MDM Radar Scan

Due to customer privacy concerns, Wal-Mart and other retailers have backed away from using radio-frequency-identification (RFID) tags for now, but they are beginning to gain a presence in distribution. Unlike passive bar codes that must be physically scanned at close range, RFID tags send signals to scanners yards away even if they're inside packaging, allowing the contents of a container to be scanned without opening it. According to a McKinsey Quarterly newsletter, the greatest gains will eventually come in retail labor savings. In the meantime, dropping costs are encouraging RFID adoption in distribution warehouses, where privacy concerns don't exist. The tags can help distribution companies locate items and control inventory "shrinkage": the tags can broadcast their location and notify scanners when more than one item is pulled at once, a symptom of possible theft.

Article at http://www.mckinseyquarterly.com/newsletters/chartfocus/2003_09.htm

Negotiation as a sales process

The concept of sales activities as a process has been around since the early 1980s. But one part of sales is still considered reactive and behavioral, rather than analytical: negotiating. The authors of Applying Process to the Art of the Deal, in the September issue of Darwin magazine, say that has to change.

Eighty-five percent of salespeople surveyed for the article said that negotiations have become more complex, 85 percent said that more internal negotiations are taking place and 74 percent said they are facing more professional buyers. Despite this, companies continue to view negotiation training as optional. But beyond varying details, all negotiations follow the same path, no matter who is conducting them or the location of the negotiators.

The authors say the same "blueprint" applies to all negotiations, with only two major questions that matter: what are the consequences if we do not reach agreement and what items are likely to be included if we do reach agreement? The blueprint has an agreement zone between the "wish lists" of the two parties. To either side are the "consequences of no agreement." For a seller, this is likely to be the loss of the sale. The buyer usually has three possible consequences: deal with the seller's competitor, build the solution themselves and do nothing. An impasse between negotiating parties only ends when they get something at least marginally better than the alternatives.

Five-page article at http://www.darwinmag.com/read/090103/negotiate.html

Designing and pricing services for success

Companies that succeed in designing and pricing profitable services must make the task a priority for senior management and segment customers based on needs rather than size or industry. Although an article in the current McKinsey Quarterly is largely directed toward after-sales services by manufacturers, distributors can benefit from many of the authors' comments on customer segmentation and pricing.

First, companies need to make sure they're offering the right services to the right customers. Too often, firms either take a one-size-fits-all approach or go too far in the other direction, customizing services to the point that the business is unmanageable. In reality, most companies can meet customer needs by focusing on two or three of four attributes: response time, parts coverage, after-hours availability and add-on services. Which of these are most important can be discovered through a 20- or 25-question customer survey.

One company's survey of 500 customers found that response time was usually the most important consideration not related to price. One this is determined, customers need to be segmented. Customers tend to fall into three major categories by need: risk avoiders, basic-needs customers and hand-holders. Risk avoiders want to avoid high expenses but don't care about such

Seven-page article at http://www.mckinseyquarterly.com/article_
abstract.asp?ar=1343&L2=16&L3=19 (free registration at interceding home page required before viewing article)