Even with today’s advanced manufacturing and production methods, a cotton hoodie, like the one Bill Belicheck is wearing above, is still 22% more expensive to manufacture in the U.S. versus Asia. This is detailed in an excellent article from the September 20, 2013 edition of the New York Times, U.S. Textile Plants Return, With Floors Largely Empty of People,click here. Your initial reaction might be, “Heck, even after 20+ years of lean manufacturing techniques, Six Sigma quality and empty manufacturing floors, the U.S. is still 22% more expensive!?” If you are a General Manager, a B2B Marketer or Sales manager, this is sobering news because we all realize the “Made in the USA” badge will typically not win the day when saddled with a 22% price premium in the hoodie aisle of your local retailer.
Fortunately, the hoodie company (American Giant) is led by an insightful founder, Bayard Winthrop. Mr. Winthrop realizes his current cotton supplier (Parkdale Mills) provides value that is above and beyond “price”. I would suspect that Parkdale Mills, the supplier, has thought critically about their Value Proposition and what it is they do that provides their customers with value above their Asian competitors. From my perspective and from information provided in the article, I believe their differential value proposition might look something like this:
Partnering: We offer an open door policy and encourage our Customers to walk the floors of our mills at any time, to touch and feel their product as it is being spun and to provide us with on-the-spot feedback. We encourage face to face conversations.
Expertise & Advice: For every new item you request, we provide you with insights on the end cotton material as well as on the U.S. market. We can do this because we have 95+ years of local market knowledge.
Speed: We can offer 1 month from “concept to delivery time”, with zero hassles of shipping through multiple ports of call.
Fewer Regulatory
headaches: You will not have to send a third party to audit our plants, or
worry about the working conditions of our employees.
When starting his company, Mr. Winthrop did work with an oversees supplier initially, but he quickly switched to the South Carolina based Parkdale Mills: “We just avoid so many big and small stumbles that invariably happen when you try to do things from far away. We would never be where we are today if (our suppliers) were overseas. Nowhere close.”
In Valkre’s work helping B2B companies understand their value proposition, and to drive mutual growth with their customers we see a theme, opposite from above, played out all over the world and across a number of industries: companies often struggle to articulate and quantify the full value of their offering. While it can be tough work to define your value proposition and to communicate that value to your Sales teams and customers, there is a solution called Differential Value Proposition (DVP®). For example, one of Valkre’s customers based in Germany was having difficulty gaining traction in Asia, even though they were the original developers of a particular technology. However over the years, a number of new manufactures had entered the market and their original technology lead had eroded. This company worked with Valkre to define and understand their value proposition. At the end of their first DVP discussion with a customer in Asia, the customer offered a comment that has become embedded into the institutional memory of this manufacturer:
We went really deep today, which was not expected to be honest. Our team talked so much because we still believe in your company….but we should have had this conversation years ago.
While this one conversation sparked a change in the relationship and drove deeper partnering, it also caused a change within the Manufacturer. They realized that reach their significant growth goals in Asia, they needed to change, and fast. Next year’s budgeting cycle was too far off. Immediate investments were made to build a team of local Technical resources, Application engineers and to build up spare parts inventory in Asia, as all manufacturing was done in Germany and spare parts took several months to reach customers in Asia.
As a General Manager or B2B Marketer, is your organization talking and partnering with your customers in this way to drive change within your organization? Does your company have the “institutional stories” to equip your Sales teams with compelling Value Proposition insights so they can more effectively sell your entire offering of products, services, logistics, and expertise? If a U.S. Cotton Mill such as Parkdale Mills has a compelling Differential Value Proposition, it is most likely that your organization does as well.
Bill Belicheck may not realize this, but his hoodie may be on the cutting edge of a new business revolution called DVP® powered by Render software.
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