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.
