Selling in to WalMart 3

[GregLocock]

http://www.fastcompany.com/magazine/102/open_snapper.html

I'm maybe not so stunned by being able to put a lawnmower together in 108 seconds as the journalist is... after all that is almost 1 man-hour, but the rest of the article is interesting.

Cheers

Greg Locock

Please see FAQ731-376 for tips on how to make the best use of Eng-Tips.

 

[TheTick]

Someting I've learned from experience: There are some customers you want your competitors to have.

 

[monkeydog]

Well, I'm sold on what lawnmower to get this summer.

 

[moltenmetal]

Hold on Greg- how is 108 seconds equal to a man-hour?

Great article- thanks for the posting.

The province of Ontario, Canada's most populous and most industrialized province, lost 33,000 net manufacturing jobs this MONTH...

 

[TheTick]

1 man•hour = 3600 man•seconds

3600 man•seconds / 29 man = 124 seconds

Greg: "B+" Maybe a little off on his math, but extra credit for trying.
moltenmetal: "D-" for not even bothering to do the math.

 

[buzzp]

Tick,
Ok, where does 29 man come from?

 

[ewh]

From the link:

"The main manufacturing line for Snapper's entry-level walk-behind mowers--with 28 people--was recently charged with producing 265 lawn mowers in an eight-hour shift."

Your'e off one, Tick.

 

[TheTick]

No supervisor? Wait... he counts as overhead!

Actually, simply dividing time by persons is probably misleading. There is no indication as to how the work is distributed. If it's like most manufacturing enterprises, there are probably a couple unsung individuals pulling the weight for a bunch of slackers.

 

[rhodie]

The 80/20 rule is invoked:

Gross 33.125 mowers per hour

80% of 33.125 is 26 mowers per hour
20% of the 28 doing 80% of the work is 5.6 workers

Therefore:

The 6 "self motivated" workers build 26 out of 33 mowers per hour. That's 4.3 mowers per "self motivated" worker per hour.

So in reality, it takes 14 minutes to assemble a mower on a good day.

The other 22 workers are busy:
- making the other 7 1/8 mowers per hour;
- creating the 12 mowers per hour of "rework" the data doesn't indicate;
- drinking coffee, smoking, or surfing the internet;
- talking about reality TV from the night before;
- suggesting that the shop unionize because pay is so bad;
- or they are scheming about how to collect workers compensation for the next twelve weeks.

I'll digress...

 

[ziggi]

Trust a bunch of engineers to analyse the manufacturing and engineering dimensions of this story.

I personally think that the CEO of Snapper is bloody smart for loosening ties with Walmart, Walmart's price competitiveness can only hurt quality goods manufacturers.

I also wonder could this be the start of a quality produced goods market emerging, ie. All the crap (read. Chinese made) goods stay at Walmart at low low prices and at low low low quality for all those cheapskates and others who shop there, while all the quality goods manufacturers target the discerning buyer who wants to buy a mower that will make his lawn look great and that will last until his kids turn grey.

My bias is towards the latter, I'd rather buy a $900 mower now and have it last 15 years, than buy a $100 mower and have it last a few months.

 

[epoisses]

You must be an exception ziggi... WalMart just sells what everybody wants to buy! If American (European) manufacturing is killed, it is killed by the Americans (Europeans).

 

[ziggi]

I just happen to want good quality products for my money, Walmart doesn't provide that for me. I'm the sort of person who is willing to pay more if I know the product is worth it and I'd much rather deal with a knowledgable representative than some kid off the street.
Unfortunately Western society is a throw away one, we buy, use a few times and throw away or ignore, Walmart appeals to some but not to me, currently they're expanding into food products......I'd rather not buy my food from the same place that sells pet food and automobile parts.

As for the death of manufacturing, the article is an excellent example of how manufacturing can stay here, be cost competitive (lower logistics and transport costs) and have significantly higher quality than that available via outsourcing.
Unfortunately for some reason people want cheaper and crapper over more expensive and better, so in those cases it's better to outsource. However my point was that there appears to be a growing market segment developing for discerning buyers and Snapper's break may be the frist of many....I hope

 

[zdas04]

"Snapper's break" wasn't the "start" of anything. When I was in college 30 miles from Wal-Mart's corporate headquarters in the 1970's the business school was already doing case studies on any number of companies that refused to sell to Wal-Mart then. Today, most of them are still in business and still sell only to independent channels.

Back then (pre-WWW) the high-quality products were generally pretty small in total sales and few of the names were widely known. Today, companies like Snap-On tools have the

http://WWW in

addition to their traditional jobbers-in-vans and they can sell to shade-tree mechanics (if there are any left in the world) and car restorers at volumes many times those of the '70s.

The quality-product market is not new, it is just getting bigger due to non-traditional marketing oportunities. I see Wal-Mart as a phenonem of the late 20th century that will be long gone (as a significant force in the world) by the end of the 21st century.

