Here's what other value-adding industrial distributor companies like yours have to say about the subject. Whether you're just getting started or have years of experience, you'll find many useful suggestions that will help your company become better at demonstrating your value in the supply chain. 

Do you want your value-added tip to appear on this page? E-mail us at valueaddedpartners@milomediapub.net.

Foundations of value-add
The value-added approach has never been just about beating a competitor. It’s more about better serving customers. Value-added organizations don’t cut the competitor’s price, they cut the customer’s costs. Value-added organizations do not ask, “What do we have to do to beat the competition?” They ask, “What is the most value we can bring to the customer?”
Tom Reilly
Tom Reilly Training

Flexibility counts
"If you are going to be a true value-added seller in the 21st century marketplace, you must be flexible and capable enough to offer different things to different customers, responding to the individual customer's definition of what is valuable to him or her."
   

Dave Kahle
The DaCo Corporation

Creating a competitive advantage
"Could you help your customers reduce their cost without reducing your prices? Creating a competitive advantage will need new situations, new ideas and new ways of working with customers. Having the best products or the best pricing just gets you into the stadium; it doesn’t get you into the game any more."

Mort Harris
Minnesota Industrial Tools

Understand your customers
"Differentiation in the distribution industry will be all about delivering value to customers in unique ways. Success will be based on understanding customer requirements and on designing a product and service mix along with associated processes that consistently meet those requirements."

Bill McCleave
W.R. McCleave & Associates

Recruit the willing
"Work with the people in your organization to embrace the concept (of value-added). Not all will. You could have a sales team of five people and  two might embrace the program. My advice is to work with those two. The others will follow once they see the success."

Spread the word
Rick Glauthier, CEO of Cunningham Supply Company in Akron, Ohio, said his salespeople never send documentation to just one person. Salespeople make sure that all of the known buying influences in an account know what’s going on. It keeps everyone in the loop and helps introduce the company to new contacts that might be valuable to know one day.

“When we send an e-mail to an engineer, for example, we’ll copy his boss or someone else involved in the project. It’s a little extra work but it pays dividends in the end because we don’t get blindsided by someone we might not know,” Glauthier says.

When a customer of Cunningham's forgot to place the order for a specialty tool, which had an eight-week lead time, and Cunningham supplied a stop-gap tool in the nick of time, Glauthier drafted a letter to the project manager briefly detailing the actions he took and expressing his appreciation that the project manager came to Cunningham Supply for help. He then sent a copy of the letter to the project manager’s boss, the president and the purchasing department.

“If you don’t tell them what you do to bring them value, they won’t know,” Glauthier says.

Click here to read his story.

Reminders build recognition
Jim Ruetz, president and general manager of All Fasteners, the sister company to All Tool Sales, both located in Racine, Wis., developed quarterly reports his account managers share with key customers called Platinum Reports.

The reports include an executive summary and between five and seven pages detailing activities that All Fasteners completes, in addition to inventory reviews and performance reports. Ruetz believes the Platinum Reports help retain customers by creating a recognizable difference when his customers receive a low-ball bid from another distributor. The next time a buyer is tempted to switch to a supplier with a lower price, the account manager can pull out a stack of Platinum Reports and ask, "Are you sure they’re going to provide all of these services for that price?"

"Customers love it," Ruetz says. "They’re not used to seeing something like this. It’s not as if they’re looking at my reports and comparing them to my competition’s. Many of my competitors don’t have anything this elaborate."

Click here to read the story.

Value-add on display
Industrial distributor Fuchs Machinery came up with a unique way to demonstrate its value-add by changing the display it brings to annual trade shows. Fuchs used to bring product samples from many different suppliers to the shows. At the Institute for Supply Management's Souix Falls Product Show in South Dakota and Omaha Product Show in Nebraska, Fuchs transformed its run-of-the-mill display into a demonstration dedicated to adding value.

Instead of random products the company sells, the display included real-life examples of projects totaling nearly $575,000 in annual cost savings provided to customers. One customer was so impressed that he invited Fuchs to look at several new projects and opportunities.

“It is our hope that customers view Fuchs Machinery not in terms of the value we add, but rather as a valuable resource to their organization,” says president Tom Berger

Click here to read how Fuchs won a 2001 Value-Added Partner of the Year award.

Digging for information
Most customers won’t hand you all of the information you’ll need to develop value-added documentation on a silver platter. You need to dig for it. It may require you to ask a series of non-threatening questions to find out what you need to know, and you will likely need to talk to more than one person. For example, you might ask a production supervisor, “How often did you experience downtime last year due to lack of available inventory?” You might ask an operations manager a question such as, “How many people worked in your warehouse before we took over? How many work there now?”

Make value-added a part of your monthly sales meetings
This tip comes from Dave Weber, president of Weber Supply Company based in Kitchener, Ontario, Canada. His company strives to incorporate value-added documentation into every monthly sales meeting. Salespeople take turns presenting examples of value-added services they have documented for customers.

Initially, it was difficult getting salespeople to volunteer to present their ideas. Before long, they started to warm up to the idea. "At every sales meeting now, a handful of salespeople will present examples," Weber says. "They're getting more comfortable and they're learning from each other."

Enlist vendor support
Vendors are valuable allies in the value-added effort in more ways than one. They help distributors in the important tasks of testing products and reporting the results. But they can help in other ways too. For example, Joan Hoppock, vice president of sales for General Industrial Tool & Supply in Los Angeles, says customers are often more willing to share information with vendors than they are with distributor salespeople. "They have an easier time giving information to the vendor because they believe the vendor will use the information to come up with the best product for them and save them money or time or improve their productivity," she says. Once the customer learns how the vendor and the distributor are working together for the customer's benefit, they're frequently more open about sharing information the distributor needs.

Set goals and objectives
Martin Industrial Supply in Sheffield, Ala., found a great way to get salespeople to think about how they add value to customers above and beyond providing them with products. Martin president Dave Ruggles established a cost-savings goal for salespeople to reach in 2001. Each salesperson must work closely with one major customer to achieve a cost reduction of 2 percent of that customer's prior year's purchases. The corporate goal is to show $1 million in total cost savings. "Part of our job is to continuously tell customers, 'You're important to us, so this is our plan for you for next year,'" Ruggles says.

Build value-added documentation into compensation
Make no mistake, developing value-added documentation is not easy to do. Salespeople may be reluctant at first to spend the time and effort on documenting their value to customers. Some distributors have discovered the best way to motivate salespeople is to require them to complete a specified number of value-added documents each month in order to earn a pre-determined portion of their base salary. Other distributors pay bonus dollars for every cost-saving document a salesperson completes. Either way, the key is to make sure you have a way to measure results.

back to top