Don’t Let Your Old Designs Drag You Down
Business leaders don’t like process exceptions, because they’re inefficient and require a lot of special intervention to resolve.
They also don’t like to discontinue old product designs that still have a few customers, because these orders help them make their sales targets and avoid customer issues. That makes sense, right?
Maybe not as much sense as you think.
I met recently with a large Italian systems integrator who was frustrated with a board OEM supplier, because repeated delivery delays were straining relationships with a large customer—a prominent defense contractor.
After many months of back-and-forth scheduling of a concrete delivery date with the OEM supplier’s inside-sales team, the integrator managed to establish a direct link with the plant manager for special routine status updates on open orders.
In this case, the OEM’s plant manager will spend at least a few hours per week (5 percent of work time) for the next several months, paying special attention to these orders that represent a small fraction of annual revenue.
Countless issues never escalate to management. In these cases, the customer stews in dissatisfaction, and all the while, customer-facing and OPS teams give special treatment to resolve customer delivery issues. This happens all the time in our industry.
Conservatively, 25 percent of overhead efforts are exhausted on less than 4 percent of sales revenue. Most of these sales are old designs. This is why OEMs cannot make money on old designs—even if they increase their prices.
But how can GDCA make money on old designs, when OEMs can’t?
The answer is simple: GDCA is set up to provide sustainment services, which is completely different from product development and innovation. This means routine sustainment activities, which are business-as-usual for GDCA, are business exceptions for OEMs.
We specialize in keeping customers of old designs happy.
It takes a specialized supply chain for everyone to succeed, and everyone on our GDCA team has dedicated their careers to being the best at sustainment—so board OEMs can focus on being the best at what they do: product innovation.