Rush hour: consumers demanding instant gratification warn businesses it's now or never

Entrepreneur, Feb, 1998 by Debra Phillips

"Customers have so many choices today that they can be very fussy about whom they buy from," observes Roger Blackwell, author of From Mind to Market: Reinventing the Retail Supply Chain (HarperBusiness). "If a store can't provide what they want, when they want it, they have plenty of alternatives that will."

It wasn't always this way, of course. Even assembly-line pioneer Henry Ford once sardonically suggested customers could have any color of car they wanted - as long as it was black. Those days are long gone. Instead, consumers are now asking for - and getting - the speed foreshadowed by Ford's assembly line coupled with choices galore. "Today, consumers have a lot of power," says Regis McKenna, chair of Palo Alto, California, business and marketing strategy firm The McKenna Group and author of Real Time: Preparing for the Age of the Never Satisfied Customer (Harvard Business School Press). "Technology providing immediate feedback [is in place], and it's building higher and higher expectations by the consumer for immediate service."

* FULL SPEED AHEAD

So what's the rush? Technology, particularly the Internet, has accelerated the pace of doing business to the point where being fast enough no longer is. "You have to be a Tiger Woods of the business world," says Blackwell. "We've set a new standard. I remember when people said it was impossible to run the four-minute mile - then Roger Bannister did it. A similar thing is happening in business: The Roger Bannisters and the Tiger Woodses are setting new benchmarks, so if you can't run the four-minute mile, don't bother to show up."

Blackwell's words ring true. Whether you refer to it as "justin-time delivery," "real time" or "Internet time," the idea of fast-forwarding products or services to consumers in record time is revolutionizing the business world. "This is an irreversible trend," says David Peyton, director of technology policy for the National Association of Manufacturers (NAM). "There's no going back."

Or slowing down. As computers keep chipping away at our notions of what constitutes quick turnaround, the race is on for entrepreneurs to prove themselves capable of running that metaphorical mile in Roger Bannister's sneakers.

"One of the great mistakes many entrepreneurs make is they think if they have a good product, they'll be successful; that's no longer true," insists Blackwell, who is also a professor of marketing at The Ohio State University in Columbus. "A good product is essential, but an efficient supply chain is equally important. And that involves state-of-the-art logistics. There's a war going on between putting money into assets like inventories, warehouses and trucks, or putting money into information from the computer. And the [computer] nerds are winning the war."

Blackwell's point is clear: The swift of feet realize that in today's market, they must take an entirely new approach to business.

* WHAT'S NEW?

To Blackwell's way of thinking, the increasing competitiveness of the marketplace is rendering the traditional supply chain obsolete. "In supply chains, the products normally start in the mind of the manufacturer, and they're pushed through to distributors, then to retailers and eventually to consumers," he says. "But when you reinvent this supply chain, you start with the mind of the consumer. I call it a 'demand chain.'"

Peyton, too, points out the shift in emphasis in favor of consumer demand. "[Business is] much more customer-demand-driven than it was in the past," he says. "You have operations that have this as the ultimate imperative rather than having things organized according to how long it takes to get machine tools set up to do a production run. It's forcing companies to be much more agile - and to have faster inventory. turnovers."

Again, the idea is to have exactly the right product at exactly the right time. Relatively simple in theory? Yes. Just as simple in execution? Not really. "It's easy to talk about the concepts of logistics, but it's difficult to do them," says Blackwell. "That's why execution is so important. Entrepreneurs might say 'Well, yes, I can see the importance of it' - that's the first step. The next step is doing it, and that's the hard part."

Ironically, at the same time companies are striving for speed in the marketplace, they're also struggling to hold down costs through low inventories. For examples of real companies doing this - and doing it right - Blackwell points to the computer industry. "In the traditional supply chain, a computer company decides what is to be made and then builds it and puts it into inventory," he explains. "At Dell Computer and Gateway 2000, however, they've revolutionized the computer business because they don't make the computer until somebody orders it. That's much more efficient."

* LEADERS OF THE PACK

Efficient, yes. But isn't the trimming of inventories a potentially risky maneuver at a time when consumers are loath to wait for the product of their choice? What if something as unexpected as, say, a UPS strike slows down the wheels of delivery? "In doing this high-wire act, [businesses] have become a lot more dependent on everyone else to do their jobs and do them on time," says Peyton. "If you look at it as a vulnerability, then that's the price we pay for the privilege of having a system that's more attuned to ultimate consumer demand and has succeeded in squeezing out some of the inventory costs that used to be there."