BUSINESS

FLEXIBILITY

LESS INVENTORIES, LESS STRESS,

MORE CLIENTS, MORE CASH

1
The advanced system for
commercial and production
companies

BUSINESS FLEXIBILITY
“The right product, at the right
time, at the right price!”

Discover how to boost

your business competitiveness
right now with no risks and no
investments

2
“It is not the strongest or the most
intelligent who will survive, but
those who can best manage
change.”
Charles Darwin

“We cannot expect things to

change if we continue doing the
same things.”
Albert Einstein

“Even against the wind!” (Et ventis

adversis).”
Gabriele D’Annunzio

3
THE HARSH TRUTH ABOUT THE CRISIS

Never before have we continued to talk

about the crisis, as in this very particular
period. The crisis made people lose their
jobs, disoriented even historical
companies, and blocked investments, etc.
You must certainly have heard the famous
phrase, “there are opportunities lurking
behind a crisis” and like many, must have
thought: nice words, great slogan, but
what shall I do with orders that are
cancelled, difficulties in selling my product,
and competition from all corners of the
world?

I’m not trying to convince you that with

optimism you can overcome all the
setbacks otherwise just a motivational
course would suffice for me to gain
courage and hope with optimism.

Frankly, for a long time I myself thought

the same thing. They were nice clichés,
but substantially, things were better when
there was no crisis.

4
There may not have been all these “Grand
Opportunities” but at least there was work.
The crisis has generated a series of
negative consequences like the loss of
jobs, drop or annulment of corporate
margins, cancellation of investments, and
drastic reduction of credit for companies.
In short, nothing positive.

With this scenario, now common to many

sectors, one can hardly pursue the great
opportunities which many preach about, as
if they were just around the corner. And
these are the “many” who want to make
us seem lazy, as if we were the ones who
will not take them.

The seeping of habits and conducts into

our life comes about in three phases:

– we denote them;
– repeat them;
– transmit them to those around us.

5
Fortunately or not, the human being ticks
out of habit and repetition; this continues
in a comprehensive manner for good or
bad, in the way we speak, dress and in
every other action.

It has been proven that the multitude tags

behind the multitude, that is, every human
being tends to conform himself to the
masses, and this is one of the main
reasons why at times, it is difficult to
detach oneself from the crowd and head in
another direction.
Going against the current is discomforting,
but implies reasoning with one’s own
brain, independently choosing from among
the options without caring for what others
will think.

Taking on the risk of change also helps us

to accept the errors, leading us to a new
level of thought where failures don’t exist,
but only feedback.
To this end, the great inventor Thomas
Edison made more than ten thousand
attempts (10,000!) before he succeeded in
creating the incandescent light bulb,

6
allowing us all to have electric light.
One day, in an interview, he was asked:
“Mr. Edison, how did you feel when you
failed more than 10,000 times?” He
answered:

“I have never failed! I only obtained

10,000 different results from what I
wanted to achieve and each of these
helped me to find the right one!”

We must always keep in mind that we

mold bodies and minds according to our
environment and the people in it. We thus
need to develop the capacity to select
which behaviour to use and which to
replace.

I am aware that all this could seem

robotic, but the brain works this way and
most often people live a life different from
what they desire, believing that it is the
fault of the divinities or the wheel of
fortune, which in no way wants the
damned winning number to be extracted.

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The reality is very simple: what you are
today is the result of the

people you choose as models and, if your

life is unsatisfactory, it means that you are
repeating the patterns of someone who
taught you what, from his point of view, is
the normal reality.

Break the pattern.

How to go about it? There are many ways.

In the coaching discipline four powerful
questions are used to start a new different
way of doing things. Note them down and
give yourself the answers (and above all
follow them up with concrete actions).

1. What more can I do?

2. What less can I do?
3. What are the new things I can do?
4. What can I stop doing?

“It doesn’t matter what they have made of

you up to today, what matters is what you
will make of yourself from today onwards.”

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One of the things a businessman should
always consider if he wants his company
to last with profits through time, is market
development.

I mean evolutions in the plural, and not by

chance.

The market, in fact, undergoes various

transformations with time. It is something
dynamic.

And does not remain still.

Isn’t technology making gigantic steps

forward?

Infinite products cease to exist and give

way to new replacements (think of the
VHS and the DVDs, or the digital cameras
that have replaced those with the film
spools).

Today we can offer services that were

unthinkable before (for example the Netflix
or Spotify services).

With time there will be jobs that never

existed before (just think of any job that

9
requires a PC and can be done from home,
like that of the copywriter).

And yet…

… these are only some of the things that

you have to keep an eye on in order to
remain competitive in the market and not
drown due to obsolescence, inadequacy, or
especially indecisiveness.

It’s true that if you ignore them

completely and blindfold your eyes in
order not to see, your company will end up
in the abyss before you even notice it.

But also, when you adjust to everything in

time, there is another aspect that changes
constantly with time: the key factors that
determine how much you are able to be an
all-around businessperson.

