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Viewpoints: Eliminate the Value Gap

The manufacturing world has changed dramatically in the recent past, both in its scope and the rate of its evolution. Geographic boundaries have been transcended to create a truly global marketplace, while technological breakthroughs are constantly providing improved methods of production. In short, these developments present today's manufacturer with an unprecedented level of competition. As a result, it's more important than ever that machine builders and other suppliers meet or exceed their customers' expectations of value.

In his book The Prime Solution, author Jeff Thull describes a "value gap," and identifies three reasons why customers typically fail to realize the full potential value of their investments.

  • The product or service is unable to deliver on the promises made.
  • The customer is unable to properly implement the product or service.
  • The customer's expectations are not met.

In short, the value gap is the difference between a customer's expectations and the actual or perceived results that he or she receives. Sometimes it can be difficult to identify the cause of a value gap. For instance, the installation of a new high-performance CNC machine tool might go perfectly, and the machine performs generally as promised, yet the customer feels that expectations of value were not met. This could be due to a salesperson overstating the capabilities of the machine, promising an increase in productivity greater than what could actually be achieved. It could also be a result of the customer not having the necessary expertise to maximize the machine's potential.

Too often, this type of situation has set off a round of finger pointing. The manufacturer will blame the machine builder for supplying equipment that fails to meet expectations. The machine builder will point out that the distributor exaggerated the abilities of the machine.The distributor will claim that poor implementation and operation have limited the machine's performance. In the end, all parties lose.

In today's market, the success of all parties in the manufacturing chain depends on productive and beneficial partnerships. Given the rapid rate of technological change, manufacturers are more reliant than ever on machine builders to guarantee maximum return on investment. Additionally, the machine business has become even more competitive, meaning that builders and distributors are highly dependent on customer satisfaction. Playing the blame game in response to unfulfilled expectations damages the vital partnerships between the three parties.

There are multiple approaches to ensuring that a customer receives the expected levels of value. One tactic that we see too often in the world of machine tools is the selling of established technologies instead of new, more-productive innovations. We call this approach In The Comfort Zone. When a machine is familiar and meets the basic requirements, there is very little perceived risk. Also, older technologies tend to be available at a lower price point, increasing their appeal. While this might make it easier to establish and meet expectations, it puts a manufacturer at a disadvantage to competitors who implement new technologies.

For a machine tool customer to truly receive the highest level of value from an investment, it's necessary to seek out partners who offer innovation, along with the support required to take full advantage of its potential. In other words, true success lies beyond the comfort zone. As the market evolves, an increasing number of machine builders and distributors are undertaking efforts to ensure that new technologies receive the level of support needed to make their implementation successful. These companies can be identified by a new philosophy towards dealing with customers. Instead of asking "Is the machine installed and running?" we ask "Are you receiving the benefits you expected from this machine?" This approach illustrates the types of actions a machine builder can take to eliminate the possibility of a perceived value gap.

In the play Death of a Salesman, Willy Loman is described as making sales calls on "a smile and a shoeshine." This is precisely the type of attitude that American manufacturing can no longer afford. Machine builders and distributors must take a much more comprehensive role in ensuring that customers receive value on their investments, and achieve the successes to which they aspire. Machine tool customers must ask no less than this from the companies with which they partner.


This article was first published in the August 2007 edition of Manufacturing Engineering magazine. 

Published Date : 8/1/2007

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