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The Ford Files – Holiday Edition 2023 “What is Value?”

The Ford Files – Holiday Edition 2023
“What is Value?”

Dear Readers, one of my favorite topics during corporate training classes is the definition of value. It peaks the learners’ interest and generates a lot of discussion. It’s also a topic that aptly crosses over from work to our personal life, and the holiday gift shopping season fits right in. I often start with lean concepts that dovetail into value, such as the following sequence of questions (with suggested responses).

What is lean? (the elimination of waste) What is waste? (anything that does not add value) What is value? (whatever the customer says it is)

I had recently updated the desired response for the definition of value to “what the customer is willing to pay for.” Talk is talk, and actions speak louder than words. This is the customer behavior, pulling cash or a credit card out of their wallet, using a smartphone app, ordering online, or even placing a telephone order. My mother often noted that people will make sacrifices for things they really want. She recalled a time she decided to walk home from work rather than taking the bus, using the money to instead buy an ice cream sundae. For her, the sundae was more valuable than the bus ride.

I looked inward to perform a self-assessment of what Mike Ford’s perception of value is. In the September edition of “The Ford Files” I described purchasing the cheapest coffee pot at Walmart at $10.99. All I need is something that heats the water and sends it through the grind & filter. Somewhat ironic that I am so much more demanding of the coffee thermos it goes into, as I am a loyal customer of the original Thermos brand. I spent more money on the thing that holds the coffee than the thing that makes the coffee!

A lifelong friend exhibits similar behavior. He drives a Ram 2500 Turbo Diesel that retails for $80K+, which is more than the USA median household income. The most concise description of this beast is that it has 16 cameras. Folks, I don’t think I’ve owned 16 cameras in total over the course of my lifetime. But hey, this is a truck we’re talking about here. I contrast this with his recent purchase of dentures. He thought his dentist’s quote was too high and decided to shop around online, locating a prosthodontist through google that would save him hundreds of dollars, albeit with a 160-mile roundtrip drive from his home. I can’t stop picking on him, joking “who buys a $80K truck but uses google to find cheap dentures? Clearly your butt is worth more to you than your face!”

George Will once wrote a column describing how the holiday season destroys millions of dollars of value in the American economy, as every gift purchase reflects a loss. Follow the logic: a $50 bill is worth more than a $50 Visa card, merely by its enhanced utility. The $50 Visa card is worth more than a $50 store card, which is only good at a particular retailer. The $50 store card is worth more than a $50 gift from that store (again, more utility as I can buy whatever I want with the gift card). Thus a $50 bill is worth much, much, much more than a $50 gift. Each time someone buys a gift there is a loss in value. The best thing for the economy would be to stop giving gifts!

I’ll close by reflecting on my most recent major purchase, a Henry .30-.30 lever action rifle, at over $1,000. I am realizing this is more than the first couple cars I owned a long time ago. The frugal guy who only spends ten bucks on a coffee maker spends ONE HUNDRED TIMES THAT on a gun. That is my perceived value friends.

Holiday blessings, Merry Christmas, Festivus for the Rest of Us, Winter Solstice, Happy New Year, Orthodox Christmas and New Year, and any opportunity to raise a glass and celebrate fun, food, family, and friends!

Yours in ASCM,

Ford

Ford is here to help. If you have any follow up questions or comments, or if you or your company are facing any unresolved challenges, feel free to drop me a note at [email protected]