While the title may be a term associated with advertising and marketing firms it is true even if buyers are not conscious of the notion.
The example of the man walking into a DIY store looking for a drill is essentially looking for a hole in his wall.
It doesn’t really matter what drill he buys as along as it will do what it says on the “tin” as it were.
Benefits can be subjective depending on the product or service but overall, there are always broad benefits to each.
Some companies look for the cheapest prices as their benefit while others look at products or services which offer the greater savings not just in terms of cost but in terms of time and efficiency.
If we look at the ordering process in business, no matter what the requirements there are some great solutions are out there as well as some “solutions” which look good on paper but are not so great when applied.
What do companies want?
Do they want the cheapest price, or do they want value added in terms of cost, time saving and efficiency?
Is it possible to have both?
From a business owner perspective, the benefits of any product or service must be price related, not necessarily cost as the cost is something with ancillary and often hidden elements.
From the buyer’s perspective the benefit of any product or service may be related to making their life easier.
They may pay a little more (within limits) to ensure fewer disruptions to their working life.
Can you marry the two perspectives together and still achieve each person’s objective?
If a buying company looks at the cost rather than the price the two objectives can be met with evidence to support the decision made or to prove an alternative was a better option.
The buying company should focus on cost however the true cost is often something accounted for after the fact or even an abstraction which is why reporting is an essential element when buying form suppliers.
It removes the fuzzy “feels” dealing only with facts and allows for greater planning and analysis.
How many suppliers provide reporting?
How many suppliers can pull reports that allow cost centres to evaluate the products or services against alternatives?
Is that a benefit?
We would say so, having the ability to see specific spending, evaluate different products using data, evaluate different sites and cost centres ensuring greater planning for budgetary purposes based upon real data from historical usage is a huge cost saving.
Is it beneficial for the owners and buyers to have a system, portal or interface that allows for greater control over ordering products?
Yes, the objective is to make things simple and easier for all parties concerned reducing the mistakes and errors, allowing for greater clarity and expectations to be managed which in turn reduces the added costs of these mistakes.
In a world dominated by firms trying to chip away at the price of goods and services it would seem unpopular to take the position of stating you aren’t the cheapest however, adding you are one of the best may allow you to differentiate from your competitors.
It’s little misleading competing on price for various reasons but keeping it simple the price is never the cost.
While many suppliers will try and compete with their competitors on price they seldom ever acknowledge the cost and neither do the buyers and owners.
To reverse this position around would it be a benefit to have a supplier who can show you the true cost of a product or service rather than just the price tag?
Not just the cost but the savings that can be made by looking at the true cost of any product or service over a given period.
We have used the £9.00 work boot example before but if you compare this boot to a £25.00 pair, on the face of it the £9.00 pair looks the “better” option as its £16.00 cheaper.
But what if it is discovered that those £9.00 pair last a few months and the average worker goes through 4 pairs a year?
That’s £36.00 spent on that boot in a year not to mention the costs of raising purchase orders, re-ordering, down time, inefficiency, morale etc all of which have a financial impact.
If it was proved the £25.00 pair lasted more than a year and has performance guarantees would it seem more expensive then?
That’s the principle BHI operate from.
To find out how we can add value and benefit your company call 0333 101 4030 or email email@example.com