Some Thoughts About Value

Maybe it's just a coincidence, but it sure seems like a lot of people are starting to redefine what it means to provide customer value. For example, in a speech at the recent joint meeting of AMT, the Association For Manufacturing Technology, and the American Machine Tool Distributors Association, AMT chairman William Saul stressed the critical importance of serving customer needs as they are defined by the customer, not by one's own notion of "value."

Next to the podium was McDonnell Douglas president and CEO Harry Stonecipher who put a different spin on some all too common perceptions about the relationship between price and value. "Who wants to drink a cheap scotch?" he asked. "Would your wife be happy to know you bought her a bottle of cheap perfume?" Or, who wants to spend a month painting their house with cheap paint, knowing it will ensure that the unpleasant task will come back all the sooner?

No, we'll pay quite a lot to gratify our senses, or to forestall an onerous task for another year.

Just a week later, Dr. Richard Schonberger, author of World Class Manufacturing: The Next Decade, spoke at the dedication of Mazak Corporation's new national technology center. He summed up the challenge to American manufacturing with the thought: "Your success rests in (the ability to sustain) continuous improvement in the eyes of your customers, not in the internal measures you are accustomed to watching."

Dr. Steven Goldman, COO of the Agility Forum, followed with his views on the nature of industrial competition in the coming years. He says that we must view manufacturing not just as a cost structure, but as a service to provide the kinds of capabilities your customers--and your customers' customers--require. It's not just parts or products they are buying, it's also knowledge, flexibility, responsiveness, the ability to anticipate future requirements before they are understood by the customers themselves.

Does cost still matter? You bet. But cost, as more companies are coming to understand, is the total cost of delivering all of these capabilities that customers need. Deliver them well, and price is hardly an issue at all.