This conference covers two main topics:
- Value for the client: Its importance as a competitive advantage, how to identify it and define attractive and profitable value propositions for the organization.
- Value creation: How to use customer value to identify optimization opportunities in the company.
Few terms in the field of management have been used as much as "quality" and "value", however, we rarely stop to think if we really understand what it is. The first thing we have to remember is that the value is not defined by the attributes of our product, but the opinion of the clients and, for them, our product has value as it constitutes a tool that helps them achieve results.
Let's first define the difference between product, quality and value.
The following study by one of the largest flower importers in the United States shows the aspects considered as Value in a flower producer and the Value that they identified from their company for their clients:
1. Value from the point of view of the importing customer:
The key insight that identifies a producer's value is Reliability. Which is expressed in the following aspects:
Compliance
Orders are received with the requested product (s), on the agreed day, with the required specifications, constantly. This reflects efficient communication and organization within the company in all the processes involved with production.
Consistency
In the classification of stems in the bouquet and in the packaging: it allows a positive experience for the client who receives the flower box, which, being profitable, will generate interest in repeating orders.
Timely information
Not only provide information, it is done in a timely manner, This is essential when it comes to issues related to production, quality problems, launching new products or eradication of others, product availability, order confirmation, response to requests, etc. The importance of keeping the client updated in everything that may be relevant to the business relationship must be demonstrated.
Education
Educate the client on new and better methods of care and handling, new materials, packaging, hydration methods, presentations, Include the client in the programs of tests and trials that are carried out.
Anticipate customer needs
Always be in search of new solutions, constantly innovating to stay ahead of the demand curve and add value (work with breeders, maximize production for markets in demand, apply new flower processing methods).
2. Value from the point of view of the wholesaler or retailer client:
The importer's challenge:
How can we get our customers to call asking for our flowers?
Surrounding analysis:
When talking about value in the floral industry, many aspects come into play:
- The quality of the flower is the beginning of everything.
- Many wholesalers think that by buying directly from crops they obtain greater freshness and better prices, which is not necessarily true.
- Although direct purchase could solve the above, there is still the challenge of achieving good sales.
- With the competitive nature of the flower industry, clients should keep their expenses as low as possible, which only allows them to invest in average sales talent
- Florists in the United States are mostly family businesses and are also affected by the challenge of good sales talent
- Sales education to their customers is the latest technique used by most large companies to drive sales.
- Training our clients to be better sellers and offering more information than others is the key to achieving added value.
Therefore, Valor is to help our clients in the sale of flowers to their clients. This is expressed through:
1. Marketing based education.
Offer our clients ways to improve their skills through face-to-face workshops, virtual seminars, product presentation events to their clients: Improvements are needed in many areas of our industry. Our clients need help in marketing, sales and negotiation practices. Offering clients a solid training platform creates loyalty as we are continually helping them obtain better business tools and improve their capabilities.
2. Excellent communication.
Advise on your challenges and opportunities. Flower availability tends to rise or fall? What can we sell? What assortment? How many units per box? For when is it available? What is new or what is the best that there is in species, in the colors and shapes that they need? Permanent information.
3. Consistent quality flowers, inspected and pre-cooled.
Quality is not a matter of whether the product complies or not, Clear written specifications delivered to producers explaining our expectations is the key, When these are communicated to wholesalers and retailers, they already know what to expect and loyalty is generated when these characteristics of the product remain constant.
4. Creative presentations.
Innovative and efficient promotions, assortments and packaging help drive new sales.
5. Brand positioning.
Create a memorable image in the minds of your customers so that they continue to ask for what meets their expectations. We are creatures of habit, when a brand enters our mind, we tend to keep looking for this brand no matter what may happen to the product. This is marketing: What can your brand do? What is the value promise of your brand? By creating impressive posters, flyers, information objects, keeping the brand in front of your client, we add value to our client, allowing him to have information and tools to promote and sell our products.
6. Excellence in service:
It is doing the little things better than the competition, the precision in the details makes our brand stand out and leave the basics, there are many gaps in our business, so offering promotions, products and ideas to customers and excellent management will create followers of our company which will be reflected in loyalty.
7. Make customer profiles:
It is necessary to be able to ask ourselves continuously, What, Why. Where and When about what they do and receive vital information that we need to serve the customer better than the competition, The flower industry has infinite details, The company that knows more about its customers than the competition has no competition.
The example illustrates a new space for value creation, a competitive space focused on joint creation experiences, developed through determined interactions between the consumer, the client and the company. In the conventional value creation process, companies and consumers have different roles of production and consumption, products contain certain predefined characteristics that are offered by the producer to the consumer. Value creation takes place outside of this interaction. But as we move towards co-creation this distinction disappears, more and more consumers participate in both definition and value creation processes, the co-creation experience of the consumer becomes the true essence of value.
