Rapid performance improvement and permanent competitive advantage

Vera Waltari

RAPID PERFORMANCE IMPROVEMENT AND PERMANENT COMPETITIVE ADVANTAGE

Technically high-quality products are not enough in today’s competitive market. A precise understanding of the rapidly changing needs of customers is needed, as well as a strong understanding of one’s own competitiveness. A leading manufacturing company in its field struggled with exactly these issues. Spring helped the company change their approach and achieve significant results already in the first three months.

Challenge

Our client did not have a clear understanding of their true competitive advantages and therefore had difficulty defining the value proposition for their customers. Despite the excellent technical quality of the products, the company was perceived as too expensive and it kept losing its most important customers.

Diagnosis

As a result of our analysis, it became clear that the primary problem was not the quality of the products, but the price pressure, which often forced to change the design. These design changes were often made without a clear understanding of their impact on the company’s costs and its customer’s perceived value.

Defining the solution

We adopted a strategic approach in which product features were optimised based on the customer’s perceived importance:

We found out which product features customers value the most and what they are willing to pay for.
We analysed design choices and performed a performance-cost analysis to balance costs and highlight areas where our client could gain a competitive advantage.
We identified opportunities to change material choices and reduce material use without compromising technical quality. This provided an opportunity for cost savings, and thus for updating customer pricing.

Results

The implementation of our solution had a revolutionary impact on our client’s competitiveness and profitability. In less than three months, the company achieved significant improvements:

5% absolute increase in sales margin – by matching the product’s features to the customer’s perceived value and optimising costs, the company was able to increase its sales margin by 5%. This was directly due to a better pricing strategy and more efficient use of materials. By offering products of the right quality level at a competitive price, the company was able to give a clear value proposition to the market.
10-20% reduction in the use of material, which was achieved without significant impact on the technical quality requirements of the products. Strategic material choices thus supported sustainable development and contributed to cost savings. Later, when the availability of the raw material weakened and the prices increased, this has been especially important.
Market share recovery – the company regained its market share in two key product segments. By offering products that better met customer expectations and offering competitive prices, they were able to win back lost strategic customers and significantly increased their competitiveness in the eyes of potential new customers.

Spring’s approach

This customer example undeniably shows how Spring’s experienced experts and the analyses applied to the situation enable rapid performance improvement and strengthen the customer’s competitiveness in the long term.

At Spring, we are committed to helping companies utilise their full potential in a constantly changing operating environment.