Frank Piscatore, the VP of manufacturing at Goliath Corporation, felt himself besieged by executives from Hardin Chemical, one of his suppliers. He had received three calls for appointments that morning: from Hardin's VP of marketing, its director of sales, and its district manager. And he had received a similar call yesterday from its vice president/general manager. Each of the Hardin callers believed he had a compelling value offering for Piscatore and Goliath and all were vying for his time. And from the messages his secretary had taken for him, Piscatore saw that each of the Hardin executives was offering a significantly different value package. One offered an EDI system that Hardin had developed internally, one offered production-process consulting, and another offered a joint R&D project. Piscatore wondered whether Hardin's VPs were communicating with each other at all and he shook his head, wondering why they kept bothering him.
Piscatore left his office and headed for a meeting in which Bill Smith, the strategic account executive from Ticonderoga Chemical, another Goliath supplier, was officially kicking off the new EDI system that would link Ticonderoga and Goliath. Goliath had been piloting the new system over the last six months, and it had been earning all sorts of praise from Goliath decision makers. They were pleased with the abilities of the system but also with the way that Bill Smith had solicited their input and kept them up-to-date on the trial. Goliath's director of purchasing—one of Piscatore's direct reports—had been praising to the skies the EDI system's billing package, which offered electronic funds transfer, customized invoices, and virtually paperless purchasing. Ticonderoga's purchasing director, its IT staff, and Bill Smith had been working closely with Goliath's VP of purchasing on the system's functionality.
Piscatore had also heard glowing reports from his VP of sales, who suggested that they award Bill Smith and the Ticonderoga team their Supplier of the Year award. The VP of sales had been sold when Smith, over dinner, explained how the system would allow Goliath to check, order, and ship Ticonderoga inventory without having to call customer service representatives. At most of Goliath's suppliers, CSR's were either hard to reach or had to check with both inventory and shipping before they could call back with a realistic arrival date. This function would be a lifesaver to Goliath, allowing it to improve its own responsiveness to customers.
Piscatore had also heard from Goliath's VP of technology, who praised the functionality of the EDI system. The VP had spent many hours poring over the system's design specs with Smith, Ticonderoga's VP of MIS, and Ticonderoga programming people. The pilot had had some rocky moments but now the integration was virtually transparent.
Piscatore strolled into the meeting room to find Bill Smith chatting with Goliath's president. Normally the president would not have attended such a meeting, but Smith had copied him on all memos to Goliath executives regarding the new system's capabilities, its performance during the six-month trial, and, most important, the quantified cost savings that Goliath would realize from the system. Goliath's and Ticonderoga's financial people (including their respective CFOs) had worked with Bill Smith to show that the paperless billing system alone would save Goliath some $80,000 a year. That was the sort of news required to bring Goliath's normally reclusive president down to the meeting. Bill Smith stood up, thanking the Goliath executives for their aid with what he called "The Goliath System." He congratulated them on their ongoing and successful cost-cutting initiatives and, in a 15-minute slide presentation, he laid out the investments that both Goliath and Ticonderoga had made into the system's development and then the huge payback both firms would receive starting in six months. Given the system's value to Goliath, the decision was a no-brainer. Smith thanked Goliath for making Ticonderoga its sole-source chemical supplier, starting the next month.
Piscatore returned to his office, where he found three more messages from Hardin executives, all of whom wanted to schedule time with him. He tossed the messages into his wastebasket and sat back in his executive chair, calculating the impact of the new systems' savings on his profit-sharing check.
And far below Piscatore, in the bowels of Goliath, Don Brown, the Hardin key account seller, was trying to sell products to Goliath's technical people. He had no idea that Ticonderoga had just won a sole-source contract nor that they had been piloting an EDI system. He was not interested in understanding Goliath's business challenges, Goliath's needs, or how Goliath defined value. That would require too much time and Don needed to move more product to hit his quarterly sales target. Don was trying to sell Hardin products to anyone at Goliath whom he thought could buy.
So what had Bill Smith done to create the sole-source payoff? He had:
Developed a deep customer knowledge of Goliath Corporation, its business, and its organizational challenges.
Responded by offering a unique solution that would be a win for both Goliath and Ticonderoga.
Quantified the value of the EDI initiative to all executives.
Earned the trust of his customer to move to an exclusive relationship where the firms could act as partners.
Bill Smith had come from an organization that had done its homework, aligning on strategic accounts, developing support structures for SAMs , and standing ready to harvest those customers' opportunities.