User login

Partnering with Competitors

(April 2010) posted on Tue May 04, 2010

Engaging competitors as partners may help friend and foe weather an economic storm


By Craig Miller

In all aspects of life, your competitor is a rival that you strive to defeat. Usually, his loss is your gain and vice versa. In our industry, we often compete with one another for the same markets with similar products and services, sometimes competing for the same customer. In the latter, whoever wins might, literally, be taking food off the other company’s table.

In this difficult economic climate, however, there has never been a better time to turn to a select few competitors and engage them as partners. Why? You need each other.

Improving production reliability
The recession has caused a lot of us to take some drastic and, some might argue, dangerous measures. But, by working with competitors, my company has been able to come up with solutions that provide interesting workarounds.

First is letting our inventories of raw materials fall to record lows. I estimate my company’s inventory to be about 25 percent of what it was during the “go-go” times. The risk of our material well running dry is compounded by our suppliers cutting their inventories, too. This makes “just in time” ordering a risky game.

To combat this, my company and four local competitors have agreed to loan ink and materials to each other in times of acute shortages. All of us have had important jobs that would have failed if we had not been able to rely on one another in this way.

Second, and I hate to admit this, our equipment is not quite as reliable as it used to be. Back in the day, we had an inventory of about $20,000 to $25,000 in spare parts for any of our front-line printers. We tried to have at least one of every part that could stop our production if it went bad. If we took a part, we ordered its replacement the same day. In addition, we have always had our in-house technicians factory trained, and we very rarely had to rely on a service technician flying in to get us back up and running. We were almost never down.

But we haven’t bought a new printer in more than three years, and all our equipment is getting a little long in the tooth. So, as you might guess, our printing and finishing equipment is not as reliable as it was when it was new. And we don’t have a single piece of equipment under warranty or maintenance contract. So, the chance that a key piece of equipment will go down has increased.

We have an arrangement with competitors who will print or finish our jobs if we lose a printer or other piece of equipment and vice versa. Within our consortium of friendly competitors, each of us have had jobs that would have failed if we didn’t have this backup in place.

Third, like many of you, we have cut our staff to the bare bones. We don’t have the redundancy we once enjoyed. For example, we have one operator who is i-Cut trained instead of three. If he’s unavailable, that machine might as well be broken. See my earlier note about benefits of having competitive friends with similar equipment.

Broadening product offerings
Another rationale for turning competitors into friends is that it’s a way to broaden your product offerings.

My shop doesn’t have five-meter printing capabilities, for instance; instead, we buy that from a competitor and resell it. On the other hand, one of my competitors does not have dye-sublimation capabilities, so they buy that from us. As a result, without either of our companies making a capital investment, we can still offer our loyal customers products that we can’t produce in-house. Other areas where we share capabilities: vehicle-graphics installs, sewing, proprietary hardware, licensed contractor signage, design, UV flatbed printing, and canvas stretching.

We know things are getting better and we’ll be back up to full strength at some point. But, I don’t think we will abandon these mutually beneficial practices we have adopted—even in the best of times.

Craig Miller is president of Pictographics (pictographics.net) in Las Vegas, a large-
format-graphics service bureau that excels in digitally dyed textiles, wall coverings,
and custom applications.

 


Terms:

Did you enjoy this article? Click here to subscribe to the magazine.