When proven cost savings are not enough to get customers in a conservative industry, what can you do?
Company: Avchem, Inc.
Industry: Supply chain & material management.
Situation: Defining and selling a new material management service into a conservative industry where bureaucratic levels have a vested interest in the status quo.
Success measure: Achieve a transformative sale that will lower the bar on material management cost for the industry, making the client's approach the de facto standard.
On one level, the benefits were clear. Cost savings at Avchem’s launch customer were adding up and getting noticed. The customer’s manufacturing division where Avchem purchased and managed consumables used in manufacturing won a corporate cost savings award. But around the industry, entrenched middle managers protected their inefficient processes, at most admitting the value of Avchem’s bulk buying.
Yet, for Avchem to survive, and its customers to save money on manufacturing process materials, customers would have to accept the idea that paying for an independent management service would save them money.
Avchem's processes for acquiring and managing production-support chemicals consistently saved money for their customers. However, even proven results could not overcome resistance from a conservative industry.
How will you help your customer to get a line-item budget for your service when before management costs were hidden in the price of procured materials?
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