Value-added. We all use the term, and we all expect it—in both our professional and personal lives. But what does it mean? Is it the lowest price? The best deal?

By Webster's definition, value-added pertains to "something added to a product to increase its value or price."

We are all faced with the continuing need to provide value-added services that reduce our end users' overall costs of operation. This presents a challenge when you take into consideration that, though the cost of the consumable product is easily identified in most manufacturing processes, it is generally a small fraction of the total cost.

Providing high-quality products and service reliability isn't enough. The real savings come from being able to measure and document results as they relate to improved quality, better process flow and higher productivity. To be successful in this very demanding market, distributors and suppliers must work together to provide a value proposition that results in improving the end user's bottom line.

How is this accomplished? What can be added to our "basket" to increase its value? With the globalization of the marketplace and resulting low-price competition, the trend to tag products as commodities is ever increasing. In order to overcome this commodity status, distributors and suppliers must work closely as a team.

Having a thorough knowledge of a supplier's product capabilities is a key component in providing cost-reduction solutions. Therefore, product training continues to be very important. The challenge becomes finding innovative ways to conduct the training without taking the sales force out of the field for an extended period of time. The traditional sales meeting may not be a thing of the past just yet, but suppliers are finding it more and more difficult to arrange training sessions with the distributor. Suppliers should consider offering training vehicles such as Web-based training or self-conducted CD courses.

Partnering with a supplier that has an experienced, well-trained sales force, in addition to an application engineering or technical department, is extremely advantageous. An understanding of the end user's needs is critical. This can be accomplished by visiting their facility and performing a site analysis: determine the application, part and work material; understand the process and the bottlenecks in the process; and get a clear idea of the end user's expectations.

Only after a complete analysis is performed can a recommendation be made. However, a product recommendation may not be enough. We need to show the end user a process improvement that will result in a cost reduction.

Experience has shown that to substantiate the recommendation, it is critical to document the ultimate cost savings for the end user. This should take into consideration elements such as cycle time, set-up time, product cost, waste reduction, labor and overhead.

By determining the needs of the end user, we can develop value-added solutions that will reduce costs. Being a solution-provider will add value to the basket, and will help grow market share and increase sales.