By consolidating the attributes defined in the previous example, we can speak of four levels of value that represent the effect that what is received produces in the client.
To maintain competitiveness in the market, it is necessary to differentiate by a value proposition (combination of tangible and intangible attributes that create in the client a perception of the total value received) made up of value attributes identified for each group of clients, developed by internal processes able to deliver the expected attributes and oriented to a research, development and marketing policy that allows us to constantly offer desired and unforeseen value for customers. Customer expectations continually evolve and force us to constantly raise the bar in order to continue surprising them. The vocation to exceed customer value expectations is the engine of continuous improvement.
Action plan to define a value proposition:
As we saw in the example, the definition of a value proposition starts from the study of the customer's needs, their environment and the competition. One of the methods that can help to identify attributes and opportunities for differentiation is the analysis of the value for the customer., the purpose of this is to determine the benefits that have value for the target customers and the way in which they rate the relative value of the different offers from the competition. The main steps of customer value analysis are:
Identify the main attributes that deserve value for customers. Different people in the company may have different ideas about things that customers value. It is a risk to assume that we can perfectly know what the client values without asking them. Knowing the client is the way to start any process that has the goal of satisfying him, it is much faster and cheaper to consult him, than to experiment with the trial and error method. Therefore, the company must ask customers what are the characteristics and attributes that they intend to obtain when they choose a product and a supplier.
Determine the importance of the different attributes. Classify and quantify in a table the importance of the different attributes identified. If customer ratings vary widely, they should be grouped into different customer segments.
Determine the performance of the company and the competition in terms of different values for customers. Compare our position with that of our competitors in these attributes. Two bad news would be: a) that the performance of the company deserves high ratings for minor attributes, and b) the performance of the company deserves low ratings for higher attributes. Furthermore, it is necessary to take into account the qualifications that each competitor deserves in the important attributes.
Study the way in which the clients of a specific segment rate the performance of the company, comparing it with a specific competitor. To identify attributes that serve as a competitive advantage, you must take each customer segment and study how the company's offer compares to that of its main competitor.
Monitor changes in customer values over time. Although customer values are quite stable in the short term, they are likely to change as competing technologies and features emerge and there are economic and social changes in the environment.
This type of analysis allows gathering enough objective information to build a value proposition where customers find attractive elements that determine their purchase decision, but what differentiates a winning value proposition from an ineffective one? Let's look at three cases:
- Proposals that express only the benefits of the offer, without taking into account other factors. This type of proposal answers the question "Why should someone buy your product?" for example: "flowers of excellent quality, with good presentations, at very good prices" This type is unfortunately the most widespread and, of course, the one that will least resonate in a specific situation. In addition, it has the risks that it may underline elements that do not add value from the perspective of the particular client or in which the competitors are superior.
- Proposals that express the favorable points of differentiation of the offer in relation to the alternatives of the competitors. They answer the question "Why should someone buy your product instead of your competitor's?" They are proposals such as "our flowers have been awarded at the Russian fair in 2006" and suffer the risk of highlighting points of differentiation that do not add value from the perspective of the individual client.
- Proposals that express the favorable points of differentiation compared to the competitors in those elements that matter most to the client in question. They answer the question "Why should I buy your product instead of your competitor's?" They are proposals of the type: "our processes guarantee compliance, if we modify the order we discount 10% of its value in your account". Naturally, this is the type of proposal that will resonate the most with a particular client, although in return it requires an investment on the part of the supplier, both in the discovery of the motivations and criteria of the former, and in the actions necessary to satisfy them.
The idea of creating value can, in fact, be summed up in a concept as simple as the effort to make yourself more “useful” to customers. But, of course, good intentions must become a practical reality, that is, companies must be able to profitably offer sustainable and superior value to customers. For a purpose of this magnitude to be successful, it must involve the entire organization in obtaining high levels of responsiveness as a result of evaluating every detail of its operations from the perspective of its contribution to quality and customer satisfaction.
Each process is made up of a series of causal factors that create (or destroy) value for value, which can be defined and, therefore, controlled, to obtain better results. By understanding all the elements that make up a process, each element can be managed to achieve a more consistent and higher quality result. The causal factors are as follows:
• Communication with the client
• The inputs (Inputs)
• The activities
• The products (Outputs)
• The performance standards
The purpose of optimization is to find the methods that make sure that customers perceive that they are getting value for money, therefore, it is necessary to carry out a global analysis of the processes that the company currently uses in order to discover the elements that make up these causal factors and determine their effect on productivity and value delivery.
