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December 15, 2017
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Logistics wins (and loses) a sale

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One company's supply chain stumble can be another's gain.

"Logistics as a competitive weapon."

It's a phrase we've been hearing for years—so often, in fact, that it's become something of a cliché. But as I found out through personal experience, it's not just a slogan: one company's supply chain stumble can indeed be another's gain. Here's what happened:

On a blisteringly hot day last summer, my family's old, reliable refrigerator gave out. For 17 years, the low-end, economy-model appliance had served the family well. But given its age (and the fact that several hundred dollars' worth of food was at risk of spoilage), we decided not to seek repairs. It was time for a new one.

So it was off to the store—or several stores, to be precise. As with most purchases of this type, some comparison shopping was in order. First stop: Retailer A, a "big-box" home-improvement chain, which offered many options and had a good supply of inventory ready for next-day delivery. As the sales representative explained, all we had to do was pick our preferred delivery time for the following day. At the appointed hour, a crew would deliver and install the new refrigerator and take away the old one. It was all very simple.

But we weren't ready to buy just yet. For purposes of comparison shopping, we felt obliged to make at least one more stop. So, it was across the street to Retailer B, a consumer electronics chain.

The first thing we noticed was that the store was almost eerily quiet. The second thing we noticed was a scarcity of staff in the appliance department. It seemed odd to have to seek out a sales representative when there were so few other shoppers around. The third thing we noticed was that Retailer B carried the same refrigerator we had just seen at Retailer A, at a price that was about 10 percent lower.

It seemed the comparison shopping was about to pay off. At least it did until we mentioned our need for next–day delivery. "Oh," the sales associate said. "Let's see (long pause). It looks like the next available delivery slot for your town would be (longer pause) next Thursday." Not this Thursday, which was two days away, but next Thursday, which was nine days away.

"Why is that?" we asked. Because of slow sales, the sales representative said, Retailer B's parent company had reduced its staff and consolidated its distribution centers. "It's delaying everything," she added.

Along with delaying everything, it cost Retailer B at least one sale.

In the end, Retailer B's loss was Retailer A's gain, but that's not the point. The lesson here is that when it comes to logistics, there's a lot more involved than price. How fast you can deliver the goods to the customer is sometimes the overarching consideration ... especially when it involves the delivery of a refrigerator on a sweltering summer day.

Mitch Mac Donald is Group Editorial Director of AGiLE Business Media.

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