VALUE PROPOSITION

Taking Your Logistics Service
 Business to the Next Level


              by
          Tom Craig
      ...
FIRST


How many of you have a clear
    Value Proposition?




                               2
UAE

“Gulf region’s top logistics hub”
          World Bank




                                    3
Market Landscape

Provide commodity logistics service (3PL,
 warehouse, transport, forwarder)
Price dominates getting bu...
Market

Fight to retain customers from
 competitors offering cheaper price
Fight squeeze on profit margins
Fight to cre...
You and the Competition




                          6
Your Profit Margin?




                      7
Is This Your Sales / Marketing
             Strategy?

Same approach as always
OR—“The definition of insanity is doing
 ...
DISCUSSION
Why you want one
What Value Proposition is
How you do it
Questions
Issues


                             9
First

Value proposition--not for everyone here
Not a quick fix for your problems
Way to separate yourself from your
 c...
Why you want a Value Proposition

 Move past the price issue
 More sales / better sales
 Expand market reach
 Increase...
Why

Separate yourself from the competition
Define who you are
Define why a customer should select you




            ...
Why

Increase your importance to customer
Make it painful to remove you (switching
 pain)
Create de facto outsourcing

...
Value Proposition
How to frame your business
Address a customer need / problem
Why a customer should use you – has real...
Value Proposition

Differentiate you in the marketplace
Way to position and define your business
Take more control of y...
What It Is

Sales AND operations approach
In addition to core business
About what customers need / customer
 centric


...
It is
Supply chain and/or company issue to
 customer
Goes beyond the standard “win-win” of
 trading a low price for volu...
Is

For potential customers AND for present
 customers
Taking your business to a new level
Way to create new capability...
Is

Results focused—for customers
Definable / measurable / quantifiable—
 even better




                              ...
It is not

Something that defines or is about the
 basic service you provide
Tag line / advertising slogan / mission
 st...
Is Not

“Daily special”
Flogging asset utilization
Value-added service (aka, giving away
 something for nothing)



   ...
Note

Single / same VP unlikely to appeal to all
 customers / prospects
Match to customers




                         ...
I am talking

                     Evolution
                     Not
                     Revolution



In Addition
To Co...
ALSO
There is not “THE” one V.P.

Just like there is not “THE”
  supply chain program

                               24
Ask this

Can you sustain your low price?
Can you be the lowest price provider?
If NO, then why are you playing that
 g...
V.P. Examples--Is

Increase inventory turns by 25%
Increase market share 2 points
Lean solution to remove 20% waste fro...
Examples

Improve your global supply chain
 performance by 15%
Sigma 6 kitting and assembly will improve
 your quality b...
Opportunity Potential

Many rush orders / much expediting / much
 fire fighting!!!
Freight can be a problem
Freight can...
Example

Too much working capital tied up in
 inventory!!!
Real need is not “visibility” to what you
 store or transport...
Examples--Is Not

Low freight rates
May not even involve costs
Nice looking pallets
For every customer



            ...
How You Do It

Listen—to what customers say
Listen—to what customers do not say
Identify customer pain issues / underly...
How

Stay focused on VP and the customer
Do not let day-to-day chaos make you
 lose sight of VP
Partner if needed—espec...
How

Integrate with partner
Realign responsibilities expressly for
 delivering VP results
Collaborate and communicate w...
How

Understand the competition and what
 they “offer” as a V.P.
Do not be intimidated by competition
 (may be large fir...
Then

What can you do to help the customers?
Not the usual things you say and do now
Address real issue (again, it is n...
Then

Do proposals, not just price quotes
  Emphasize V.P. and state the benefits
Be open to / propose new arrangements...
KPIs

About the customer—not you
Ties directly to V.P.
Should reflect the KPIs of the customer or
 its supply chain gro...
Questions

Market positioning--where?
Market size—how big?
Cross multiple markets (reduces risk)?
Competition?



    ...
Questions

Change in strategic direction?
Sales and marketing strategies?
Operations strategy?
Funding?



           ...
Issues with V.P.

1)   Customer
2)   Core Business
3)   Delivering
4)   Sustainability



                              40
Customer

Some focus only on price
Would not understand or appreciate a
 value proposition
Would change service provide...
Core Business—Stay the Course

Comfortable with what you do
Even if it is a struggle
“If we only…..”, then……




      ...
Delivering V.P.

