June 28, 2018 | Daywey Chen

Maintaining competitive edge through the right business strategies

Looking into the business operation strategies when planning to compete in the market in the long term. How should you position yourself as an SME under the strong M&A market trend, where big companies are growing into the 800-pound-gorilla?

We are not going to talk about continuous improvement, hiring the right people, the importance of training or technology investment. All those are cliché being talked about in management schools and could be found in many online articles. Here, we are going to share four different business strategies from experience.

SME ganging up to form a platform, creating an economy of scale

As big packaging and printing companies are enjoying the benefit of economy of scale, smaller companies are at disadvantage due to the much smaller customer orders. As result, the fix and variable operational cost for SME are much higher. In North America, waste emission quotas are shared among companies to ensure production capacity during demand fluctuation. The same strategy could be applied to supply sourcing to create an economy of scale. To negotiate with suppliers not as an individual company but as a group to obtain a lower pricing. At KYMC, we position ourselves not merely as a press manufacturer, but to serve as a platform for our customers, aggregating the demands from customers and negotiating with suppliers for a better deal in terms of cost, lead time, and quality.

Creating value through customization and short runs

As big packaging and printing companies often could provide a lower pricing, they tend to be less flexible and are only taking in long run orders. Opportunities could be created for SME by focusing more on the short run orders that require some level of customization such as the use of special metallic colors or special additional print process such as embossing. Large companies usually have job schedule planned out further ahead due to the long-term contracts from big brands. Therefore, for orders that are not coming out from previously signed contracts requires long lead time. SME is able to create a niche by being flexible in last minute orders. As an example, at KYMC one of our customer located in the Midwest region in the USA are able to pick up orders from the east and west coast due to its ability to provide fast lead time on last minute order. Brands are willing to pay more despite the higher freight cost. At the end of the day, the profit margins are usually higher for short runs, customized orders and expedite orders even though at higher operating cost.

Selecting the right customers

Big brands do business with big packaging and printing companies for a reason. On the other hand, small brands do business with small packaging and printing companies for reasons as well. The question is with the active M&A activities at the brand levels, will there be room for small brands in the long term? From our market observation, the answer is yes. As people’s quality of life gets better, it’s in people nature to seek for unique products, limited edition products, customized product…etc. Take the alcoholic beverage industry as an example, big brands like Diageo, Anheuser-Busch, Hennessey are targeting the mass population. However, there will always be small wineries and breweries on the market, many times family owned, producing products targeting the niche consumers. Choose your customers wisely and prove that you could create value for them will ensure your piece of the pie on the market.

Increase your brand awareness through digital marketing strategies

Last but not least, the cost of information spreading is cheaper than ever before. Technology advancement allows SME to reach audiences on a global scale under a reasonable budget. At the same time, not only is it cheaper, it is also much easier to spread information with the ubiquity of the internet. The power to carry out large-scale global marketing is no longer limited to large companies. Nowadays digital marketing could be very customer specific, targeting the customer profile of your preference. At KYMC, we work with professional online media and social networks to target our messages to a very specific group of people. Take advantage of the technology and spread your brand awareness. Use it to pick up sales opportunities from all over the world.

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Article by Daywey Chen, KYMC