When talking about the price of a service or product we all know the maxim ‘you get what you pay for’. Of course there is no reality to this! No matter how low the price, if it doesn’t do what it says on the tin or is actually very poor doing it, then its expensive!!
When I worked for IKEA the big statement when designing, sourcing, working with factories and communicating with customers was ‘low price with a meaning‘. Just to have a cheap product with poor functionality, design, quality and ethically unsound has no meaning!! Everything has to have a value no matter the price.
How can organisations achieve low price with a meaning? As with all things it requires the virtuous circle of the following:
The Price: Achieving a low price requires a concentration on high volume, with a high degree of industrialisation to secure the most efficient production process. Raw materials are secured in terms of sourcing, specification, availability and all within a transparent supply chain..
Supply Chain Agility: A forecast and order planning system that shrinks the distance between the point of sales and the factory. Regular shipments with stock having a status of evil! Implementing a supplier matrix set up of 70-30. Split the sourcing between two factories, securing high production utilisation at the 70% factory and the rest as a security back up at a newer supplier being developed for future business.
Secure Product Quality: Please see my previous article CEPQ – Customer Experienced Product Quality
Socially and Environmentally Assured: Secure the following basics:
- Transparent and well supervised supply base including sub suppliers and contractors to the direct vendor factories.
- Secure legal, clean and efficient factory supply.
- Well managed labour in the supply chain – no child labour, no excessive hours etc..
- A legal and well paid workforce securing an efficient and motivated factory.
The Product Design: See my previous LinkedIn article Democratic Design..
Everything that is made and supplied must have a meaning. It should be part of a company’s intrinsic value whether they are in the low volume/high price or the mass volume competitive market. Its all part of Good Business Growth…
Whatever the market, products have to be competitive, design and quality assured, produced and supplied by companies that care! As Apple Inc and IKEA have proven; customers buy why and not always the what !!