The challenges of managing expectation and driving improvement for end customer can be challenging. For this reason, becoming Value Added Services Provider is becoming more and more important for manufacturers. In the coming years, I believes that industrial customers would seeking their suppliers’ assistance on an initiative-by-initiative basis to reduce complexity in supply chain, improve assembly configurations, provide out of the box environmental benefit, less packaging, reduce total cost of acquisition, improve quality and become thinking partner to drive total value addition in supply chain. In this blog I examine the dynamics of industrial customer changing requirements by answering the following questions:
- How companies can effectively manage change and provide Value Added/ Value Engineering services for specific industrial customer initiatives?
- How should companies begin to extend their internal Operational Excellence capabilities to manage industrial customers’ innovative supply chain expectation more holistically?
When faced with managing end customer expectation that impact an industrial customer audience, Companies can help customers to grapple with a number of unique challenges and limitations. Let’s look into roles of Purchasing Manager, R&D Manager and Supply Chain Manager in industrial customer organisation and see what challenges they face:
limited amount of reliable partners that can be trusted vs simple suppliers; identification of new business partners always carries a risk, switching costs, find a supplier that offers the right products for global customers, global availability
Research & Development (R&D) Manager
For a new supplier: not aware about the products and their performance, reluctant to change, big effort to change the application, switching costs –> new products should only come in at the design phase of a machine for example.
Supply Chain Manager
Long total supply chain lead time, lack of customization options for distribution and packaging. Understand risk in supply chain, lack of contingency plans, current partners might take away value creation and margin
We are approaching Value Added Services (VAS) from strategic perspective, and trying to establish ‘engagement model’ that builds trust and increases the receptiveness to industrial customer requirements.
Value Added Services Provider Engagement Model
Our experience has shown that Value Added Services Provider Engagement could help to succeed when industrial customer are involved in the shaping of a solution or change initiative. Engaging industrial customer directly has a positive impact on all variables involve delivering value to end customer. However, this in itself presents a challenge because industrial customer networks are usually comprised of hundreds or even thousands of end customers of varying size and complexity, with a high degree of geographic spread.
Companies can’t reasonably involve every problem faced by our industrial customer to find the right solution, so how do we pick the problem to focus on? And once we have shaped the solution, how do we communicate it effectively to the rest of the industrial customer audience? Building an industrial customer -engagement model can help address these challenges
Illustrative Value Added Services Provider Engagement Model
Value Added Services Provider Engagement Model to address the customer challenges in R&D, Purchasing and Supply Chain
|VAS Engagement Elements
|For Customer Research & Development (R&D) Team
|For Customer Purchasing Team
|For Customer Supply Chain Team
|NEED- Define most critical to their goals, initiatives and challenges relative to the offering.
|Reduction of complexity of the machine
|Increase profitability by reducing components’ prices or cost savings in material and logistics processes
|Flexible and fast solutions/samples, ready to market, short change cycles, anticipate change proactively
|Optimization of engineering processes- Reduction of engineering time/costs
|Reduction of suppliers by having full assortment supplier
|Innovative solutions that fix his challenges possibly in a customized way, ready-made solutions
|Repeatable processes- Find multiple ways of creating variance (scalability, variability)
|Reduce dependency on suppliers by finding second sources
|That partner delivers right solution right the first time, is expert in the field of his products and their application with the right costs
|Demonstrating technical capability and technical leadership – Reduction of installation time
|Reliable partner- global availability and continuous availability (lead times), and the right quality level of products/services
|To have peace of mind and risk mitigation
|ASSERTION- How Eaton offering addresses the need.
|Customized solutions for product variations and customer specific programming and upgrading
|Customer specific packaging (simple / complex)
|Customer specific solutions in logistics & warehouse
|Provision of complete technical data/documentation
|Product assemblies; Product combinations including wiring; Sub product groups in enclosures;
|Kitting – all variations
|Combination of sub functions and assembly units while providing variance (from standard to customized)
|Customer specific Programming / Loading parameters
|Dispatch notification; Customized labels & barcodes
Set building; Customer specific packaging
|OUTCOME & DISTINCTION
|R&D can focus on core competencies
|Reduced total cost of ownership and increased profit
|Warehouse processes, inventory & supply chain will be optimized
|Customer Value Analysis/Value Engineering workshops can help with the evolution of the machine and identify potential and increase value
|Reduction of resources, investments, assembly costs & time
|One point of contact (3rd party component, solve your problem)
|Value Proposition for Industrial Customers
|R&D Managers aiming to optimize engineering processes and therefore improve efficiency utilize your company Value Added Services. They also can rely on Your product expertise as well as product assembly & combination services; the engineering team is enabled to focus on core competences.
|Purchase Managers aiming to simplify the sourcing and ordering processes of their high performing organisation rely on your company Value Added Services as one point of contact – especially for the integration of 3rd party components
|Supply chain leaders wanting to give their high performing organization a competitive edge rely on your company VAS. It helps to streamline and innovate their processes with a track record of proven solutions in all areas of the supply chain that reduce total cost of ownership and result in increased profits.
Leverage Existing Field Relationships
It is important to leverage the existing relationships that your field sales representatives have with current industrial customer as a part of the Value Added Services Provider -engagement strategy. Your field sales representative can help to:
- Discuss the Value Added Service Provider requirements with customer leadership early in the project lifecycle.
- Promote your Engineering & Lean Subject Matter Experts who can deliver in-person training and coaching to customer personnel closer to launch.
- Participate with customer in New Product Launch from the outset
- Define quality and delivery standard together, keeping end customer requirement in mind.
There are some very practical steps that industrial customers can take to improve their innovation efforts, both on a project-by-project basis as well as more holistically across the organization. Engaging Value Added Services Provider is one of these important steps. Moreover, Value Added Services can help build trust and involve you as strategic partner in shaping solutions and change initiatives as much as possible. If customer really wants to take their development efforts to the next level, they need to make Value Added Services specific requirement of doing business.
About the Author- Dr Muddassir Ahmed
Dr MuddassirAhmed is the Founder & CEO of SCMDOJO. He is a global speaker, vlogger and supply chain industry expert with 17 years of experience in the Manufacturing Industry in the UK, Europe, the Middle East and South East Asia in various Supply Chain leadership roles. Dr. Muddassir has received a PhD in Management Science from Lancaster University Management School. Muddassir is a Six Sigma black belt and founded the leading supply chain platform SCMDOJO to enable supply chain professionals and teams to thrive by providing best-in-class knowledge content, tools and access to experts.