What are these factors?

They consist in the satisfaction of your

active clients and the acquisition of new
ones.

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A company is not a business without
clients. Let me repeat: without clients
there is no business, since there would be
no cash resources to achieve anything.

With the evolution of the markets also the

habits of companies develop, and which,
strangely enough, are the same companies
themselves which could become your
clients.

Besides the product, here’s why you need

to also have the newest and advanced
technologies and strategies to maintain,
acquire and satisfy more and more clients.

The aim of a strategy is to transform the

way with which the enterprises attract a
better clientele, intended as the greater
value and less price-oriented.

For businesspersons, this strategy should

break down the eternal battle of clientele
acquisition based only on prices.

Instead, strategy should consist in solid

foundations to be able to penetrate the
market and boost the profits thanks to a
deep competitive edge.

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For the salespersons, this strategy repeals
the antiquated and obsolete acquisition of
clients adopted up to now.

The replacement strategy consists in

creating a system which attracts the
clients towards you, clients who are willing
to assess what you have to offer for their
benefit.

As I said, also strategies have developed

with the years.

Always in constant development, these

strategies cover new and optimized
instruments, to give you the maximum
advantage you can get from continual
research experiences.

So, in the way you are forced to change

products when the market so imposes, in
the same way must you constantly work
on your purchasing/sales system to have
more and increasingly satisfied clients.

Unfortunately, this is the most important

aspect, which still today, is the most
underestimated. You have to keep an eye
on it since it is strictly connected to the

12
development of the companies’ purchasing
habits.

And not all make the right choices.

But remember: it depends on you. You can

control and handle the future of your
business, decide differently, or even make
no decisions.

You have to analyse, understand,

question, and think in a critical manner
and examine the settings in which you
operate to understand the best way to
push your company to the utmost.

Socrates was an ancient Greek

philosopher, an advocate of western
philosophical tradition which still today is
studied in school.

And some of his most famed phrases are:

“A life without research is not worthy to be

lived”

“Only one good exists: knowledge. And a

sole evil is: ignorance”

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This is why along the years, I dedicated
myself to observing and analysing this
situation closely. I participated in various
seminars and believe I have reached a
personal conclusion: there had been a
crisis, it’s undeniable, but I believe that
the problem today is not the crisis initiated
ten years ago, but that the current crisis is
the consequence of the fear of facing the
changes.

So, let’s not talk of crises, but rather, how

to face and overcome this fear of change.
We must identify the right cause of the
crisis, and above all, defeat this fear of
change paralyzing us.
“Change”: a word which not always
arouses positive sentiments given the
unpredictability which the event fosters.
So, when we fear and avoid it, we keep it
at a distance with the risk of remaining
static and immobile.
Change requires energy, pure will,
determination, tenacity and perseverance,
since at times in the face of difficulties, the

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temptation of going back can annul the
good decisions for change.
The greater difficulty is almost always
taking the first step, setting out on the
road of transformation. It certainly seems
to be more convenient to settle down on
what one has and not explore the
alternative paths since we think they could
lead to the change we unconsciously fear.
There are many types of changes;
obviously this book analyses that of the
work field. The people mainly addressing
change generally possess good flexibility
which derives from professionalism and
competencies acquired, as also a
predisposal to constantly evaluate ideas
and new paths.
But the more change touches the emotive
sphere, the more difficult it is to reason
objectively.
To give an answer to why change is
frightening, we should start from the
meaning of the word itself.
In Greek the word “change” has the same
semantic root as “catastrophe” and the
same inflection as “movement.” It thus

15
appears like a sort of distortion that may
give rise to unforeseeable consequences.
Change in itself should be embedded in
the life of each one, even if not necessarily
intended as a distortion, since each of us
needs continual renewal, both biologically
and also psychologically.
Just think of the unceasing renewal of the
cells of the body which keep us alive: the
cessation of this would mean death.
If it doesn’t change, it is because it’s dead!
The same occurs in nature: all that does
not change is dead, a plant that doesn’t
grow, does not bloom, and is dead.
How did China, the biggest production
power in the world and which frightens us
in many sectors, get to this level? I believe
it is because 10, 15, 20 years ago it
started to behave in a different way
(change) in the manufacturing sector and
not only in that.
We see numerous companies complain of
the crisis and then continue internally to
work with decades-old machinery,
systems,

16
and organizations.
In a world that is changing faster than in
the past, you wonder: how can we be or
remain competitive when we use obsolete
instruments and organizations with
characteristics measured to a now long-
gone era?
And we also have the guts to complain…
Looking into any field, from the PC to
telephones, printers, and machinery,
everything is constantly changing.

What is the consequence of Resistance to

Change?

As a consequence, a defense mechanism

starts, which tends to make the company
hide and isolate itself. In the long term the
defense to change leads to immobility
making the company enter a vicious cycle
which generates weakening instead of
growth. We have seen the leading
companies of the sector use this defense
mechanism which blocks investments for
years.