David

 

[jmw]

Actually, Ziggi, I rather like the "Sear's Craftsman" approach...... buy the tool you need, do the job then take it back for a refund.
It is then sold at a huge discount to the Sear's employees.

Of course, this isn't exactly a recipe for success and Sears has been suffering a lot over recent years.

They had to remove the unlimited lifetime warrany for riding mowers because folks decided "what the heck, if I run over a stob or two, hit a rock, well heck, I'll just take it back."

ALso, guys were buying mowers designed for the average Joe to do his backyard once a week and using them as part of their commercial enterprises.....

But that's enough about lawnmowers from me.... I got really burned by you guys when I complained about the poor design of some of these mowers from the low price end of the market...



JMW

http://www.ViscoAnalyser.com

 

[pennpoint]

I lost a Snapper in a mean divorce.
Later, I won a Sears Craftsman in a new christmas romance...still today, I'll confess I'll never forget that Snapper!

wishing you well

Best regards
pennpoint

 

[jmw]

Pennpoint,
you bring a smile to my day.... I can just imagine the lawyers fighting over who got the lawnmower.... (you could have conceded the snapper and used what you saved in legal fees to buy a new one?) and I never figured a Sears Craftsman as a romantic gift before....what a loss to the romatic writers that they have never realised the potential for a lawnmower.... the closest was DH Lawrence when he introduced the gardener as the object of the heroines affections....perhaps we can sell the idea to Hollywood... in fact, after the success of that film about the old boy who traveled across the US on his riding lawnmower, I'm surprised there have been no sequals.
Engineers!

JMW

http://www.ViscoAnalyser.com

 

[ziggi]

zdas,
This is a big thing to me, primarily b/c I wasn't born in the 70's but from what I gather that is a decade that should never ever come back....ahhh crap it already did, well at least the 80s haven't come ba.....ahhh crap.

Anyway while the Wal-Mart model is successful at present, it appears that North Americans are becoming more selective about their purchases as the economy changes.
In my opinion as we have less disposable income we're beginning to buy for the long run and we want our money to go far, obviously there will still be those who think cheaper is just as good, however it appears that more and more people are realising that you get what you pay for......or it could be that I'm biased b/c I'm from a European background.

 

[zdas04]

ziggi,
Think of the Pony Express. A great idea to "quickly" move information that lasted less than a decade and was overtaken by techonology.

I see Wal-Mart in the same light--they introduced sophisticated computerized inventory-contol/stocking-mix when all of their competition was using "gut feel". They became the model for the world in managing inventory and picking the list of thigs to put on their limited shelf space. Now everyone from Sears to Mom & Pop grocery can do the same thing and most are. When everyone follows a similar model you are back to customer service as the differentiating factor, and everyone does that better than Wal-Mart. Hence my assertion that by the end of this century the company will have long since stopped being a factor in the world economy.

David

David Simpson, PE
MuleShoe Engineering

http://www.muleshoe-eng.com

Please see FAQ731-376 for tips on how to make the best use of Eng-Tips Fora.

The harder I work, the luckier I seem

 

[RDK]

Lawnmowers at Christmas?? Around here a romantic gift is a snow blower!!!

But seriously, Snapper is known for quality product. Wal-Mart is known for selling a lower cost and lower quality product. (Not that that’s bad in itself, just incompatible with the Snapper market positioning.)

To me it makes sense not to sell through Wal-Mart in this case. They may sell fewer mowers but they will not be used for down selling cheaper mowers either. They will maintain their high end brand identity and support their dealer network.

House branding would also be the end of their high end sells. Why buy a full price Snapper when you can buy a Wal-Mart by Snapper at less cost? Then when the quality is not there you forget the low price and blame Snapper for poor quality.

Pricing engineering services is along the same lines. When I almost doubled my rates I got about twice as busy. People value things based on what they pay for them and sometimes are willing to pay more for perceived quality when that perception is based on the higher price.


Rick Kitson MBA P.Eng

Construction Project Management
From conception to completion

http://www.kitsonengineering.com

 

[ziggi]

zdas,
hmmm I never thought about how Walmart was different back in the day, but that makes sense to me. I was looknig at it from a macroeconomic point of view, and on personal experience. I'm a young man just starting a family and trying to float a mortgage etc. etc. cheese with my whine....
anyway what I see in my personal situation and those of friends in my age category is the rising cost of living compared to a decade or two ago, people my age tend to be very selective about what we buy. We have little disposable income and thus spend it on one or two good quality objects or a quality education rather than on junk, ie. we're more discerning due to our limited income situation.

RDK,
Your points are pretty much what I gathered from the article as well. I suppose that's why so many companies spend a fortune on branding. I think that a good understanding in human psychology is a perfect framework for understanding good branding strategy. I mean if I needed to subcontract out work I'd feel more secure in using the more expensive company for two reasons:
1) I'd wonder why the other company is so much cheaper, what flaws do they have.
2) I'd know that by using the higher priced company I would be able to demand more to justify the high price