Why Is a Supplier’s Total Value Important?

With fewer and fewer suppliers available, it’s more important than ever for suppliers to make the commitment to Total Value.

A supplier’s Total Value is the sum total of the value of its products plus the value that its organization brings to its customers. Because the Total Value offered is not limited to a suppliers’ products and services, suppliers must focus on its customers’ needs at all levels.

To deliver Total Value, a supplier must provide these 5 components:

  1. Product Quality – Product Quality is where Total Value begins, ensuring that customers have the highest quality product at the lowest cost. Being able to give bottom line results through extensive cost reduction measures is a critical part of delivering Total Value.
  2. Delivery – A firm commitment to rapidly deliver product to meet customer requirements is a critical component in Total Value. Products are delivered quickly and consistently, giving customers reliable resources for fast time-to-market results.
  3. Flexibility -A supplier’s flexibility to accommodate requests that are beyond routine customer service requests on a day-to-day basis determines overall operational performance. Being able to meet customers’ unexpected issues and quickly recover from any type of performance failure is important in offering Total Value.
  4. Capabilities -Customer needs drive the best Total Value, yielding a wide range of capabilities in a supplier that includes both equipment and people. Costly equipment, trained workforce, and expert knowledge impact the Total Value on daily operations
  5. Product Value -Giving customers product value means being able to enhance their revenues, help reduce their current operating costs, and avoid future operating costs. As a supplier, product value involves combining the four components of product quality, delivery, flexibility, and capabilities to produce the most efficient, cost-effective approach.

Suppliers are not simply order takers, but are an integral part of the development process. Companies working together in a strategic customer-supplier relationship that is dedicated to pursuing long-term, high profitability for both create a Total Value alliance.

Unlocking the Total Value in a supplier can save customers money, improve quality, gain revenue, and advance capabilities.

Sirois Tool is a Total Value shop that provides close tolerance, complex, high quality tooling, gages, and fixtures for bearing, medical, firearms, and custom machine manufacturers, and many others.

Note: This is the first in a series of 6 articles on “Total Value”.

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