Equipment Distributor Targets Key Markets,
Quadruples Company Size
In 1994, the management team of a very large heavy equipment dealership recognized that the nature of competition was changing dramatically, and that it would no longer be possible to compete effectively with the pure product and sales approach to business that the company was used to. Those managers realized that their business would need to become more focused and market-driven if it was to grow in the future, and they became committed to a growth strategy based on providing superior value to their targeted customers, their employees, shareholders, and the communities in which they did business.
The first order of business was to achieve some focus. With 240 different business opportunities (product/markets) available to them, the managers realized that they simply could not be effective at trying to be all things to all people. MVS facilitated a thorough analysis of their product/market matrix, which led to the identification of 10 strategic priorities for the future. The management team then set out to understand value within those ten product/markets better than any competitor. The MVS customer value analyses revealed that the company was already the value leader in some product/markets, but this was definitely not true in all cases. MVS facilitators worked with competitive planning teams to develop unique strategies for each product/market. These strategies were designed to either leverage a value advantage into greater profitability and market share, or to achieve a value advantage for the same purpose. The customer value analyses also led to identification of the key value streams for focused improvements using the tools of Six Sigma. After implementing the process improvements, the management team deployed MVS’s transactional measurement system that allows them to monitor performance from a customer viewpoint, and to react quickly to the occasional lapse in superior value delivery.
Becoming the dominant value provider in their targeted product/markets has paid tremendous dividends for the company’s shareholders. Total revenue has quadrupled over 10 years, to more than $1B, while profitability has soared to record levels in the past three years. The company has grown from 600 to 1800 employees, and has been cited by the American Productivity and Quality Center (APQC) as a “Best Practice” company in customer value management.