funny. They were prepared to deliver cabinets
but the customer had to buy
the cabinet and the content as well. They were never willing to do it on
consignment terms, which is what made it work. So that was a big difference
to start with. Secondly, they didn’t understand
my replenishing system of
stuffing the cabinets full enough that you could survive a couple of weeks.
What they offered was so different that we could immediately show the
customer that with our competitors, you’ll still have to do it yourself, you’ll
have to take responsibility. Whereas in my case, when you change a printer,
for example, and you don’t tell me, I will find out you don’t use this cartridge
any more and I’ll adjust. These
cartridges are very expensive, do you want
the responsibility? That’s the main difference of consignment.
DW: Later were you able to discover new constraints that opened the
way to new growth?
PH: Ultimately the constraint moved back inside the company. The new
constraint became; how quickly can we measure or install a new cabinet? At
first we could only do something like two or three cabinets a day.
People
were standing in line for cabinets. We had waiting lists for three months. So
we put a second person on the job. Not a big deal. But we were fully in
charge. We could grow at the pace we wanted to grow. That’s kind of funny
in a race where everybody was yelling about price! There are other
businesses in that situation. For example,
if you go to a really good
restaurant, they don’t care about prices. They are booked for the next three or
four months; they become arrogant. And we had the same situation! It was
great! And to think that we had started
with all those competitors, all the
problems, and 20 sales guys who were really discouraged, they didn’t know
what to do. And here we came with this really simple solution. I’m amazed
that to this day nobody’s really copying it.
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