Regardless of the market – medical, industrial, aerospace, or agriculture – end users are becoming more knowledgeable and demanding more when shopping for goods and services. Simultaneously, management is driving operations to do more with less, better, faster and cheaper. When companies are squeezed at both ends, from the customer and upper management, it becomes even more difficult to align priorities. Something has to give.
In business today, the concept of value-based purchasing is more relevant than ever. The value model is summarized in a very simple equation: Value = Quality/Cost. Like any equation, to increase the quotient we need to increase the numerator or decrease the denominator; in the case of value, preferably we do both.
More often than not, when a customer buys purely on price, the consequences of poor performance linger long after the satisfaction of the low price has worn off. Functionality may suffer and the time spent managing repairs, warranty claims, and finding a potential replacement is often higher than investing in a more expensive part to begin with, which lowers the overall value.