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Decades have passed since a multicity fashion retailer upset the market by producing products in China and moving them to the market by air. By gaining the ability to turn a new fashion from idea to goods on store shelves enabled the retailer to achieve a dominant position in one segment of the retail industry.
From the day it was founded, FedEx created a new market by promising overnight delivery at a reasonable cost. Amazon has built a business that’s based on quick (and sometimes same day) delivery. Even some grocers now offer same-day home delivery for orders placed online.
Strangely, few people have asked whether the customers really need that much speed, or whether they might settle for slower delivery at a lower cost. One manufacturer of auto-parts created an internal goal of shipping every order within 24 hours after receipt. Meeting this goal was possible but expensive, and the logistics team was struggling to provide this level of service.
When a consultant came in to examine the operation, he discovered that nearly all of the customers had a procurement system with built-in lead times and they did not need or appreciate the fast service they are receiving. In fact, there were a few cases where the company had lost customers who decided to use a competitor that had lower prices and slower service.
A fixation with speed is fashionable, but is it always desirable?
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