Key Highlights:
- Suppliers can approach a project in one of two ways: they can review a specification and provide a solution that meets it or they could look at it from first principles and ask probing questions.
- Added value can be hard to define in a sentence, but it is immensely powerful. It is the difference between mediocre customer service and excellent customer service, and between OEMs competing and having a competitive advantage.
- Follow on technical support and guidance throughout the project lifecycle, from design to testing and implementation, can help OEMs get more out of a solution and ensure they get long lasting value.
As cost pressures tighten and demands for improved quality increase, OEMs and others in the automotive supply chain are increasingly looking for ‘added value’ from strategic supply partners as a way of delivering innovative solutions effectively and reducing overall costs without compromising quality.
Wayne Matthews, head of sales at Tecman, addresses what 'adding value' means. What does it involve? And how do you know if you’re getting a value-added solution?
A tale of two approaches
Suppliers can approach a project in one of two ways.
They can review a specification and provide a solution that meets it, with a focus on improving a specific aspect of the design that impacts performance, functionality or cost.
Or they could look at it from first principles and ask probing questions. Are the material choices the right ones? Has every eventuality been considered? What is the end use scenario? What conditions does the part need to operate in? What is the customer trying to achieve? This consultancy approach is the kernel of a value-added methodology.
That is because adding value is about creating more than the sum of the parts. The output should not just be designs and manufactured products, but advice and support to help OEMs and customers to rethink and reengineer potential solutions.
This leads to a collaborative, partnership-style approach that delivers value above and beyond what would have been possible via a traditional approach.
Getting the process right
To offer consultancy effectively, suppliers need to have a strong design and development process in place. It is the process, as well as the use of the most effective advanced materials, that is important when considering how they can add value to projects. When this process is complemented by hands-on, practical manufacturing knowledge and expertise, OEMs gain invaluable insights about project scalability and the application of different material options.
Done well, this should involve collaboration between supplier and customer to understand needs, challenges and expectations and engaging in co-design and co-development with OEMs to generate ideas and prototypes.
During my career I have seen how this ‘first principles’ approach can lead to the development of ground-breaking solutions. We recently worked with a customer in the automotive sector, where we applied lessons in thermal management from the electronics sector, to develop a product that exceeded objectives and is now being integrated across their EV range.
OEM engineers working on niche or siloed challenges are often experts in that particular field but can find it difficult to integrate broader knowledge to enable concepts to become reality. Strategic partners add value by bringing perspective, cross-industry insights and practical knowledge to help OEMs contextualise their challenges and adopt a contrarian approach to identifying solutions.
It is this kind of approach, rooted in practical knowledge, that fosters long term relationships, which in turn helps unlock innovation and leads to the development of superior solutions that deliver a competitive advantage.
Added value can also be capability driven in some cases. For example, we worked with an injection moulder whose supplier could no longer supply a particular component. In this context, adding value involved reverse engineering a part to understand how it was constructed and where improvements can be made. The ability to do this augmented the customer’s internal capabilities and was a source of added value on what was a broader project.
Interpret beyond the specification
In addition, a broad interpretation of the project objectives can be a tangible source of added value.
If automotive suppliers factor in issues like durability, aesthetics and the environmental impact of a solution, as well as adhering to the core specification criteria, they can develop better end products that have greater longevity as the priorities of OEMs shift over purchasing cycles. This long-term view helps create an atmosphere of trust between engineering teams that long outlives an individual project and can have powerful cultural effects.
Close collaboration and teamwork are the missing links in many projects that limit how much value can be delivered, especially when both parties look at a relationship as transactional and price driven. Cost is an important factor, but it doesn’t have to come at the expense of quality and innovation – the two are not mutually exclusive.
Ongoing support
Finally, adding value is a comprehensive, end-to-end process. I talked about how it starts at the design stage – rethinking the spec from first principles – but it also carries on after the project has been completed and products have been delivered.
Follow on technical support and guidance throughout the project lifecycle, from design to testing and implementation, can help OEMs get more out of a solution and ensure they get long lasting value. This after sales service boosts customer satisfaction and loyalty, and just like the broad interpretation of objectives, helps to create a bond between the two parties.
Final thoughts
When two companies work together, there is a fork in the road at the very start of the relationship.
One pathway leads to the development and manufacture of a part, according to a tightly defined spec, and is transactional in nature.
The other is more conversational and collaborative. It involves understanding, questioning, probing and the development of new ideas. OEM and supplier come together as partners willing to innovate and rethink old solutions.
Adding value means choosing the second pathway.
More than this though, it requires a rigorous design and development process designed to evaluate, test and refine different solutions that are scalable and affordable.
It also requires suppliers to do some of the intellectual heavy lifting – interpreting the specification beyond the narrow confines of particular materials and anticipating OEM needs that may not have been explicitly set out.
Added value can be hard to define in a sentence, but it is immensely powerful. It is the difference between mediocre customer service and excellent customer service, and between OEMs competing and having a competitive advantage.
If you’re serious about it, my advice is to invest in working with a partner with capabilities and expertise. They are radically different to a ‘supplier’.