These concepts will help you innovate down your value chain.
Before we address the B2B value chain, let’s be clear about this: There are only two ways you can help B2B customers. You can improve their products or their processes. A company’s products define who it is: This company is a producer of motorcycles, for instance. And its products dictate the processes it uses… such as welding. Other examples of processes and products include:
- Packaging (process) for snack foods (product)
- Exploration (process) for petroleum (product)
- Visitor registration (process) for hospital care (product)
When you help a B2B customer improve its process, this reduces their costs. When you help a B2B customer improve its products, they can sell a higher volume or at a higher price. Put simply, when you improve customers’ processes or products, they save or make money, respectively.
We like to think of four broad categories of B2B suppliers. Here are some generalizations about producers of each of these:
- Materials: These could be chemicals, plastics, glass, alloys, etc. They often end up as part of B2B customers’ products. This means their primary impact is usually on customer’s products… though they may also impact customers’ processes.
- Components: A component is like a material, except it doesn’t lose its identity in the final product. (You can still see a hydraulic cylinder on the front-end loader, but not a thickener in the paint.) As with materials, components usually end up as part of the final product, and therefore impact customers’ products (and possibly their processes.)
- Equipment: This is a combination of materials and components that performs some useful operation. Unless the piece of equipment is being integrated into a larger system of equipment sold by the customer (sometimes called an “integrator”) equipment suppliers usually see their greatest impact on customers’ processes.
- Services: In this case, no physical article is delivered. B2B service providers can impact both customers’ processes and products. In most cases, though, service-providers find they are improving efficiencies and reducing costs in their customers’ processes.
You'll see in the next BlueHelp article, Finding value down the value chain, that your exploration down your market's value chain will be aided when you parse your potential improvements by product vs. process.
Keywords: product improvement, process improvement, product vs. process, B2B products and processes, value chain, save or make money, materials, components, equipment, services