When Wiley Metal started in business in 1982, we quickly found out how critical piece pricing was going to be in our ability to secure customers. Piece pricing has been used in the metal fabrication industry for generations prior to our family getting involved, and we weren’t about to change it overnight. We felt there was a better way, though, by building relationships and adding value, but change would come slowly.
Over the decades since, we have seen incredible changes. We’ve seen the introduction of the internet and online marketing, smartphones, digital inventory and invoicing, the IoT and most recently, robotics and AI. Through all of these changes, there has been a constant. Piece pricing stubbornly remains in place for many potential clients.
A major reason is that many customers believe that piece pricing is an easy way for them to compare apples to apples. They may still feel that if they give potential OEMs the same specs, they can justify their decision to purchase based on the lowest price per piece.
The thinking was actually understandable. After all, an OEM manufacturer certainly had to understand their own costs and wasn’t going to produce pieces for less than they could afford. If an OEM manufacturer could produce a piece at a lower price than a competitor, perhaps they were more efficient or had greater capacity to justify their lower costs. For a customer, it almost didn’t matter. If they could get a piece they needed produced at a lower cost, it wouldn’t be prudent to award the contract to someone else.
There are, however, flaws to that thinking. Some suppliers would intentionally underbid an initial project to “get the business”, eventually raising prices to, or past, market rates. Some suppliers may have been so desperate for an order to jeopardize their own existence. This could ultimately leave the customer back at the drawing board in searching for the next cheapest per piece supplier. These are some of the challenges of per piece pricing.
Other Challenges of Per Piece Pricing
Those buying on a per piece basis use incredibly narrow vision. They must be so price-focused as to ignore “peripheral” aspects of a supplier like their ability to deliver consistent quality on-time. It requires a customer to be so price oriented on a per piece basis to place little importance on a supplier’s reputation, knowledge or experience. Purchasing on a per piece basis also means a client may be missing out on an incredible amount of value-added capabilities. They may be passing on a supplier who can partner with them in developing more efficient and effective ways to produce their parts. They may not be taking full advantage of what an OEM manufacturer brings to the table or of the value of a true partnership.
Evaluating OEM Part Suppliers Value Add Services
Even in our earliest days when we dealt with per piece pricing bids on an almost daily basis, our team saw the value in distinguishing ourselves by adding value. We knew that if we could build and maintain relationships with our partner clients and assist in their success, our success would follow. It has.
Our team is knowledgeable and actively involved with our partner clients and their goals. Access to our engineering team expands the capabilities of our clients and our philosophy of constant, proactive improvement means our clients are getting better as well. As we earn the trust of each, we often acquire opportunities to produce additional parts and products, making us even more efficient for our partners.
For us, it usually always started with a conversation. The better we could understand our clients and their goals, the better we could put our knowledge and expertise to assist them. If they had a concept or idea, we would gather to see how we could make it happen. If they were struggling with a design or material choice, we were there as part of their extended staff, to help. In return, we were rewarded with world-class clients who have been loyal to our company as well. It has become second nature to work together without the angst or push and pull of the sales process. There’s a level of trust and understanding that is built that is far superior, and much more valuable, than dealing on a “per piece” basis.
Per Piece vs Value Add
We certainly understand that some companies seem to have per piece pricing built into their corporate DNA. As an OEM parts supplier, we are happy to take part in bidding on just about any project. But we are constantly looking to improve our value-added services to set us apart.
We have worked with partners in supply chain relationships to share revenue goals to improve profits. We are flexible and responsive, another key benefit of building close partnerships with an OEM supplier. You see, we believe part of the manufacturing process is building a strong, dependable and reliable supply chain. Per piece pricing is a weak link in that supply chain. On the other hand, utilizing suppliers that provide valuable value-added services strengthen the links in that chain.
Per piece pricing provides a temporary solution. Seeking OEM suppliers with strong value-added services builds stability and strength. It builds worthwhile relationships and creates future opportunities.
Whether you are purchasing a new car, home or a diamond, making any purchase has its nuances. Where and who you are buying from makes just as much difference, if not more, than how much you are paying. That’s important to keep in mind when considering purchasing on a per piece basis.
Whatever it is you are trying to accomplish, we invite you to contact us to talk about your next project.