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There are four main ways in which companies create value for their customers and distinguish themselves from competitors: better price, better quality, better delivery or better flexibility. Knowing which one of these is your main value orientation, is important. It helps you create focus in your organization and makes you stand out compared to the competition.
In three earlier articles I summarized these four value orientations and explained what it takes to succeed with a price-oriented strategy and a quality-oriented strategy. In this article I discuss the third of these orientations: delivery.
Similar to the other orientations, there are a four major areas to pay attention to when following a delivery-oriented strategy: 1. a consistent value proposition, that is 2. aligned with your market, 3. aligned with your operations and 4. aligned with the structural environment of your organization.
Requirement 1: A Consistent Delivery-Oriented Value Proposition
A delivery-oriented value proposition is a value proposition that focuses on creating a seamless, fast, optimized and convenient delivery of a product or service. This includes competing on availability (“Always in stock!”), proximity (“Never more than two blocks away!”) and convenience (“One-click shopping!”).
Obviously, many logistics companies have a delivery-oriented strategy. Companies like DHL and UPS, but also Amazon, compete largely on delivery. They compete to offer the fastest, most accurate or most convenient way of getting products from A to B. In doing so, they often also compete on price, but delivery is their primary focus.
But also non-logistics companies choose this strategy. Take McDonald’s. They don’t offer the best hamburger (quality orientation) nor the cheapest (price orientation). But they excel at offering a predictable, standardized hamburger that can be bought and tastes the same everywhere in the world. In other words, they excel in delivery.
As with the other value orientations, offering a delivery-oriented value proposition successfully asks for doing this consistently. This means you offer what you say you offer, or at least close. If you claim to be the fastest, you’d better be the fastest too. It also asks for insisting on the delivery-orientation across the entire customer journey – from the moment the customer gets in contact to you to the moment of delivery – or even thereafter. As long as there are still parts of the customer journey that are not yet optimized for delivery (e.g. creating an account, paying, opening the box, etc.), you still have room for improvement.
Requirement 2: A Matching Delivery-Oriented Market
Next to a consistent delivery-oriented value proposition, you obviously also need people that value excellent delivery. Of course, none of us would object to that. But to effectively compete on delivery, your target market needs to be a market that finds delivery more important than everything else – more important than price, quality or flexibility.
Typically, the larger delivery-oriented markets consist of customers (consumers or business) that for whatever reason have little time or are impatient, late, lazy or even a bit chaotic. As soon as they feel a need for a particular product or service they want to have it now. They don’t want to spend a great amount of time on getting it. They simply pick the fastest alternative. Which could be the alternative that pops up first in their minds. After all, they don’t want to waste time on finding the best alternative either.
There are also more specific, and usually smaller niche delivery-oriented markets. Those typically consist of customers with very specific delivery demands. They need to ship, for example, very fragile or large products or need to have something delivered at a very specific time and location.
Having a matching delivery-oriented market also means that this market is not yet oversupplied by competitors who compete on the same delivery aspects as you. You want your customers to choose you rather your competitors. This means you have to have a way in which you stand out. In the online shopping market, currently the rat race is for shortest time between ordering and receiving a product (“Order before noon and get it before 4pm!” etc.). Joining this rat race implies you need to do at least as well or better than others. Alternatively, there might be other delivery aspects, or price, quality or flexibility aspects on which you could focus.
Requirement 3: Focused Delivery-Oriented Operations
Succeeding with a particular value orientation means vigorously implementing this value orientation throughout your organization and supply chain. For delivery this means that you want to make sure that all things you do add up to creating the best delivery experience there is in the market. This means that, if you compete on speed, for example, you need the infrastructure, location, people, suppliers, processes, logistic providers, etc. that enable you to deliver fast. And not only that. All these factors also need to be seamlessly aligned so that any hick-up within or between steps of the delivery process is avoided.
Realizing focused delivery-oriented operations also implies that the way you charge customers (your revenue model) and your risk and cost structure are delivery-oriented as well. Again, if it is speed or convenience you are competing on, the way customers pay should be fast and convenient too. And if this is what you compete on, then the major costs and risks you have should contribute to speed and convenience. After all, why spend money on something or take a particular risk, if it doesn’t add value to your delivery-oriented value proposition?
Of course, while focusing on delivery, you always need to take into account the other dimensions (price, quality, flexibility) as well. There are minimal acceptable thresholds for all of them. Even though customers might need fast delivery, there is a maximum price that they are willing to pay for it, for example.
Requirement 4: A Fitting Delivery-Oriented Environment
Being successful with a deliver-oriented strategy also asks for an organizational and external environment that supports this delivery-orientation. After all, you have a real company with real people in the real world. This means you are not completely free in choosing whatever business model you want. There are structural elements within and outside your organization that you need to take into account.
One of these elements are the company’s values and goals. If building a loved aspirational brand, for example, is one of the main ambitions, delivery might not be the most obvious orientation to go for. The reason is that most people’s level of expectations in terms of delivery are so high that exciting them with delivery is a real challenge. In such case a quality or flexibility orientation might be the better fit. Or you need to find ways in which delivery really becomes a great or fun experience for your customers. Online electronics store Coolblue in the Netherlands is a good example of this. Next to excellent speed and reliability of delivery, they add humor, thereby making ordering there a nicer and more fun experience than elsewhere.
It is also important that your delivery orientation matches the trends and developments that are happening in your industry and the broader environment. If new regulations (or Brexit), for example, make it increasingly difficult to deliver cross-border, then maintaining a successful delivery orientation may be increasingly difficult too. However, if you are better equipped to make the necessary adjustments than your competitors, this seeming threat may turn out to be a real opportunity for you. So, whether this new regulation is a threat or an opportunity, depends on how well you can align your operations and value proposition with this external development. The same applies to any other internal or external development.
Like with a price-oriented and a quality-oriented strategy, the key to succeeding with a delivery-oriented strategy is aligning everything you do around your offerings. This starts with offering a consistent and coherent value proposition (requirement 1) and further includes effective market alignment (requirement 2), effective operational alignment (requirement 3) and effective structural alignment (requirement 4). It takes all four types of alignment to be successful with a delivery-oriented strategy.
March 8, 2019 at 03:09AM
Forbes – Entrepreneurs