Finding Your “Sweet Spot”
Knowing how well your products are competing and keeping tabs on your customers’ changing needs will help you create a winning strategic plan.July 2010 By Howie Fenton
I JUST returned from an in-plant presentation where I spoke about the importance of knowing and shifting your "sweet spot." Every in-plant has its own unique sweet spot—the products you make most (volume) and make best (most cost effectively). The importance of this concept has percolated to the top of my mind lately as I work on an in-plant assignment designed to identify work currently outsourced that may be done more effectively by the in-plant.
Knowing your sweet spot and making sure it evolves as your customers' needs change is more important then ever. Why? Because if your sweet spot does not align with customers' needs, then you're not making the products your customers want at a competitive price, or offering the services they need most. This can result in questions about the value of your in-plant.
There are two ways to measure what you do most and what you do best. Calculating what you do most is pretty easy. Take all your invoices for a year and divide them into categories based on the application (business cards, envelopes, etc). Your highest pile is your highest volume or most popular application.
Figuring out what you do best is tougher. For each job, you have to estimate whether you made money or lost money. If you group them by product again, you can find out which products made money and which products lost money. As long as your pricing is competitive with outside sources, then the products you made the most money with are the ones you are most cost efficient at producing, and therefore your best products.
Good or Bad Sweet Spot?
The question then is, are those good or bad sweet spots? That is determined by changes in demand. If, like many in-plants, you are seeing declines in your sweet spot, then that is a problem. The reasons are obvious: the equipment, workflow and applications in many in-plants today are almost exactly the same as they were 10 years ago. Most work today is created by the same workflows and printed on the same small-format, two-color duplicator presses.
To avoid being blind sided by your customers' changing needs, you have to constantly listen to the voice of your customer, and monitor and build new workflows to create new sweet spots. A great way to do this is through the use of surveys to (1) assess customer satisfaction in product quality, (2) assess satisfaction with the services offered, and (3) compare your in-plant to the outside services. NAPL has a proprietary tool called the eKG Competitiveness Survey that does exactly this.