Issue link: https://iconnect007.uberflip.com/i/1505694
74 PCB007 MAGAZINE I AUGUST 2023 Matties: We came across an assembly company that was using information exchange and Industry 4.0 as a strategy. They said that every time a potential customer came in for an audit, they would close over 92% of those prospects. Their strategy was to create a connected factory as a showcase. Yes, that makes a lot of sense. ink about this from the standpoint of the client. When a cli- ent is shopping around for a supplier, what they want more than anything else is confi- dence. Yes, they're looking for a low price. Absolutely. But we've all been burned as indi- viduals when we've cho- sen the lowest price. e lowest bid is not always a recipe for success. Michael Porter also talks about the Five Forces model. His the- ory here is that if you want to improve prof- itability, you have to weaken the power of these five forces, and one of the five forces is the bargaining power of buyers. When buyers have power, they can negoti- ate lower prices in a commod- itized environment. How do you reduce the buyers' power? One way to do that is to increase switching costs. You want to make it as hard as possible for your client to switch suppliers. You want to lock them in. Why do I go to Starbucks? I go because I accumulate points, and I get a free drink every now and then. What would be a correspond- ing concept for a printed circuit fabricator? How can you lock your customers in like Star- bucks locks in its customers? I'm not suggest- ing you offer frequent flyer miles, but how can you become an effective partner in the cus- tomer's overall production process, not just fabrication? How do you create that kind of partnership? When you do, you have a situ- ation where the client would never dream of cutting ties with you as a supplier, because that would mean having to recreate all of that tribal knowledge, understanding, and appreciation for who the client is. Matties: Still, as Michael Porter and others have said, it's easier to do nothing than to be blamed for making a bad decision. Yes, it's risky for both parties when a client is shopping for a new supplier. Again, that comes back to this idea of switching costs. Sometimes it's easier with the devil you know, rather than the devil you don't know. Matties: What about vali- dation certificates from a third-party organiza- tion? I think something like that is definitely needed. Everybody is ISO-9000 certified these days; it's kind of the ante to get you in the game. You can't play if you're not ISO 9000-certified, so it has lost some of its meaning. Matties: Speaking of books, we recently read a book by Seth Godin titled This is Marketing. Seth points out that people often take a key and try to find the right lock. Like Seth, you're saying companies need to find the lock first, and then tune their capabil- ities to be that key. I agree with that analogy completely. It starts with an understanding of your market. What client base are you trying to appeal to? Are you trying to appeal to defense customers, medical device customers, or information technology customers? What do those clients want? What are those market segments? A defense customer wants something very different than what the medical device community wants. What is your When a client is shopping around for a supplier, what they want more than anything else is confidence.