Expert's Panel

A collection of timely and important topics posed to our panel of experts.

Customers want cheap tools but they continue to demand customization. All of the options make sense in and of themselves, but they drive up costs and reduce manufacturing efficiency. How can we get customers to accept more standardized products?

 (ep10103)
1. It starts up front. Through very proactive MRS activity try to determine the most likely options and configurations that are going to be needed. Then as the manufacturing process is being determined, flexibility can be built in where the variables are likely to occur. An MRS that proactively involving your key customer base can also affect the design of the tool for flexibility in the right spots.
2. What is the customer's alternative if you do not put the option on the equipment? Will the customer go to one of your competitors-can your competitor serve the customer better than you can if you do not add the option and is the option really needed to do what the customer wants to do? If you customer can walk to your competitor easily and you do not respond, that is one set of characteristics. If the customer doesn't have other alternatives, you use high option price to either guarantee the margin or force the customer into the standard system, if indeed it will work. That's a delicate wire to walk but you generally have more alternatives than just giving in to the customer saying "I want this option and I don't want to pay for it." Keep in mind that for every dollar added you have to charge five dollars or your margin goes down.
3. I usually talk the standardization side of the fence, but lately I've been seeing the other side. If you are a good marketing person and you are identifying your customer's needs, why do you want to force them to standardization? Let me give you and example; if you're selling a $2-million pieces of equipment, or whatever, you don't have a lot of customers. So what I'm proposing is that we think about rather than preaching standardization, why not work on getting our organizations to deal with change? If you are not the largest supplier in your market segment and you can do some customization profitably, maybe you can answer the age old problem of how do you beat the 75% market share guy. Because I guarantee you he can't do a whole lot of customization. He has lost his ability to do that. You will win customer loyalty. In our industry maybe standardization is not the goal.
4. You have to be flexible, but if you don't plan for that flexibility you are going to get killed. So, it still comes back to standard options-as was said before, you need to think about that in the design.