Influence of design chain on company competitiveness
The COVID-19 virus has severely disrupted the established world order, and major countermeasures have extremely disrupted the economy. Starting with the aviation, tourism sectors, the influence has extended to the restaurant and hotel business. Undoubtedly, this wave, as it spreads further, will reach (or have already reached) the furniture manufacturing sector as well.
When demand will fall in the market, the competition will intensify. Furniture manufacturers will have to do more to attract the customer and offer more value than the competitor. Differentiate.
In such a situation, the first thing that companies usually do is lower their prices. It is an easy-to-implement action that does not require any effort but is easily replicated by competitors. Therefore, lowering the price is ineffective in achieving differentiation. A competitive advantage that a competitor cannot easily duplicate is what is needed.
What are those advantages and how does the design chain affect it?
The first competitive advantage is the price
The question that arises immediately for you is why, having previously identified price reductions as an inefficient way of competing, I now claim that this is one of the key benefits? The main reason I do it is that:
The price is the most easily perceived benefit to your customer. Let’s say 1000 € vs 900 €. The customer does not need to understand what materials are used, what technologies have been used to create this furniture, etc. it’s just 100 € cheaper. Simple, right? The easiest to copy, but also the easiest to understand for the customer benefit.
However, the key question for the manufacturer is how this price reduction is achieved. Lowering the price simply by cutting it and reducing the company’s earnings is a very inefficient and dead-end way that impoverishes competing companies. However, if it is done by reducing the cost of the product (rather than the profit), this is indeed a strong advantage.
There are two ways to lower product price – reducing your costs and increasing efficiency. Designing has a small impact on costs, so we will look at its impact on improving the efficiency of the company.
In processes that take place in manufacturing companies, the raw product information is used – specifications, drawings, CNC programs. One of the critical factors for increasing the efficiency of these processes is to provide such information faster and to ensure its quality and completeness. The design chain is the primary generator of such information. Therefore, increasing efficiency in this chain would highly affect the whole process and allow to cut the production costs because savings were actually created.
The second competitive advantage is a lead time
Will the order be fulfilled within a month or two weeks – is also a customer-perceived advantage.
In some cases, the task of designing furniture and preparing information for production accounts for up to 80% of the total lead time. As a result, its influence on lead time is direct. On the one hand, improving the design process directly contributes to shortening lead time. On the other hand, in many companies, this process is a bottleneck, and any malfunctions in it are a straightforward result of the company’s ability to deliver on time.
The third competitive advantage is the ability to fulfill wishes of any complexity of architect or client
Rapidly changing trends, sophisticated design solutions, customization to the customer’s space, the use of different materials and their compositions, the integration of sophisticated hardware – are not achievable to all furniture manufacturing companies, and as such, this ability is a strong competitive advantage.
Here design is critical because if there is no way to design complex products, there is no way to make them.
There may be more competitive advantages that are influenced by the design process, but these are, in my opinion, key. Of course, it raises a question of what influences the design process itself, its effectiveness, which tools work best, but it is a separate topic.
It can only be noted that today’s pandemic is changing the situation and that the ability of a company to remain operational will already become a competitive advantage.
Stay healthy and safe!