Raisins and Chips – Lowering Costs and Increasing Customer Satisfaction with Strategic Sourcing
If a company can lower the cost of a product or service and increase customer satisfaction then the strategic sourcing group has raised the bar.
This morning I opened a new container of raisins to add to my cereal. I was dismayed when I saw that it was only two-thirds full. I understand that there can be some settling of the product, but a full third?
Anyone who has opened a bag of chips has had a similar experience – two thirds product and one third air.
I wonder if the manufacturers of these items know what customers are experiencing or feeling when they open their packages.
By contrast the granola bag I opened to add on top of my cereal and raisins was full.
I doubt I will buy that brand of raisins again but I will buy that brand of granola.
This experience made me think about product packaging and design and the opportunities that exist to lower costs and make customers happier.
Simplifying the design of a product has many benefits.
Better designs in packaging can positively impact costs throughout the value chain.
The combination of simpler design and reduced packaging can have a multiplier impact on profits.
Here is a brief list of potential benefits of better design:
- A reduction in packaging will lower the weight and corresponding shipping costs.
- Suppliers in remote markets should be able to compete if transportation costs are lower.
- A simpler design can translate into fewer things that can go wrong and a reduction in quality control costs.
- Simplification can also mean less dependence on specialty manufacturers.
- Designs that can be migrated to assorted products create multiple ways to cut costs and increase efficiency.
- Lower set up or installation time and costs.
- A product with a smaller footprint creates benefits in transportation, storage and marketing. I will leave the full discussion of that to another day.
The products I mentioned at the beginning have changed over time. At one time chips meant potato chips. The variety of “chips” available today is staggering. Somewhere along the way the folks that are making the food seem to have lost touch with the package designers.
Perhaps there is the belief that if the amount of product in a container is reduced by a small amount it won’t be noticed.
I think the opposite is true. Buyers are much savvier today and with so many choices they can easily find a competing product with better value.
There may not be as many choices in raisin producers but there are plenty of other foods that can be eaten instead.
Procurement professionals can lower costs and increase customer satisfaction by working with everyone in the value chain from design to marketing to find opportunities.
Looking at the final product from a consumer’s point of view will be a good first step. If you wouldn’t be satisfied with the product, why would anyone else be?
Action Step: Every organization can get better. Finding and creating success is often a matter of taking the first step. If you are uncertain where to start, a procurement professional like myself can provide guidance and expertise to help your organization achieve the results you want. If you would like to explore this topic in greater detail, please contact me.
If you want to explore a purchasing or procurement topic in greater detail, I invite you to request 30-minute discovery conversation. In my experience the next step will be apparent at the end of the call. I never assume that my recommendations will be right for everyone, so don’t expect a sales pitch. You can reach me at 973-936-9672.
Organizations of all sizes are reducing costs and increasing efficiency, without changing the way they conduct business. If you would like to know how, simply give me a call or send me an email with your contact information and the best time to reach you.
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Think about it.
Until Next Time, I Wish You Great Success in Your Business and in Your Life