A recent study conducted by Kotler Marketing Group in conjunction with several automotive supplier associations was revealing but not surprising. The study said that 72% of part suppliers believe they have superior capabilities to low-price competition, but most match the lowest bid 56% of the time. While the vast majority of study participants perceive themselves as having an advantage over their competitors in terms of either technology or service-and-support capabilities, they struggle to get rewarded for the value they create.
Let’s look at just one group of suppliers, and expand our scope beyond the automotive industry to just about any industry (although the automotive players are probably the worst): Moldmakers. Let’s face it, no one wants a mold! What they want are molded parts, so the mold is a necessary evil. It’s a hunk of steel. While many mold purchasers at large OEMs understand what a mold is and the function it fulfills in the manufacturing of a company’s products, there are still many others who haven’t the foggiest notion of what a “mold” is and what it does.
Say “mold” to many people and they picture that black stuff that forms on your walls after a water leak. One person once thought I was talking about “crown molding”—that decorative touch where your walls meet your ceiling in your living room—and had no idea that it was so expensive!
In spite of the fact that plastics is a large part of our everyday life, molds continue to be that hidden element in manufacturing to which many in the OEM’s purchasing department assign little value. No wonder it’s so tough to sell value!
I blame the moldmakers themselves for a lot of this. Sometimes these guys are their own worst enemy! They themselves don’t realize the tremendous value they bring to the table in manufacturing. And if they don’t understand their value—and then promote that value loud and clear—how can they possibly sell that value for what it’s truly worth?
I think back at all the mold shops I’ve visited and worked with over the past nearly three decades, and look at the fantastic ideas that these guys come up with in mold design and build. These guys believe there’s not a plastics processing problem in the world they can’t solve. They’re creative, innovative and always looking for ways to prove to their customers that the impossible is possible.
Take Alan Petrucci, for example. He’s just one of many of these innovative thinkers, but he’s carried his innovation through the long and painful process of getting a patent on his PERC System, and has commercialized it. But, like one of his daughters told me, “Dad didn’t think he was really doing anything special when he came up with the idea for PERC. He just thought he was helping out a customer, and that’s his job.”
The way to get their OEM customers to recognize—and pay for—the tremendous value that moldmakers provide is to promote that value: Toot your own horn! Educate customers in the value you provide! Bill Kushmaul at Tech Mold has been educating his customers for more than a decade using “What Is A Mold”—a book the company put together to use in their seminars to educate OEM purchasing agents and engineers in the value of a mold.
People won’t pay for what they don’t value. And they can’t value something if they have no idea how it contributes to the quality, manufacturability, and cost of their own products. That education is key to getting your price, not just matching the next “blue-light special” that comes along. —Clare Goldsberry