Let's look at some of these elements and how they can become an opportunity to increase the organization's competitiveness and efficiency:
Communication with the client:
- Facilitate the business: It should be made easier to do business with the company, do not limit the functions of the seller to sending an availability and taking orders, evaluate the ability of your sales team to establish relationships with customers, their abilities to identify the needs of their clients and propose solutions, their degree of knowledge of the company's internal processes and products, Check if their procedures facilitate the client's access to information and to carry out a transaction (availability, inquiries, orders, status of account, request for changes, etc.)
- Open several bridges between the client and the company: facilitating contact between client and company officials creates spaces for the exchange of ideas and fosters an image of closeness and interest in offering solutions, see if the client knows the charges and the names of the people in the company who can help you and if there are ways to contact them. For example, establishing a direct communication channel between the quality managers of the client and the company.
- Customer support: services that serve the customer must be implemented to create value in the eyes of their own customers and increase their sales. Review in what specific ways the company is maintaining and accompanying your business relationships, Example, In a rose cultivation in the north of the savanna, the owner spends most of the year periodically visiting his clients one by one to evaluate the product, Benchmarking, identifying opportunities with your clients, strengthening relationships and guiding your employees from there, the result: 70% of its production has been placed in fixed orders in markets in Europe and Japan.
- Attention to key accounts: pay special attention to the few buyers that move the largest volume of production or that are of high value to the company, verify if this group is clearly identified and review if there are defined and effective strategies to ensure satisfaction, the continuity and growth of relationships. For example, some companies have assigned internal “agents” to some key customers, who are responsible for monitoring and controlling the development of orders and their fulfillment.
- Management of customer dissatisfaction: A complaint or claim must be converted into valuable information to improve internal processes and revert it to customer loyalty by an adequate response and effective action; Evaluate how the company receives, manages, responds and follows up on customer complaints.
- Quick response to last minute orders: We know of the variability of demand in the flower market, so the company that is able to help its clients by confirming unforeseen orders has a huge competitive advantage over its competitors; Check the capacity and flexibility of your company to introduce changes to the production plan, the effectiveness of communication between the different processes involved and the speed of response to the client.
Inputs
Here are all the inputs required by the company to make the transformation of the product: Information, Materials, Equipment and people
- Information: An integrated information system optimizes different activities between processes, facilitates planning and decision-making, with the aim of offering customers timely, agile and reliable responses; Evaluate the way the information related to the product and customers in the company is managed: Is it integrated in the same system? It is used to simultaneously plan and manage supplies, flower, orders, labor? How much fingering activity do you consume? Are indicators generated with this information? Is it possible to follow up on customers and their behavior?
- Materials: Supplies and accessories are part of the product, therefore, they have a direct effect on the value for the customer. The selection of suppliers and characteristics of the materials should not be made taking into account only the cost, the effect of these materials on the process and on the customer's perception should be taken into account. Decisions must be made after agreement between the processes and clients involved with these materials. Example: Using a smaller gauge cap can affect the performance of the bouquet assembly process, increase waste and affect the image of the bouquet when the customer opens the box.
- Equipment: The equipment, tools and work elements, and the maintenance they require, affect the effectiveness and efficiency of the processes. The company must ensure that its processes have sufficient elements, designed appropriately for its use and in optimal service conditions.. Example, a bouquetera that uses around 22 strapping machines, implemented a total productive maintenance (TPM) program, training its operators in a basic routine of daily pre-enlistment of their equipment for 15 minutes, obtaining a reduction of 1.5% in downtime per strapping machine failure and doubled the period for corrective maintenance.
- People: Labor is the most important resource in the flower industry, most of the investment in optimization should be directed to obtain the highest return on this investment, the effect of the staff on the value for the client depends selection activities, training, work culture, performance measurement, redesign of activities, in addition to the programs established to motivate and facilitate the development of ideas to improve the activities and products that are carried out. What does your company do to find, develop and motivate human talent?
The activities
If Value is the client's perception of what has been received, which makes them produce satisfaction or not, it is evident that not everything that adds cost adds value. Consequently, no client will accept to pay for our inefficiency, therefore, detecting in each stage of transformation and sale activities that do not add value to the client, becomes a search for competitive opportunities.
One method to demonstrate inefficiencies within the value chain is to observe each of the transformation stages and identify if one or more of the cases described below occur:
A product becomes value when it increases the benefit for the customer or reduces the costs of its own value chain, the company must ensure that the result of its processes meets at least one of these conditions, verifying the following:
- Specifications: A product must contain the customer's value attributes, check if the physical specifications of your product, acceptance ranges, composition, handling and conservation parameters are defined; if these specifications are known and understood by people in the different processes that directly or indirectly intervene in their elaboration; if these specifications are updated and communicated the changes.
- Compliance with specifications: All the requirements of the order must be fulfilled according to the commitments agreed with the client, delivering less than what the client expects and pays is the most serious cause of dissatisfaction, it is necessary to check if the internal mechanisms exist and work of the company established to guarantee product compliance and the steps to follow if nonconformity is detected.
