variable overhead) on some individual blades. Although
cost savings allowed Peerless to cut prices on their blades,
more signifi cantly, they had an improved product, faster
lead times, and more production capability.
Production capability was of particular importance.
Peerless found that the ability to do things for customers
that simply couldn’t be done before changed the way
customers ordered their blades. Because of their new
capability, they were now seeing fewer repeat orders
(although the batch size remained about the same) and
considerably more “creativity” on the part of their customers.
Orders now came to them as “The same pattern
as last time except . . . ” Customers were using Peerless’s
new capability to incre mentally improve their saw blades,
trying to increase capacity, or productivity, or quality by
even 1 or 2 percent, based on their previous experimentation.
Peerless had discovered, almost by accident, a signi-
fi cant competitive advantage.
Ted was intrigued with the way the laser cutter had revived
Peerless. He stated that, based on payback or return
on investment (ROI) criteria, he could not have justifi ed the
investment in the laser cutter beforehand. But more signifi -
cantly, if he were to go through the fi gures now, after the
tremendous success of the laser cutter, he still would not be
able to justify the cutter on payback or ROI grounds. The
point was, the new technology had changed the market Peerless
was selling to, although the customers remained largely
the same. The laser cutter in fact “created” its own market,
one that simply could not exist prior to this technology. It
fi lled a need that even the customers did not know existed.
Despite the increased speed of the laser cutter, it was
not necessary to lay anyone off, though some employees’
jobs changed signifi cantly. The laser system was purposely
packaged so that the existing employees could work with
it and contribute to its success, even though they may have
had only high school educations.
Ted continued to push the concept of a small, high-
quality, technologically advanced business staying ahead of
the same foreign competition that was wreaking havoc on
the major corporations in America.
Ted summarized the benefi ts the new technology brought
as:
•
variable overhead) on some individual blades. Although
cost savings allowed Peerless to cut prices on their blades,
more signifi cantly, they had an improved product, faster
lead times, and more production capability.
Production capability was of particular importance.
Peerless found that the ability to do things for customers
that simply couldn’t be done before changed the way
customers ordered their blades. Because of their new
capability, they were now seeing fewer repeat orders
(although the batch size remained about the same) and
considerably more “creativity” on the part of their customers.
Orders now came to them as “The same pattern
as last time except . . . ” Customers were using Peerless’s
new capability to incre mentally improve their saw blades,
trying to increase capacity, or productivity, or quality by
even 1 or 2 percent, based on their previous experimentation.
Peerless had discovered, almost by accident, a signi-
fi cant competitive advantage.
Ted was intrigued with the way the laser cutter had revived
Peerless. He stated that, based on payback or return
on investment (ROI) criteria, he could not have justifi ed the
investment in the laser cutter beforehand. But more signifi -
cantly, if he were to go through the fi gures now, after the
tremendous success of the laser cutter, he still would not be
able to justify the cutter on payback or ROI grounds. The
point was, the new technology had changed the market Peerless
was selling to, although the customers remained largely
the same. The laser cutter in fact “created” its own market,
one that simply could not exist prior to this technology. It
fi lled a need that even the customers did not know existed.
Despite the increased speed of the laser cutter, it was
not necessary to lay anyone off, though some employees’
jobs changed signifi cantly. The laser system was purposely
packaged so that the existing employees could work with
it and contribute to its success, even though they may have
had only high school educations.
Ted continued to push the concept of a small, high-
quality, technologically advanced business staying ahead of
the same foreign competition that was wreaking havoc on
the major corporations in America.
Ted summarized the benefi ts the new technology brought
as:
•
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