What Power Do Companies Like Yours Have?

We’re spending the next few weeks talking big picture.  Everyone is heads down, with good reason.  But there is opportunity in times of crisis for those who look up and out.  This is not a grab for market share but rather a time for reflection on what you do really well so you can come out of this time better, faster and stronger. 

Specifically, we’ve been speaking about some strategic questions to ask yourself about your industry – the people you compete against for that share of the market.  We’re looking, here, for a means of differentiation.  A way that your products and services can stand out in a defined market segment and attract new customers. 

We’ve discussed how difficult (or easy) it is for someone to start a new company to compete with you.  We’ve contemplated products and services that might replace you – things that aren’t sold as competition to you but are adjacent.  Today, a great example of that might be the staycation to a vacation.  While staying at home is not a direct competitor to a vacation like a cruise would be for an RV trip (and let’s please remember these vital companies when we come out of this situation and support them), but it’s an alternative choice that someone who wants or needs a vacation can make. 

Now, we ask about the power of the supplier.  When you, or one of your competitors, makes a product or delivers a service, what supplies do you need to do this?  This could be a hard good, a material that will go into a finished product, a sub-assembly, an outsourced workforce or even your own customer if they provide you part of what you need to do your work. 

While you are thinking about the supplies you need, think also about the companies or people that make these possible.  They may not be the ones that you use, but you’re looking at how deep and wide the industry is that provides the building blocks for the one that you’re in.  It’s the steel company for the car manufacturer, the wire harness company to the electronic device you build and the polymer company for the coatings you need in production. 

How many companies are suppliers in your industry?  Now, think about the largest supplier that there is of a part, service, material or resource you use in making your own products.  What if they no longer existed (and this is an exercise we should all be doing right now)?   How difficult would it be to find a replacement of equal price and quality? 

Supplier power seems easy as first glance.  You might think to tight contracts and stipulations clauses as a way to manage this, but this particular subject requires a bit of finesse.  It’s never easy to determine what direction that power will turn and you don’t want those tables reversed on you. 

If the suppliers’ power in your industry is too great, there are some additional questions you should be asking.  Next time, we’ll start exploring your market. 

In 2020, we are rolling out meaningful tools for manufacturers that are affordable, on-target and competitive.  We are also expanding our educational offerings.      

We believe in the critical importance of manufacturing right here in North America and we work hard to keep you working.  Ask us questions; you will find that we are far more reachable than other software providers you may partner with.  We are here to help you find the right tools and use them, whether it's a Google doc, an Excel sheet or a Production Control system.  To learn more about meeting your targets for 2020 or just getting a question answered, visit us at www.cimx.com.