Company finds a niche by getting a product to customers faster than its competitors.
Electronic Liquid Fillers has created one big niche for itself by takingan ordinary product in an ordinary market and getting it to the customer fasterthan anybody else
It looks as if time may be to the '90s what quality was to the '80s. Some companies are competing by delivering products to the customer faster than would have seemed possible only a short while ago. Let's look at Electronic Liquid Fillers, a two-time Inc . 500 company that is using this strategy to build market share in a no-growth industry. -- J.C.
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In Silicon Valley the buzzword is Time to Market. In the apparel industry it's Quick Response. Banks advertise 24-hour turnaround on loan applications, opticians and film developers process orders while the customer waits. Call it the Domino's Pizza strategy of competition: do whatever you do, but do it faster than anyone else.
These days, such a strategy may not be a luxury. "A recent survey of 50 major U.S. companies," reported Fortune not long ago, ". . . found that practically all put time-based strategy, as the new approach is called, at the top of their priority lists." And plenty of smaller companies are already practicing what the giants now preach (see "Running Fast," page 5). "There is competitive advantage," observes consultant Stan Davis, author of Future Perfect, "in providing the same product or service, at the same price, in 20% less time." He need hardly add there's competitive disadvantage in sticking to the same old sluggish schedule when everyone else is speeding up.
What some companies have learned, in fact, is that competing on time can be one of the most powerful business strategies around. Speed immediately sets your company apart. It adds value, and it lends an aura of class and competence, putting you up there with the Federal Expresses of the world. Properly implemented, as James W. Ake and Electronic Liquid Fillers Inc. have discovered, it's an engine of growth akin to what's under the hood of a Formula One automobile.
Just one caution: like a Le Mans racer, you have to pay very careful attention to where you're going and what's happening along the way. You'll have to let speed shape and reshape every aspect of your company, and you'll have to be prepared to make quick -- sometimes drastic -- in-course corrections.
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At first glance, what's striking about Electronic Liquid Fillers is its down-home ordinariness. Its industry: making bottling and packaging machinery, a business that even optimists describe as slow growing. ("We're in an unglamorous, mundane, old-fashioned category," acknowledges company founder Ake.) Its product: a line of fillers, cappers, labelers, and ancillary equipment, nothing too fancy. ("We make the standard model, what you might call the Chevrolet," adds Ake's oldest son, Jeff, vice-president of sales.) Its location: LaPorte, Ind., an hour and a half southeast of Chicago. ELF occupies a former tractor showroom augmented by a couple of big steel sheds. Out back is a cornfield.
On second look, ELF is anything but ordinary. Six years ago the company had only 6 employees and less than $1 million in sales; today it's up to 100 employees and $11 million. Twice in succession it has made INC.'s list of the 500 fastest-growing private companies in America. The company's profits have been high enough to make would-be acquirers -- there have been several -- salivate. Aftertax earnings in 1988 were 17% of sales. Posttax earnings in 1989 dropped to 14% of sales, but that was the year the company spent half a million dollars opening a subsidiary in the United Kingdom. Like every other investment ELF makes, the U.K. operation was paid for in cash. The company has zero debt, not even a mortgage on its building.
How to explain such performance in so lackluster a business? Speed. "We deliver in 10 days," says Ake. "It takes our competitors 16 or 18 weeks, sometimes more. Customers can't wait that long." Customer Don Vollmar, plant manager of Huntington Labs, in nearby Huntington, Ind., couldn't agree more. "Getting the machinery in 10 days was a large factor in my initial order. I was in a tight bind and they delivered on time."
In the beginning, speed was less a matter of strategy for Jim Ake than of survival. Leaving a 25-year career with Fortune 500 companies -- culminating in a stint as president of Nabisco's Rival Dog Food division -- Ake had set himself up in the liquid plant-food business. When he found he had extra time on his filling equipment, he began doing contract bottling; when he discovered the equipment didn't work as well as it should, he began fashioning his own. Pretty soon he was on the road selling inexpensive filling machines of his own design and calling in the orders to father-in-law Paul Stout, back in LaPorte, who would assemble them.
"One of my very first orders was a machine I shipped to California," explains Ake. "I sent an invoice, waited 30 days, then called the customer up. He said, Gee, your machine is still on the dock -- I haven't even uncrated it yet. I'll pay you when I can make sure it works." Needing the money, Ake offered to install it himself, right away, if the customer would pay right away. A few days later he had both the check and an operating principle: the faster you can get your machine in the customer's hands, the faster you can expect payment. As the orders rolled in, Ake began figuring out how to organize a growing business around speed of delivery.
