From a Material Supplier to a Solution Provider

Although the case company has shown significant growth, there has always been this mindset among managers that they need to constantly improve their product quality and services to retain their competitive position in the market place. Sales managers during their visits and discussions with customers realized that customers are happy with the quality of the products. However, their concern has been the installation time in particu-lar with spirals and sleeves. Most of the customers have had to utilize these products

manually which is time consuming and irritating for the operators. The case company manager was convinced that they should offer something to their customers:

“We started looking for solutions to facilitate usage of our products in 2005. At that time once a while customers were asking if there is any solution available or not. Thus we developed a simple tool to facilitate mounting of spiral on hose as-semblies. Unfortunately, customers were not happy with the idea and we were out of options for a long period of time. In 2008 we were able to find a tool for our purpose. It was not a commercialized product so we needed to acquire permission to sell the tool under our name.”

Figure 63 shows the tool which the case company offers to the customers for mounting spiral on hose assemblies.

Figure 63. The case company tool for mounting spiral.

The case company manager continued:

“It was around 2010 when a large machine manufacturer asked us to prepare 10000 pieces of textile sleeves for them. We made few sample with our textile cut-ting machine and delivered it to them. Customer did not approve the quality of our cut and asked us to burn sleeve edges after cutting. We realized that it is not cost efficient for us to do this process manually so we declined the order. This ex-ample and some other comments we received from our customers forced us to start thinking about a solution for cutting textile sleeves with better cut quality”.

During the past few years, customers have been asking whether the case company could offer them a better tool or machine for mounting the plastic spiral and cutting the textile sleeves. Hence, managers realized that developing a new solution for these needs should be a high priority for the company:

“It is very important for us to have a close relationship with our customers and providing solutions to facilitate the usage of our products is a step in the right di-rection. In addition, offering these solutions may open up new opportunities for us. We may be able to sell more products to current customers or even find new

customers in the market. Finally, if everything goes well, we may be able to gain a profit out of these solutions which is always nice.”

Thus, based on the manager’s statements, it can be concluded that the case company is moving from being only a material provider to a solution provider. They want to get involved with their customers’ operations and to help them in finding solutions for their problems. In addition, the case company is looking for new opportunities to expand their product portfolio. They want to supply the majority of hose protection products needed by their customers. Figure 64 illustrates the steps that the case company is tak-ing to expand its business.

Plastic Spiral Textile Sleeve Safe Wrap Safe Strip Binding Strap Case Company

Products

Hose Capping Material

Supplier

Solution Provider

Expanding Product Portfolio

Spiraling Machine Development

Sleeve Cutting Machine Development

Hose Capping Machine Development

Figure 64. The case company business growth plan.

Becoming a solution provider can offer various benefits to the case company. First, they will be the first company in the industry to provide a reliable solution which would im-prove the competitive position of the company in the market place. Second, they can show to their customers that their relationship with them is not just a simple buy-sell transaction, but a long term business relationship which can benefit both parties. This will increase customer loyalty and will have a positive impact on the company’s annual sales. Third, new customers may become interested in working with the case company instead of their current suppliers because the case company will have proved that they have an understanding of their customers’ operations and have the capability to help them solve their problems. Finally, facilitating product usage may simply lead to an increase in demand.

To move toward this goal, the case company defined three development projects: spiral-ing machine, sleeve cuttspiral-ing machine and hose cappspiral-ing machine. The author of this the-sis was involved in all these development projects. Among these projects, the sleeve cutting machine was chosen to be discussed in more detail. The main reason for this selection was that the development process of the sleeve cutting machine involved less complexity than the other two projects, making it a good example for the demonstration and testing of the theoretical framework.