Never mind the quality, feel the price

Circuit World

ISSN: 0305-6120

Article publication date: 1 December 2003



Ling, J. (2003), "Never mind the quality, feel the price", Circuit World, Vol. 29 No. 4.



Emerald Group Publishing Limited

Copyright © 2003, MCB UP Limited

Never mind the quality, feel the price

Never mind the quality, feel the price

Quite recently we made some enquiries to a company on the matter of waste disposal. "Can't do it", they said "the ground is too soft for our tankers, we can only access from a hard standing". Might they not have a vehicle such as a tractor and trailer that could access the site from grass? "No, we don't", came the response. We persevered. Did they not think that it would be a good idea to offer a disposal service to properties in rural areas, which did not necessarily have concrete roads conveniently, placed? The reply was emphatic. "Goodness me no, we are not in business to offer a service, we are in business to make money. Buy your own tanker". Obviously, a graduate of the Andy Gilchrist Business Management School.

Few years back, I met with the production director of a Midlands manufacturing company and asked him why he had changed to the products coming from the company I represented from one of our competitors. "Simple", he said: "Last month we nearly ran out of an essential consumable during a night shift. It was our fault entirely, bad stock keeping, and we failed to re-order. Rang your competitors representative and asked if he could help, and all right I know it was two in the morning but he said that it was quite impossible. So I rang your representative No problem, he told me, and he got out of bed, got dressed, rang your factory manager, got him out of bed, they met at the factory, where he drew some stock from stores, put it in his car and got here within an hour and a half. Your rep. lives in Lichfield, your factory is in Nottingham and I am in Leicester. Hardly adjacent. We lost not a moment of production, and now I buy from you. That is what I call service, and for that I am prepared to pay the difference between your prices and those of your competitor".

This true story rather underlines a point. In a world where markets are now called global, one is interested to know what premium is put on service. We all know of the fierce emphasis put on price, and the damage it does, but I have not seen much discussion about service. In the scenario where you have the manufacturer in Europe who is supplied from China, somehow I cannot see someone in Shanghai really wanting to answer a call for service in the middle of the night, and, even if he did, the delay in response might be rather too much.

I recall hearing some time back of a study done by a major European OEM on the cost effectiveness of buying from the far East. The conclusion was, that by the time they had travelled more than half way around the world to discuss their requirements at least three times, had rejected faulty goods more than twice, and endeavoured to disentangle the complications caused by cultural and time differences, let alone languages, the savings were minimal.

Of course, nowadays everyone makes perfect circuit boards, there are no such things as rejects, quality control is 100 per cent and everyone is happy. Really? All that the rush to China has done is to move the same problems half way around the world. I am leaving out discussion with the fact that European labour costs are 12 times that of China, and that European taxes are 30 per cent higher, because they are purely economic arguments. If you want to make millions of boards for mobile phones that will cost the punter absolutely nothing, provided they work with a service providers plan, then that is understandable.

The reason, I suggest, why the US board shops are returning to profitability, and why European board manufacturers are surviving is that they serve a market which relies upon them to service their requirements. Locally, conveniently, in the same language with a clear understanding of mutual needs and responsibilities.

Price is not everything. It never was. Service matters, so do people.

John Ling

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