Combat rising inflation and future-proof costs with a multiple-year ServiceCare contract, reducing overheads and improving the profitability of your operations.
Managing manufacturing costs can be a struggle at the best of times. Now, rising inflation, specifically in the cost of raw materials, is forcing manufacturers to review pricing strategies and make difficult decisions in order to protect profits and keep their operations running.
“Many industrial companies face a complex new array of challenges today, including a global pandemic that has driven radical shifts in demand, buying patterns, cost to serve, and perceived value across sectors, which in turn have led to sharp spikes in commodity prices.” ‘Winning the race with inflation: The pricing opportunity for industrial companies’, McKinsey & Company
What impacts are manufacturers already experiencing as a result of increased costs? How is VFE helping its customers to future-proof operational costs and why is the opportunity now?
Fighting the effects of inflation
As commodity prices surge, raw material costs have risen with them. This has a significant impact on the cost of production. “With little flexibility in the cost to produce, manufacturers looking to maintain profit and reduce risk must offset those costs elsewhere”, explains Slater Jinkinson, head of sales at VFE. “Typically, this means price increases.”
Manufacturing inflation example
“A business with 30 percent gross margins and 40 percent of cost of goods sold exposed to raw materials, assuming inflation of 20 percent, will need to implement and capture an 8 percent price increase just to keep gross margin unchanged. Even higher increases may be necessary with more exposure to raw materials or higher inflation.” Winning the race with inflation: The pricing opportunity for industrial companies’, McKinsey & Company
Much like production itself, manufacturing pricing strategies are complex processes governed by multiple levers. Pull one and all other factors must be taken into account in order to ensure the pricing is correct and the strategy is still profitable.
In the current environment, with inflation continuing to rise and businesses across the board having to adapt their pricing accordingly, budgeting in manufacturing becomes an even greater challenge for busy maintenance and operations managers.
“We always strive to solve for the customer”, reveals Slater. “In this case, we wanted to raise awareness for our fixed-rate ServiceCare plans. Available for periods of up to five years, these can help manufacturers to fix some of their costs at today’s rates, helping to combat inflation for years to come.”
What is a ServiceCare plan?
Throughout the advanced manufacturing and heat treatment industries, service providers play a key role in managing the flow of production. But managing service contracts and associated costs can be a challenge in itself, particularly when manufacturers are required to engage multiple providers, at different frequencies, for a wide range of services.
“Our ServiceCare agreement is set up to solve this challenge for our customers”, explains Slater, “giving them a single contract — and a single point of contact — for all their services.”
Each plan is tailored to meet individual requirements. Customers can select the frequency of maintenance visits and whether or not to include an emergency call out option. Crucially, we offer fixed-rate pricing, meaning that our ServiceCare customers can secure their servicing and calibration pricing now, at today’s rates, for a period of up to five years.
General benefits of our ServiceCare agreements also include:
Learn more about how routine furnace calibrations can reduce production costs.
Fix your rates now and make the most of your manufacturing budget for years to come
Sign up for a multiple-year ServiceCare contract to secure fixed-rate servicing and calibrations for up to five years, protecting profitability and future-proofing your operations.
VFE has over 35 years’ experience helping manufacturers to reduce costs, improve their businesses and keep their operations running. Our high customer retention rates — approximately 80% over the last 20 years — demonstrate our exceptional standards of service, tailored to meet every customer’s individual requirements. The offer of multiple-year, fixed-rate ServiceCare contacts is another way we help our customer to achieve this.
“We’re a service provider first and foremost”, reveals Slater. “That means adapting our operations to help support our customers when they need us most and give them the confidence that whatever challenges 2022 throws at them, we’re here to help.”