I talk a lot about outsourcing as a way to grow small business turnover and small business capability, but we should also talk about value co-production!
Outsourcing means several businesses working together, to service more customers than they could service by themselves. If you think only small business does this, think again. Almost all big car manufacturers, furniture manufacturers, and other big business do it always.
Value Co-production means that you, and your outsourcing partners, offer discounts to customers so they build their own product. You effectively sell a kit of whatever it is you manufacture. This is often done in the furniture industry, look at IKEA, Homebase, etc. When they talk about “flat-packs” they are talking value co-production, with benefits to the customer:
1. Lower Price – in return for their own work input;
2. Transport – the items often fit into in your own car;
3. NOW factor – customers can take the good now, no waiting for delivery.
Some of the benefits for your small business are:
1. Lower Cost – due to shortened manufacture cycle;
2. Higher Manufacturing Output – due to shortened manufacture cycle;
3. Higher Turnover – products become more competitive in price;
4. Lower Transport Cost – due to smaller items being shipped.
This all will help to drive down overheads and help cutting costs. Is value co-production for you?
If you are a manufacturing business, it is certainly worth thinking about! ST.