In my previous post I talked about improving your operation’s ‘breaking point’; the point at which your operations are overwhelmed and you can no longer meet your previously established standards and norms. But the concept can be taken further. Some businesses create competitive advantage by establishing a breaking point that is greater than their rivals’.
There are two ways in this can be achieved:
- More capacity. For retailers a key bottleneck can be the checkout process. If there are too few tills open, queues quickly build up and new customers entering the store may simply see the queue, turn on their heels and leave the store. Grocers have overcome this challenge by introducing more and more checkouts. If you want really low prices you go to Aldi or Lidl, but you may need to put up with some queues. If you want pretty low prices and greater speed, you visit Tesco, Asda or Sainsbury’s, which have invested in more checkouts per customer visit. Tesco have gone further than their rivals by introducing the ‘one in front’ promise, whereby they open up a spare checkout if there is more than one shopper in front of you in the queue. By improving their checkout ‘breaking point’ they gained a clear sources of competitive advantage.
- Faster processes. Faster processes allow you to deal with more units in a given time period, again increasing your breaking point. For example, Domino’s have built their business on a customer service promise of delivery within 30 minutes or you get your pizza for free. Underpinning this promise is a set of processes that allow franchisees to consistently meet this target, even in high demand conditions.
Understanding and improving your company’s ‘Breaking Point’ is not an academic exercise; it can create meaningful competitive advantage for many businesses, particularly those focused on a strategy of operational excellence. What ways could your business gain on your competitors by improving and exploiting your breaking point?
© Stuart Cross 2009. All rights reserved.