout the process of crafting a solution, the supplier has to act as the driver because customers may lose interest without regular reminders of the benefits they can accrue from a solution. To motivate customers, the supplier needs to encourage meetings to brainstorm how the supplier’s capabilities can fulfill (and bring a profitable return to) a customer’s needs. At these sessions, sets of workable solutions scenarios should be resolved and then ranked by which can generate the greatest return within the shortest time.

Small successes at the early stages of the engagement are important, as evidence that solutions are effective and to encourage both sides to further their partnership.

Symbiosis Readiness: The Five-Point Checklist

1. Customer Trust. Do you have customers who trust your expertise and are willing to share insights on their challenges and needs to succeed in their marketplace?

2. Collaboration. Does your organization team up cross-functionally internally? (If it doesn’t, you will go through false starts when you try to collaborate with the customer.)

3. Innovation. Do you have a process to capture innovation at the customer frontline to drive solution generation? Do you have a process to capture the learning so that you’re able to repeat your success with other customers?

4. Risk Profile. Does your company have the risk profile to invest for future potential returns by the customer? Can you afford to make the economic transition?

5. People and Leadership. Do you have people with a strategic mind-set and the consultative skills to uncover and develop opportunity with the customer?

How Nibco Benefited
While the solutions agreement is being worked out, it is important to determine the roles and responsibilities of both sides, including benchmarks, expectations, and ways to measure success or failure. Without clear metrics, what was supposed to be symbiosis could dissolve in rancor. A casual handshake deal can doom a solution; a detailed written charter can ensure its success.

An apt example of a well-thought-out solution that followed this protocol is the one forged a few years ago between Dow Chemical Company and Nibco Inc., a $400 million maker of valves and pipe fittings. After watching Nibco struggle with an erratic supply chain for years — orders would come in bunches and then slow down, so Nibco never knew the quantities of materials it needed on hand to manufacture the number of pipe fittings it would have to supply — Dow approached Nibco with this plan: If Nibco agreed to share with Dow the details of its order book, inventory, design, and factory operations, Dow would take over total supply chain management of the resin pellets Nibco needed to make plastic into pipe fittings. Dow promised to stock Nibco with just-in-time inventory that would put the burden of warehousing and filling Nibco’s shelves with each type of resin pellet completely on Dow, and Dow offered a series of performance measurements that it guaranteed would be met, or the solution would be canceled. Simply put, when Nibco needed the supplies, Dow would ensure they would be there even without an order being placed.

At first, Nibco was hesitant to do this because it would mean sharing a lot of information with a supplier to which it would also be entrusting the most critical part of its operations. So the companies agreed to begin by having Dow handle just a portion of Nibco’s resin pellet supply chain. That worked so well that, within months, Dow was managing all of it. Significantly, as a result of this solution, Nibco became a solutions provider also, because it could extend and even customize its product line, while actually decreasing the expense of managing what would turn out to be a much wider inventory. In fact, as the solution has played out, Nibco’s operational costs in its resin pellet business have dropped 15 percent, while its market share among customers drawn to its enhanced offerings has increased. Dow was a beneficiary as well; its orders from Nibco have risen by about 10 percent.

 
 
 
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Resources

  1. Jeffrey Bennett, Deven Sharma, and Andrew Tipping, “Customer Solutions: Building a Strategically Aligned Business”; www.boozallen.com
  2. Jan Dyer and Chuck Lucier, “Climbing Up the Value Ladder,” s+b, Fourth Quarter 2000 Click here.
  3. Steve Lohr, “He Loves to Win. At IBM, He Did,” New York Times, March 10, 2002
  4. Mack Hanan, Consultative Selling (AMACOM Books, 1995)
  5. Neil Rackham and John De Vincentis, Rethinking the Sales Force: Redefining Selling to Create and Capture Customer Value (McGraw-Hill, 1999)