Define it well within company
Energize/motivate the company
Internal organization—present vs ??
Need ...
Delivering

See “bigger picture”
Add skills / partner with others
Change is not easy




                              ...
Sustaining It

Get employees committed to and
 involved with V.P.
Recognize change management—an
 extensive topic
Conti...
Sustaining

V.P. can give the company and employees
 an identity
Change can be built on that identity




              ...
Value Proposition

Did not say it would be easy
Did not say “you just….”
Did say it can change the dynamics of
 your bu...
So? What will you do?

Continue the same old / same old
--OR--
How many of you want—
  Greater customer retention
  M...
Final Value Proposition
           Comment
It is not static
Customers and markets and services
 change—only the rate of ...
ASK AGAIN

How many of you have a clear
     Value Proposition?




                               50
It may not be like this, BUT




                               51
OR your business like




                        52
Related topics for V.P.
   --For another discussion--
Branding
Responding to competitors
Gaining advantage over competi...
Technology—IS NOT




                    54
Technology--IS




                 55
Technology—for V.P.

Much more than “track and trace”
Global
End-to-end visibility
Supply chain management



        ...
THE END

OR A NEW BEGINNING?




                      57
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Presentation made at LOG.AE in Dubai for 3PLs and other logistics servixe providers. Creating a value proposition to increase customer retention, gain better sales, improve profit margins and distinguish in marketplace from other commodity service providers. Presentation was very well received.

