How the Little Guy Can Land Big Contracts
March 30, 2004
Size doesn't have to matter when it comes to securing huge contracts. Find out how small and mid-sized manufacturers can win in the big leagues:
First and foremost, be absolutely certain that you can pull it off. Before pursuing a new market or a bigger-than-usual or high-profile contract, make sure that your company is capable of fulfilling the terms of the job. This means having the basics in placea tested system and good people. For example, Inscape Corp., Toronto, soughtand wona huge contract with Best Buy for about $17 million worth of office furniture systems for four buildings by convincing the retailer that it could deliver. More importantly, the company was itself convinced about its own capabilities. According to Joe Cyr, executive vice president of operations, this came from having a strong cellular manufacturing system, which the company has been refining since 1987. If you're not that sure that you can do it, don't compete for big contracts, advises Cyr.
Work and rework your system. Building the necessary confidence requires having a proven system in place, preferably one that has been put through extensive testing and reshaping. For example, MainStream Management LLC, Iowa, which advises manufacturers on implementing lean systems, retooled its system again and again until its leaders felt sure the company could handle big jobs. Even with only 10 employees at the time, the company was able to secure an agreement with a U.S. Air Force logistics center. This is a huge deal for the company, says partner Timothy J. Hutzel, who estimates that the job will facilitate a 500% increase in revenue and staffing. "You can't be stupid confident," Hutzel tells Industry Week. "If you aren't confident with your own leadership, your own people and your own systems, then you aren't ready."
Turn size into an advantage. Both Inscape and MainStream made their small size into a plus rather than a minus, stressing that it would only enhance customer service. "We're a small organization, and we have very little hierarchy, so we can talk directly to the customer," Hutzel tells Industry Week. "For the first time (at the Air Force logistics center), someone came in and asked, 'What are your needs?' rather than saying, 'Here's what we do, and here's what we have." According to Hutzel, MainStream informed the Air Force center that the job would receive their full attention whereas a bigger competitor would only give "one week of every four in a month."
Keep your marketing message consistent. This strategy worked for EMI Industries, Florida, a $36 million manufacturer of store fixtures such as coffee and condiment stations. The company decided to pursue a bigger share of the convenience store market, where it had only one large client, Quick Trip Convenience Stores. Its marketing campaign centered on a targeted list of potential clients, to whom it made many sales calls and sent multiple mailings touting its success with Quick Trip. Soon, the company got the attention of another major national convenient store chain and signed a $3 million agreement to remodel drink stations at 300 stores a yeara massive contract considering that convenience store contracts usually involve 10 to 20 new stores or remodels a year. According to David Hahmann, vice president of marketing, the trick was to keep their marketing message unified and to offer a solution that met the client's needs.
Keep your clients in the know. If they express doubts about your capabilities due to size, keep clients in the loop to assuage their concerns. That's precisely what Inscape did when Best Buy was already sold on its product but nonetheless concerned about the company's size. Inscape included all top executives at every stage and promised to place a representative at the site. Being kept in the know alleviated Best Buy's fears. "They kept asking, 'What if this happens What if that happens,'" recalls Cyr. "I said, look, understand what this means to us. There is no way we are going to fail."
Bagging the Big One
Industry Week, April 1, 2004