The Mcilvaine Company helps suppliers increase market share
and sales by identifying the best sub niches as small as $ 1 million/yr. It also
helps to aggregate these sub niches into niches of at least $10 million/yr.
These are large enough to pursue an organized approach. The other niche criteria
are market share of 20% and EBITDA of 30%.
This share and high EBITDA are obtained only if customer cost
of ownership is 7% lower than alternatives. So, this Mcilvaine initiative is as
valuable to purchasers as to suppliers. However, the whole program rests on
understanding the needs of customers.
The AWE Productivity Hub is a resource to facilitate the
exchange of critical information between buyers and sellers.
It
starts with the truism which is that every purchaser wants a custom solution to
his problem. The challenge for the seller is to minimize customization to reduce
costs. The seller has two options for maximum productivity.
·
Determine if
there are enough other customers to warrant a special design or service.
·
Bundle several
products into a package which further reduces cost of ownership.
Purchasers need to be involved in these decisions.
For example, if the company has multiple plants it
can offer to buy products for several. BASF buys specially designed valves for
many plants.
Some pump suppliers are providing skids with valves and
piping. So, the value proposition should not be limited to a sub niche but to
the optimum combination of sub niches. If proper communication is achieved the
results are beneficial to the entire AWE industry.
Productivity Level Versus Profitability |
||
Productivity Level |
Supplier |
Purchaser |
No niche program |
15% EBITDA |
100% of present cost |
Sub-niche quantification |
20% EBITDA |
3% cost reduction |
Analysis of niche combinations |
30% EBITDA |
7% cost reduction |
The Mcilvaine primary function is to forecast all the sub
niches.
But to do so it is analyzing all the facts and factors key
to value propositions. So, it is also helping suppliers with value propositions
around niches. The Productivity Hub is created to facilitate discussion about
these value propositions between suppliers and purchasers.
Mcilvaine is working directly with the media and
also working through supplier clients.
The Left column of this page explains the details and provides
some of the links to the media coverage of the program.
Details on the program are available from:
Bob Mcilvaine
President, Mcilvaine Company
rmcilvaine@mcilvainecompany.com
847 226 2391