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

 

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