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MARKETING MATTERSCEO JOURNAL


Updating Our Reality L


DAN MARCUS, TDC CONSULTING INC., AMHERST, WISCONSIN


ike the new “Star Wars” movie, 2015 was for me a throwback to an earlier time.


Last year, as was routinely the case 30-plus years ago, I found myself working mainly with new CEOs. Moreover, because they wanted to look afresh at their market- place, 2015 was filled with market research-based assignments similar to those which kept me busy in the 1980s and ‘90s. I am able to share some highlights of the many interviews we conducted last year within the casting user community. Back in that earlier time, many


casting buyers were former employ- ees of OEM-owned captive met- alcasting facilities. As these decid- edly old-school, casting-friendly staff retired—and after a brief flirtation with Japanese-style “partner- ing”—price-obsessed MBAs and automotive-type com- modity teams often took their place. Today, the customer reality is new yet again, and the buyers and engineers we spoke with appear to be a more evolved and interesting species. Not least of all, they are young; members of a generation with decidedly different values and expectations. Tey approach business differently than their predecessors, and astute suppliers will market to them differently. Two characteristics of this new


generation are most interesting. First, it is remarkably neutral, almost indifferent, about the products it specifies and the suppliers it pur- chases from. On the positive side, this means most are keen to learn about new materials, new designs, new products and new suppliers because this generation—driven by the harsh lessons learned during the Great Recession—genuinely consid- ers itself duty bound to find the “best” product for every application. And by “best,” it means the one that will meet the application’s technical specs at the lowest possible cost. On


the negative side, this new generation comes across as having little loyalty to suppliers or products. If an alter- native is offered, most are more than willing to explore and embrace it, re- gardless of existing supplier relation- ships or whether the alternative is the same or a substitute product. The second striking character- istic of this group is its highly col- laborative nature. Specifically, most are quite open to learning and eager for suppliers (and others) to partner with them to that end. Moreover, they express a surprising openness to suppliers participating on long- lasting cross-functional teams for the purpose of lowering costs by improving and optimizing specifi- cations and product designs. Beyond these innate charac-


Most interestingly, and after years of dealing with cheap, high-scrap im- ports, this new generation is redefin- ing quality. In today’s reality, “quality” increasingly means accepting defects as inevitable but minimizing the col- lateral damage caused by scrap. In this context, quality is no longer the pow- erful selection criterion it once was, as suppliers can achieve the desired result for customers all but equally well through strong initial quality performance or a well-managed (and well-funded) inventory, replace, return and reimburse program. As the power of quality is dimin-


Te buyers and engineers we interviewed are a more evolved and interesting species.


teristics, this new generation of buyers and engineers has settled the debate, at least for the foreseeable future, on a number of important issues that have earned considerable ink in this column over the years. First, most expect casting suppliers to provide a finished part. No ifs, ands or buts about this anymore. Customers now expect and assume vendors will act as Tier 1 suppliers to the extent required. Interestingly, those interviewed are once again neutral concerning how suppliers provide the required services— whether via in-house capabilities or proficient vendor management— but their default expectation is that suppliers will seamlessly add as much value as the customer needs. Te debate seems also to be set- tled as to what differentiates among and between competing suppliers.


ished, it is delivery and price that are the last remaining differentia- tors between and among suppliers and products. Delivery mainly refers to short lead times and speed to market, but significant numbers of customers are still unsatisfied with their suppliers’ on-time perfor- mance. CEOs take note: it is still possible to gain competitive advantage via short lead times and even exceptional on-time performance.


Tat said, price is the ultimate


differentiator and, like quality, its role has been redefined by and for this new generation of engineers and buyers. Specifically, “price” and its doppelganger cost are no longer the exclusive purview of purchasing; they are the prime directive and prime mover in every department and at every level within customer organiza- tions. As a result, suppliers can no longer hope to gain pricing leverage through strong relationships with engineering or quality staff based on superior performance. Instead, price and total cost are king and, at least for the life-span of this generation, will ultimately determine the marketing winners and losers.


Keep the conversation going. Reach the author at tdcconsulting@outlook.com to comment on this or any CEO Journal column or to suggest topics for future columns.


February 2016 MODERN CASTING | 45


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