A unified front might be the trick to obtaining a fair price.
While it could be said that our industry, steeped in a tradition of phenomenal technological breakthroughs, has done some really fantastic things over the years, one thing that we have collectively failed miserably at is conveying the value that the design, fabrication and assembly of printed circuit boards provides the end-user. Worse, I question whether we even know how to measure the true cost of the value we bring to our collective customer base.
What is “value?” I view value – total value – as the sum of all parts that go into providing a product. The sum of all the parts includes not only the materials and supplies that make up a product, but also the competent and innovative people, regardless of academic background, who actually make it, and the investment in the best available equipment – which does not necessarily mean the newest. Equally, the sum of the parts includes the oft-forgotten but essential “little things,” like commitment to adequate inventory, training staff on new processes and methods, and servicing customers that all too often need considerable hand-holding to understand the options available to get what they are ultimately asking for – all with exceptional quality, delivered quickly and on-time.
Collectively, we have been mediocre at best at explaining (read: selling) this value. Trade groups have failed to broach head-on a meaningful discussion of the value our industry collectively provides to end-customers. Ditto for the supply base. Worst of all, the individual companies aggressively tout their abilities but don’t connect the dots in terms of how their products and services really benefit end-customers. Rather than marketing the value that goes into the design and manufacture of PCBs, each company will discuss in vague generalities why they are better than the others, or how they can save the end-customer some money on the next order. Rarely do any of us tell customers that collectively we all provide significant value, and therefore, with all due respect Mr. Customer, we all should be valued!
Why tell a customer that everyone – not just your specific company – is of value? Because only by selling the value of all companies will any company be able to command what they are worth in the marketplace. Customers hear only the bean-counter mantra that we all are just commodities. Instead, customers need to hear that, regardless of our location, niche or size, we are all providing true value, are worth the price we charge, and perhaps they, the customer, should pay more attention as to whom they buy from, and why.
This is not about fixing prices or other collusion but rather presenting a unified front to promote what we all apparently take for granted: that there is real value to what we do. We as an industry – associations, suppliers and manufacturers – owe it to ourselves and each other to educate customers on that value, and that value needs to be reflected in a fair price.
A fair price also requires understanding, valuing and charging based on the accurate cost of product development and manufacture. Rather than incorporating the total cost into a price, we fall victim to competition, real or perceived. How often do we complain about the renegade “bucket shop” or “big company from wherever” that drops its price so “none of us” can make money? Maybe instead we should remind customers that those who drop prices just to fill their plant have more often than not failed, leaving customers stuck with no product.
Possibly a better approach would be to add to our sales presentations the value our products and services provide, and explain the total cost that goes into each job processed and manufactured. Equally, maybe in little ways we can all, together, reinforce that true value is being provided, and not capitulate when customers demand unrealistic price targets or extended payment terms “like the distributors accept.” None of us are distributors; we build to print and purchase specific materials processed per specification and, therefore, have total costs that go into providing true value. If everyone holds their end up, the message will get across!
This is not for the faint of heart. Make no mistake, customers love when an industry works together, by plan or by accident, to create a downdraft in pricing. In fact, customers encourage this by convincing suppliers that what they provide is of little or no value. And when this happens, regrettably too often we as an industry capitulate. Yes, some may resist, but a chain is only as strong as its weakest link. If one firm breaks ranks, we all suffer.
Long-term, to remain viable, we need to do a better job conveying how much value we all, together, provide customers. This requires a multifaceted approach. Yes, we need to continue to explain our technology and service. However, we have to expand on that to include the true cost of providing ever-improving service and investing in cutting-edge technologies. Equally, we need to better communicate the outstanding technical competence required of employees throughout the industry. Circuit boards and all they go into are not designed, fabricated or assembled strictly by machines. Skilled people make it happen, and that is a core value – and true cost – too often ignored or undervalued by end-customers, and rarely effectively communicated by our industry as a differentiator.
Our industry has a tradition of being innovative. Clearly our companies have excelled as technology leaders. Isn’t it time that, together, we fashion a message that all the companies that provide the leading edge technology that end-users have come to expect are providing true value?