People rely on water for basic needs. Beyond simply turning on the faucet, few people think about what is required to fill a glass of water. While appearing deceptively simple, much planning and investing goes into supporting water treatment, supply and distribution infrastructure systems. Much more needs to be done if these systems are to continue meeting the demands of the population. Often this support starts with the automation from a mechanical system to a hydraulic pumping mechanism. As the population increases, so does the demand for water, placing further stress on already strained pumping systems.
A strategic approach can help, which encompasses people, processes and products. It uses a total value assessment to more accurately quantify and achieve long-term business benefits. Suppliers are needed who are forward thinking and help support water dealers, treatment professionals and intricate water infrastructure systems. Increasing productivity, reducing costs, delivering new innovations, improving quality and responding faster to customer needs are all key objectives of a business accelerator model. The aim of this model is to achieve real results that translate into tangible business benefits.
Key business accelerator characteristics
Too often, dealer and manufacturers focus on the lowest possible up-front purchase price without significant concern for long-term value. Unfortunately, this traditional business model neglects to consider benefits such as increased productivity, better efficiency, the overall reduced number of SKUs, a reduced number of vendors, increased throughput via lean manufacturing and technical reliability.
As an example, consider a mid-market original equipment manufacturer (OEM) exploring the idea of converting its mechanical system to a hydraulic control system, perhaps in a water or wastewater treatment plant. If a supplier begins discussing the technical features of its upgraded system, the OEM might be intrigued, but could be put off by the cost of a hydraulic control system, which for the purposes of the example is generally two to four times greater than a mechanical system. However, if the supplier can explain the value-added benefits, the OEM should realize that by using a hydraulic system throughput, machine reliability could be improved, the number of extraneous components reduced and doors to new customer markets opened. This can validate the rationale of selecting a total value of ownership (TVO) strategy instead of the lowest price.
Rethinking perspectives & increasing profitability
The business accelerator model supports all of the constituents involved from the selection of materials to the design process to manufacturing. For example, if an OEM uses this system, the parts can be chosen and incorporated into the final product more quickly because of the shoulder-to-shoulder engineering design. This is one factor that makes this model different than a traditional supplier’s model.
Purchasing and supply managers who have traditionally focused on price are starting to take heed of a bigger value proposition and a more holistic view of their material purchasing and supplier selection criteria. The accelerator model fills the gap that traditional suppliers have yet to offer — rethinking profitability and how to achieve it. It has been developed to bring an overarching deeper understanding of the value that a supplier can provide for the entire supply chain, and aims to have revenue-enhancing effects on its customers’ business.
The approach captures total cost considerations as well as performance advantages gained by the dealer or manufacturer to create further value for its customers and receive additional revenue that otherwise could not be realized. The model embraces the need to reduce overall business costs, bring finished products to market, and provide quick solutions for homeowners and other clients. It was developed from the concept of the value of a true partnership, which touches on the TVO theoretically and ends in a conceptual framework to benefit OEMs, dealers and water treatment professionals.
The concept of value in such an offering is often perceived as being almost equivalent in importance to the value of a relationship. According to the ARC Advisory Group, a relationship has value for the business executive, first, because exchanges between the supplier and manufacturer or dealer become predictable and reassuring because both have learned how they each organize their business operations. Second, the interactions and knowledge sharing exchanged often leads to an adaptation in the relationship, which results in new solutions.
A collaborative environment can create more agility, adaptability and alignment, which are only possible when partners promote knowledge flow between the highest areas of impact within the supply chain. The flow of knowledge is what enables a supply chain to come together in a way that creates a true value chain for all stakeholders.
Transparent supply chain
The value created by knowledge makes the supply chain more transparent and gives all parties involved a 360-degree view of customer needs and value propositions. Increased demand visibility can provide benefits such as a better understanding of market trends.
Ultimately, solutions and services should help customers improve their product development cycle and reduce their cost to design, develop and deliver, while bringing greater value to the end product, attracting prospects and increasing the sales of the component manufacturer.