Documenting the value you add
Learn from peers how to develop and promote your value-added resources
By Susan L.P. Srikonda -- Industrial Distribution, 5/1/1999
While adding value is important, it's equally vital to show your customers the value of the services you provide.The Value Added Promotion Task Force, made up of both ASMMA and I.D.A. members, has been hard at work learning and practicing real-life methods of developing and promoting the concept of value-added services to end-user customers.
Members of the task force will present their case study results and individual experiences during the "Documenting the Value You Add" seminar offered at 1 p.m. and 3:30 p.m. on Saturday, May 1. The seminar is closely tied to this year's convention theme, "Adding Value Together," and the industry trend of moving beyond a focus on price and toward a focus on value-added services.
The seminar, developed by the task force in cooperation with industry consultant Tim Underhill, is intended to provide channel members with a tool they can use to document the value of the services they provide.
In one case study to be presented, the Weber Supply Co., Inc., of Kitchener, Ontario, was able to identify a change in grinding wheel specifications for an aerospace manufacturing customer that will result in $240,000 in annual revenue enhancement for the customer. The key point here is not the revenue enhancement itself, but the documentation of it, says Jack Weber, chairman of Weber Supply.
"The fact that this [savings] has now been documented, it creates a paper trail that when we're evaluated as a vendor, they'll look at," Weber says. "Obviously value-added separates price and cost. The customer now puts an entirely different value on the relationship with us.
"It's things we've done for a long time, but not taken the time to document," he says, "and as a result of that, when [customers] have looked at alternative vendors they've not always remembered the things we've done. That's why I'm a strong supporter of documentation."
Documenting value-added services often requires the cooperation of all three channels of the supply chain: distributors, manufacturers and end-users alike. The distributor's role may be to identify value-added opportunities, then turn to the manufacturer to work together to create and implement a solution. And the end-user will need to provide cooperation and support throughout the development, implementation and documentation phases.
GOJO Industries, Inc., a manufacturer from Akron, Ohio, participated in a case study in which it suggested an alternative packaging option for a customer which resulted in a $60,000 annual savings in freight costs. The key to finding this cost savings opportunity was the three-way conversation between GOJO, the distributor and the end-user customer, says Michael Lapides, vice president of GOJO.
"[The process] required us to sit down with the distributor and the end-user customer, which is not done often enough in the industry," says Lapides. "We absolutely needed all three players in the conversation loop."
Both Lapides and Weber say the most difficult part of the documentation process lies in convincing an established sales force of its value.
"The most difficult part of our whole sales process was convincing our salespeople to take the time to document the value-added," says Weber. "There was a reluctance at the outset. But now they're very comfortable with it -- now it's almost a race: how good, how big, how efficient can the value-added be?"
"This is a tool that few people in sales will get, but for those who will get it, it will vastly change their businesses," Lapides says. "It's a higher-level view and requires much more discipline than most of us have in our daily lives. It forces you to focus on what is important."
Though the documentation system presented by the task force can be used just between the distributor and end-user in many circumstances, carried to its logical conclusion it should also involve the manufacturer, Lapides says.
"All three parties gain value here," says Weber. "The end-user gains a greater degree of respect for the product he's using and for the distributor and manufacturer working together to provide the product or the concept. Together, they provide the customer with the best possible solution."
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