Value - A Story of Misunderstood Perception

Let me set the scene for you. Joe customer calls in and wants to price a turbocharger. You give him a price and then it happens… the pause. Of course this pause is immediately followed up by the line, “I can get it online for less than that.” Now, if you’re like me, you’ve heard this story on too many occasions to count, but the truth of the matter is that all too often today’s marketplace perceives value through a foggy lens at best. Value has started to become synonymous with price and I’m here to tell you that it’s time to address that misconception. 

All too often many of us are guilty of over-identifying the price of an item as the determining factor as to the value of said item. But you see value is much more involved than the price tag may indicate. Value is the all-encompassing assessment of the item as it pertains to the situation. Now I understand that this is more pronounced when talking about a four-hundred dollar common rail fuel injector buried 9 hours deep into a $12k engine that lives in a $60k truck than it would be if we were talking about what you just paid for a gallon of fuel. But seriously, if you only or excessively use price to determine value, you may be missing opportunities to get the most value. If you put weight on the other items that, without a doubt, have a high-impact to an item’s value, you are likely to be getting a much better deal.

The same principles apply to the assessment of the supplier of the item. How do you choose your supplier of a given part? Do you call every supplier around for a price and buy from the cheapest one? That may not be the best way to determine your supplier or the value they bring to the table.

We, at Area Diesel, assign a large amount of value to a supplier who has available to us the products that we consume. As a warehouse distributor, it is our responsibility to stock these items. Of course, there is a hard dollar cost associated with stocking inventory and any burden of cost in holding goods that can be deferred to the supplier immediately adds to the bottom line. Can you maintain a minimal inventory and know that your supplier will have the right part at the right time? In this industry, almost as a rule, the price is irrelevant if you can’t order the part today and have it tomorrow.

Another consideration that carries a lot of weight is the service you receive from the supplier you choose. You need to be able to easily and immediately contact a supplier. You need to speak to someone now. And you need the person you speak with to be the right person. You need an answer, specification, or response and you need it be timely. This immediately and significantly impacts the levels of service that can be provided downstream. Are you receiving this level of service from your supplier? Are you sacrificing this value-contributor in lieu of the cost?

When you are able to reach your supplier, are you getting an expert? Are you getting a factory-authorized and factory-trained individual to effectively handle your inquiry? Is your supplier versed in the part and the application it suits? Are they stocking and offering you the plethora of other gaskets and seals you’ll need to complete that injector replacement? There’s nothing worse than missing a promised date on a $6k repair job because you didn’t know you’d destroy a two dollar gasket in the teardown process. Did your supplier recommend that you replace the copper seals on the back-leak valve in the rear of the cylinder head while you have access to them because they commonly leak after 100k miles? Oh and by the way it’ll take you 9 hours to get back to if you don’t. Of course, the customer is going to think it’s your problem if it starts to leak when they hit a hundred thousand miles two weeks after paying you $6k to repair their truck. Folks, it’s not an upsell… it’s a service.

Are you getting a quality item? Is it an OEM, first-fit component or an imposter? It matters you know. What parts were used inside the part you purchased? Were these parts OEM? Were the design updates performed at the time of remanufacture? Was the individual who installed these parts appropriately trained? What equipment was used to calibrate the part after it was remanufactured? When was the last time the test equipment was tested? Was the facility in which the part was remanufactured clean and sufficient?

How capable is your supplier? Are they box pushers or are they capable of servicing and modifying the item in the box? Customers are constantly modifying, customizing, and hot-rodding their vehicles. This is a billion dollar industry that isn’t going away anytime soon. Can your supplier modify the exhaust connection on the turbocharger you need so your customer can stuff a V8 Mack into his snow blower?

I know we are all reluctant to discuss this part but in the event you experienced a failure did you have warranty coverage? Was the claim processed fairly and timely? Were you paid to replace the failed item? Nobody likes a warranty… nobody. But if it’s not handled appropriately it makes a bad situation worse.

Price. Such a small word but in reality it is the most frequently considered component of value. The saying, “You get what you pay for.” comes to mind. Did your supplier position you to be profitable? Did they put you in that position while retaining all of these other value-added attributes? In today’s reality we jump onto the web and within about 30 seconds we can buy pretty much any item we desire, and for a pretty attractive price too. But here’s the thing. Can you make that purchase and still have access to all the pieces of this value puzzle that make the purchase of that part you just received a purchase of true high value?

Availability – Expertise – Quality – Service – Capability – Warranty Coverage – AND Price.

That’s the formula for identifying value. Where do you stand with your suppliers?

Curtis Owens, Parts Manager
Corey Stallings, Branch Manager