- Product suitable for the use of the client: in some cases, attributes that the company considers to be an advantage can be a problem for the client when the handling and use that this will give it is not known. Example, an alstroemerias company decided to increase the length of the degrees of its bouquets by 5 cm, thinking of offering a higher quality product, on the contrary, several of its clients complained that they had to cut the bouquets again to adapt them to their boxes, bouquets, arrangements, etc. with extra cost in labor and waste management.
- Order status information: Customers want to have access to the product before it is shipped, check who receives the customer's QC people, if their indications are followed up, if they send pictures of the orders regularly, even, if you can see it via internet (webcam).
The performance standards:
- The vision: The organization should be seen as a business system, made up of different processes, which must be coordinated towards a single goal: delivering value for the customer beyond the product. This vision must be clearly understood by its customers, employees, suppliers and must be supported by their actions and behaviors, it is difficult to create value if the philosophy of the company and the management of its managers are based on different principles.
- The work culture: We all easily recognize companies that are characterized by delivering value to their clients and immediately relate it to employees whose beliefs and behaviors are consistent with the principles of the organization. Reaching this level has meant a multi-year effort by the company to establish corporate values that allow developing working groups convinced of their role in customer satisfaction and the permanence of the company. What is the culture of your organization? What is the strategy for customer orientation?
- Multifunctional management: Customer satisfaction and its evidence in the growth in sales of the organization is the objective of every organization, therefore, the indicators that measure the effectiveness and efficiency of the processes must be oriented to their ability to achieve this objective, in this way the actions, decisions and use of resources of each process must be carried out taking into account the degree of contribution to the main objective above the fulfillment of particular goals.
- Keep promises: A vital aspect of differentiation for a supplier in the eyes of the customer is the fulfillment of commitments, this is a culture that must identify the organization and its products, there must be no margin for non-compliance, no excuses, not arguments that justify not delivering what the client expects. Why set a margin of error for flowers? Do plush bears and chocolates have the same levels of dissatisfaction?
- Being in the trenches: value creation is not a policy that is stated to the organization, it is delegated to subordinates and it is measured through indicators, it is a conscious effort of all hierarchical levels making presence right there where it is being transforming the product, supporting activities and staff in search of new opportunities to deliver value for the customer.
Once the processes and critical aspects of value creation have been analyzed, it is advisable to integrate the actions to be followed under an optimization program based on models successfully implemented in different sectors that can be adapted to the particular conditions of the company and would facilitate the transition to more efficient and competitive production methods. In the last decades, models such as lean manufacturing, Six sigma, Theory of constraints, Just in Time, Relational Marketing and others have been developed, which emphasize the creation of value for the client and the minimization of the use of resources through different tools that They can be used to intervene the different aspects to improve. An example of the lean manufacturing application in the flower sector can be found on the Gestiopolis.com website.
Developing a consistent value proposition takes time and money; But if a company is looking for different ways to deliver value to its customers, it cannot afford not to consider, evaluate and improve its procedures. If managers and employees do not dedicate the necessary time to carry out this exercise, they will never know where their weaknesses and strengths are in front of their clients and the competition, missing opportunities to generate profitable relationships that ensure the permanence of the organization.
Bibliography
- Adler, M. Production and operations, Buenos Aires. Macchi. 2004
- Band, W. Value creation, the key to competitive management. Madrid. Ed. Díaz de Santos. 1994
- Bel mallen, J. Communicate to create value. Madrid, Ed. U. de Navarra. 2004
- Duggan, KG Creating mixel models value streams, practical lean technics for building to demand, New York. Productivity press. 2002
- Kubayashi, I. 20 Keys to improve the factory. Madrid. Productivity press. 1993
- Porter, M. Competitive advantage. Mexico. Homeland. 2007
- Rother, M. Creating continuous flow, Massachusetts. The lean enterprise institute. 2001
- Sliwotsky, A. The migration of company value. Buenos Aires. Brown. 1997
- Villaseñor, A. Concepts and rules of Lean Manufacturing. Mexico. Limusa 2007
Speaker profile
Agricultural Engineer from the National University of Colombia, Specialist in quality management systems administration, Santo Tomás University, Diploma in production management with an emphasis in Lean Manufacturing from the Pontificia Universidad Javeriana.
14 years of experience in the agro-industrial sector, in production, operations (post-harvest), in the implementation of management systems and in the design and improvement of processes.
Expert in the Lean Manufacturing model and in teaching and learning methods in adults.
Director, Consultant and lecturer in process optimization and quality management in different companies in Colombia, Ecuador and Peru. Teacher and thesis advisor at different universities.
