Greater account satisfaction.
Greater focus and momentum.
More time to spend on adding value.
Greater employee satisfaction.
Aligned firms, such as Honeywell Industrial Automation & Control Solutions or Minnesota Power, ultimately reduced costs through more collaborative customer and supplier relationships. When the firm is committed to the strategy, it will take significantly less time—and fewer resources—to get things done. Processes and systems will take care of all that can be systematized; increased employee urgency will cover those actions not appropriate for process redesign.
In Getting Partnering Right, Neil Rackham et al. present the Motorola-United Parcel Service case, in which Motorola found itself "too slow to respond to the changing needs of customers, who increasingly were moving to just-in-time manufacturing and reducing their inventories. Customers were demanding faster shipments but they didn't expect to pay premium rates to get them."  Motorola decided to find a distribution partner who could work closely with it to create a new process.
It chose UPS, which created a more effective, aligned shipping process with Motorola and immediately created a 60+ percent savings in shipping time by cutting out wasteful steps in the shipping process. Sharing data further cut costs "by reducing the re-keying of shipping information and eliminating duplication in customs documentation and other paperwork."  As the partnership has grown, more than 60 percent of products were shipped direct, "so Motorola has been able to dismantle some of its own high-overhead distribution infrastructure,  which resulted in greater cost savings.
At this point, UPS was not selling shipping; it was selling one of its core competencies: logistics. One way of defining a core competency is the ability to bring expertise and aligned processes to bear on a customer problem.
But reduced costs are not the only potential benefit for the aligned supplier. Increased alignment means greater employee satisfaction and loyalty. Employees get to spend time on important tasks rather than on constant rework. They can make better, more informed decisions because their priorities are clear. Because everyone has recognized that they are responsible for account satisfaction and loyalty, everyone becomes part of the firm's value offering. For many—if not most—employees, being part of important work, adding value, and making a difference are critical motivators.
A core competency is the ability to bring expertise and aligned processes to bear on a customer problem.
Aligned suppliers minimize internal bottlenecks that could have undermined relationships. That frees them to spend more time "mining" for opportunities to increase account share. Employees at such firms tend spend less time worrying about covering their own inefficiencies and more time focusing on the accounts' needs. They can really listen to the account contacts. If you have ever had anyone make the effort to really listen to you, you know what a profound experience it can be.
Once employees really hear customers, then your firm suddenly has many customer champions looking for business problems, solutions, and ways to co-create value. And as they create joint value, the relationship tends to get better and better, and the customer tends to grow more and more loyal—no matter how volatile the market. Think of Honeywell IACS's 61 percent growth in a flat-to-declining market. In our experience, selling competencies is almost always a higher-margin sale than selling standard offerings. Alignment helps the bottom line grow while offering real power to differentiate, particularly because alignment is so difficult to achieve. But those firms that do align with customers tend to be market leaders—such as Johnson & Johnson, Honeywell Industrial Automation & Control Solutions, and Marriott International.
Rackham, N., et al. (1996). Getting Partnering Right: How Market Leaders Are Creating Long-Term Competitive Advantage (p. 59). New York, McGraw-Hill.
Rackham, N., et al. (1996). Getting Partnering Right: How Market Leaders Are Creating Long-Term Competitive Advantage p. 59. New York, McGraw-Hill.
Rackham, N., et al. (1996). Getting Partnering Right: How Market Leaders Are Creating Long-Term Competitive Advantage p. 60. New York, McGraw-Hill.