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Dubai

  1. 1. VALUE PROPOSITION Taking Your Logistics Service Business to the Next Level by Tom Craig www.ltdmgmt.com 1
  2. 2. FIRST How many of you have a clear Value Proposition? 2
  3. 3. UAE “Gulf region’s top logistics hub” World Bank 3
  4. 4. Market Landscape Provide commodity logistics service (3PL, warehouse, transport, forwarder) Price dominates getting business Much customer turnover Many competitors All offer similar service as you 4
  5. 5. Market Fight to retain customers from competitors offering cheaper price Fight squeeze on profit margins Fight to create a market / brand identity 5
  6. 6. You and the Competition 6
  7. 7. Your Profit Margin? 7
  8. 8. Is This Your Sales / Marketing Strategy? Same approach as always OR—“The definition of insanity is doing the same thing over and over and expecting a different result.” Albert Einstein 8
  9. 9. DISCUSSION Why you want one What Value Proposition is How you do it Questions Issues 9
  10. 10. First Value proposition--not for everyone here Not a quick fix for your problems Way to separate yourself from your competition Way to change the dynamics of your business 10
  11. 11. Why you want a Value Proposition Move past the price issue More sales / better sales Expand market reach Increased customer retention Higher profit margins 11
  12. 12. Why Separate yourself from the competition Define who you are Define why a customer should select you 12
  13. 13. Why Increase your importance to customer Make it painful to remove you (switching pain) Create de facto outsourcing 13
  14. 14. Value Proposition How to frame your business Address a customer need / problem Why a customer should use you – has real value to customer Hint—it is not about lowest price 14
  15. 15. Value Proposition Differentiate you in the marketplace Way to position and define your business Take more control of your business 15
  16. 16. What It Is Sales AND operations approach In addition to core business About what customers need / customer centric 16
  17. 17. It is Supply chain and/or company issue to customer Goes beyond the standard “win-win” of trading a low price for volume/business Goes beyond narrow logistics service and your 4 walls 17
  18. 18. Is For potential customers AND for present customers Taking your business to a new level Way to create new capability in addition to core service Creating competitive advantage (do not worry about “copy cats”) 18
  19. 19. Is Results focused—for customers Definable / measurable / quantifiable— even better 19
  20. 20. It is not Something that defines or is about the basic service you provide Tag line / advertising slogan / mission statement / vision About freight About pallets 20
  21. 21. Is Not “Daily special” Flogging asset utilization Value-added service (aka, giving away something for nothing) 21
  22. 22. Note Single / same VP unlikely to appeal to all customers / prospects Match to customers 22
  23. 23. I am talking Evolution Not Revolution In Addition To Core Business 23
  24. 24. ALSO There is not “THE” one V.P. Just like there is not “THE” supply chain program 24
  25. 25. Ask this Can you sustain your low price? Can you be the lowest price provider? If NO, then why are you playing that game? If NO, why do you not have a Value Proposition to better position yourself? 25
  26. 26. V.P. Examples--Is Increase inventory turns by 25% Increase market share 2 points Lean solution to remove 20% waste from your supply chain 26
  27. 27. Examples Improve your global supply chain performance by 15% Sigma 6 kitting and assembly will improve your quality by 10% 27
  28. 28. Opportunity Potential Many rush orders / much expediting / much fire fighting!!! Freight can be a problem Freight can be a symptom of a problem!!! Inventory can be a problem Inventory can be a symptom of a problem!!! 28
  29. 29. Example Too much working capital tied up in inventory!!! Real need is not “visibility” to what you store or transport Real need is something bigger and how you fit into it 29
  30. 30. Examples--Is Not Low freight rates May not even involve costs Nice looking pallets For every customer 30
  31. 31. How You Do It Listen—to what customers say Listen—to what customers do not say Identify customer pain issues / underlying problems / what is really important See the “big picture” and where and how you can fit into it 31
  32. 32. How Stay focused on VP and the customer Do not let day-to-day chaos make you lose sight of VP Partner if needed—especially if service/capability is beyond your scope 32
  33. 33. How Integrate with partner Realign responsibilities expressly for delivering VP results Collaborate and communicate well with customer Align operations to VP Integrate with customer 33
  34. 34. How Understand the competition and what they “offer” as a V.P. Do not be intimidated by competition (may be large firms) that do not have a V.P. 34
  35. 35. Then What can you do to help the customers? Not the usual things you say and do now Address real issue (again, it is not about you and your service; it is about the customer) 35
  36. 36. Then Do proposals, not just price quotes Emphasize V.P. and state the benefits Be open to / propose new arrangements — such as JV 36
  37. 37. KPIs About the customer—not you Ties directly to V.P. Should reflect the KPIs of the customer or its supply chain group Not micro-managed/task/work level Not metrics for metrics sake 37
  38. 38. Questions Market positioning--where? Market size—how big? Cross multiple markets (reduces risk)? Competition? 38
  39. 39. Questions Change in strategic direction? Sales and marketing strategies? Operations strategy? Funding? 39
  40. 40. Issues with V.P. 1) Customer 2) Core Business 3) Delivering 4) Sustainability 40
  41. 41. Customer Some focus only on price Would not understand or appreciate a value proposition Would change service providers for a lower price HINT: V.P. is not for those customers 41
  42. 42. Core Business—Stay the Course Comfortable with what you do Even if it is a struggle “If we only…..”, then…… 42
  43. 43. Delivering V.P. Define it well within company Energize/motivate the company Internal organization—present vs ?? Need for training Need for operational integration 43
  44. 44. Delivering See “bigger picture” Add skills / partner with others Change is not easy 44
  45. 45. Sustaining It Get employees committed to and involved with V.P. Recognize change management—an extensive topic Continuously improve performance Avoid backsliding 45
  46. 46. Sustaining V.P. can give the company and employees an identity Change can be built on that identity 46
  47. 47. Value Proposition Did not say it would be easy Did not say “you just….” Did say it can change the dynamics of your business Did say it will separate you from competition 47
  48. 48. So? What will you do? Continue the same old / same old --OR-- How many of you want— Greater customer retention More sales Higher profit margin 48
  49. 49. Final Value Proposition Comment It is not static Customers and markets and services change—only the rate of change is in question Your V.P. will and must change Look beyond your competition and your “comfort zone” for V.P. ideas 49
  50. 50. ASK AGAIN How many of you have a clear Value Proposition? 50
  51. 51. It may not be like this, BUT 51
  52. 52. OR your business like 52
  53. 53. Related topics for V.P. --For another discussion-- Branding Responding to competitors Gaining advantage over competitors Sustainable competitive advantage Making operational improvements last Business transformation 53
  54. 54. Technology—IS NOT 54
  55. 55. Technology--IS 55
  56. 56. Technology—for V.P. Much more than “track and trace” Global End-to-end visibility Supply chain management 56
  57. 57. THE END OR A NEW BEGINNING? 57

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