Are You Really Cost Competitive?

Are You Really Cost Competitive?

If you think yours is one of the cost “protected domestic markets,” think again. Our view: There is no such thing.

Consider that you are Kimberly Clark or Georgia Pacific with huge Georgia or Wisconsin-based paper plants – each costing a billion dollars. Along comes the annual bid for toilet paper from U.S. Foodservice, a major distributor to restaurants and institutions. After three rounds of bidding, you lose the business when another supplier gets the business under a brand called Monogram — with product produced in China.

Here’s how this is received in Neenah or Atlanta. “Okay, now let’s see, team,” says the Division Sales Manager. “We just lost a toilet paper bid to the Chinese, who have to ship very lightweight paper goods in sea-tainers 7,000 miles to get to the West Coast, U.S. Then, they have to ship it to distribution centers around by US Foodservice. What are we missing? How can this be?”

Indeed, how can this be? The point is that when you are bidding against the Chinese, or any other quasi-State companies, you have no other choice but to find new ways to meet customer needs. Low cost producer status can be only one part of your plan.

Copyright © 2016 John Lilly Strategic Insights, LLC • Please read our Liability Disclaimer and Terms of Use