Switching Gears to Give Customers What They Want
This global heavy equipment manufacturer faced declining market share and customer defections. Its new multichannel sales and distribution strategy was designed to defend the business while delivering $350 million in annual benefits.
A heavy equipment manufacturer created its business by configuring every machine to a customer’s exact needs. Unfortunately, while once a market differentiator, this approach had become cumbersome and expensive. Dealers faced an increasingly complex product ordering process and delivery delays, which made it hard to give customers what they wanted. Meanwhile global competitors capitalized on shorter lead times and lower prices to steal market share.
As they tackled this challenge, Deloitte helped them in their efforts to leverage automotive and consumer concepts to develop and implement a new go-to-market strategy addressing supply chain, customer, pricing, human capital and tax issues. The multichannel strategy gave the manufacturer’s customers two more choices: option packages simplified the order process to produce customized machines faster and more efficiently (finish-to-order), while some machines with popular options already built in were available for delivery in less than two weeks (pre-built). With members from 12 countries, the joint project team then transferred these new product packaging skills to company employees and set up a center of excellence to sustain the process in over 90 product groups globally.
The company’s new multichannel sales and distribution strategy represented the most fundamental shift in its 80-year history – essentially reinventing the way it served customers and builds products. At stake were products accounting for half of the company’s total annual revenues of $4.5 billion. Revenue and cost benefits of $350 million annually are expected from adopting this new multichannel strategy. Even better, customers are getting exactly what they wanted: lower prices, faster delivery, extensive customization, or a combination of all three.