VALUE VERSUS PRICE? REALLY?

By Richard Brayne-Nicholls, Commercial Director, Aquapurge Those that know me will appreciate that I hesitate at all times to tell any tales outside of school. However, I suspect that the following – while based on a true and actual story – might be so generic as to be worthy of a wider audience. Company XYZ injection moulds large and complex plastics parts. The quality demands from this company’s international customer are very high – and the failure rate on this particular production line is correspondingly high – staggeringly bad in fact. A charitable view would estimate the reject totals running at over 50%. The primary cause? Contamination in the screw and barrel leading to flecks of carbon in what should be a faultless surface finish. A fail is a fail. The quality manager needs to save his job and get to the bottom of these issues. But the company’s procurement manager and the cost accountant are working out of their silo and fixated on only one thing – ‘price per purge’. Saving a few pence at the hopper throat means more in this instance than saving thousands in wasted production. Of all the production wastes to be analysed in manufacturing the scrapping of finished product is the most expensive since it wastes all of the factors – machine time, material, etc – that have already been invested thus far. Clearly this unnecessary ‘turf war’ is for management to solve and sort. However, it never ceases to surprise me how slow and reluctant many businesses are to grasp the nettle. At Aquapurge we have a catalogue of the cost of inaction in this way; from immediate consequences to secondary implications; knock-on effects in the customer’s business and then the cost of remedial technical and reputation repair. Price is not necessarily the enemy of value at all. Indeed, paying a little more – in the right way at the right time – can help ensure a healthy profit rather than an embarrassing loss.

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