Getting paid for added value
A business that refined high-value raw material was experiencing pressure on prices. The margins from qualitative advantages were eaten up by sharper competitors, powerful purchasers at customers and increased risks with the raw materials.
The assignment was to find ways of strengthening revenues for all kinds of value added. The improvement in margins had to be achieved within 12 months and amount to at least 1.5 per cent of the value added.
Revenue consultants from Carrus drove creative work forward in a large working group. Parts were carried out as customer value analyses together with key customers. Other ideas were processed internally.
Joint evaluations of potentials and opportunities for implementation led to
• four activities to get paid for values in the customers processes
• nine activities to get paid for value-added services
• four activities to obtain coverage for costs in business
The annual measurable value of the activities decided upon amounted to >2.4 per cent of the added value/s, corresponding to +20 per cent of profitability at an unchanged volume and raw material prices.
The focus on value creation at customers was reinforced in both product and service development and in delivery (including recycling)
Partnership agreements could be produced for development together with key customers.
Barriers to changing supplier were raised