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This choice led them to a decisive
slowdown, blocking development and even
making them retrogress.
Once you have crossed this threshold, it
will be even more difficult to introduce
change after some years, since if you
haven’t done it before, you will not see
why you should do so now.
Change brings growth and thus,
strengthens. It is fundamental not to run
away in the face of novelties, or renounce
the opportunities that come up, but try to
look out and face new experiences.
Oftentimes, in every sector we notice this
fear to face changes, and receive
feedbacks like, “We have always done it
this way, so why change?”
It’s a matter of survival: renouncing to
new opportunities means self-condemning
oneself to immobility, which is the main
evil of our businesses.
In applying this concept to our sector of
spare parts, I see clients who react with
enthusiasm to proposals for new Business
Flexibility solutions.

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I see in in this type of company, their
operating methods, the desire to face
change and the remarkable confidence in
themselves, though conscious that there is
always a bit of risk. But that risk however,
activates the right amount of adrenaline
and brings proactivity.
However, I see also clients who perceive
only danger in the innovative proposals.
These arouse in them a sensation of not
being in control of the situation and
therefore, of potential danger.
The experience of these companies led me
to decide not to insist in trying to
demonstrate that the innovation we
propose is the right path also for them.
They are so convinced of the
preconception that I prefer investing our
time in working with companies of the first
group.
On the other hand, I am not a preacher
and do not expect to convert all the clients

19
to our new Business Flexibility system.
Luckily for us, there are many companies
that comprehend the importance of
change in such a particular period.
At this point, you can also directly draw
the right conclusions to what happens
when two forces like Immobility and
Change clash. We believe that the most
suitable word to define this situation would
be “Crisis.”
Given that you cannot control market
change, you only need to do one thing:
transform immobility into change, so that
market change and change in your
company can work together and magically
erase the word, “crisis.”
And it is at this point that we can finally
affirm that, yes, great opportunities can
arise from crises.

20
THE FIRST BOOK ON BUSINESS
FLEXIBILITY

I wrote this book on Business Flexibility to

share useful concepts and ideas with the
people working in the sector of spare parts
production and sale, to give a hand and
act as a stimulus in facing new challenges.

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FROM 2009 ONWARDS EVERYTHING HAS
CHANGED IN THE COMMERCIAL AND
BUSINESS WORLD

Many companies had to invent new

management models, new proposals, and
organization, and not a few had to give up
in the face of scary market situations, to
say the least.

The onset of new competitors from all

parts of the world, and particularly from
the Asian zones where the companies are
also supported by immense government
incentives, has destroyed the old
paradigms and have increasingly opened
out to the new king of transactions: The
Price.

These situations have had an upper hand

in making the historical companies choose
the fastest, but also the most dangerous,
shortcut of the lowering of sales prices, in
order to maintain their market shares
gained with years of work, to the point of
zeroing the profit margin or even of
working below cost.

22
Unfortunately, this “forced” strategy has
led to remarkable economic stress of the
companies which, inevitably were
transformed into occupational stress,
leading also to the social problem of many
countries due to the reduced volumes of
work or even the closure of their
businesses.

As constructors of heavy-duty parts for

earthmoving machines since 1968, we
witnessed up to 2009 a frenetic race of our
clients, and generally of companies of the
sector, to increase their inventories so as
to reduce the purchase costs, always
offering “stock merchandise” to their
clients.
Then we realized that this meant having
your corporate resources, spaces, human
resources, money, and obsolescent goods
tied up, and greatly limiting operations
and corporate development.

Being in the sector, you well know that a

bucket-wheel blade, the quality of which is

23
by now, mistakenly considered standard,
is hard to produce in Europe and be
competitive with the Chinese competitors.
But we firmly believe that most of these
products can be made in Italy and sold
worldwide by adopting with our clients, a
different approach from the one commonly
adopted for years.
The new challenge is to adapt the
warehouse to the market level, riding its
highs and lows without allowing ourselves
to be overwhelmed by the wastes/
expenditures which a high inventory value
entails. This allows its value and all the
related costs to be reduced.

Acquiring the quantities which the market

requires is an idea many agree with, but it
is an idea that has to be faced with the
right partners, who have to guarantee
reliability, resilience and flexibility.
To respond swiftly and effectively to the
clientele is a committing challenge that
few can win.
On this premise, this book wishes to
provide insights into examining the issues

24
related to Business Flexibility, and is the
concept which is the title of this work.
In leafing through the next chapters, you
will understand and assess the various
ways of competing in the world of spare
parts, using less resources in the
warehouse and obtaining just the same
utmost satisfaction of your clients.

Enjoy reading.

25
WHO IS PIERLUIGI ROSINI

I am an entrepreneur, and for 20 years

have been in the field of Heavy-duty Parts
for Earthmoving Machines with
Metallurgica Valchiese, a company founded
in 1968 and acquired by me in 1997.

Today I deal with business development

and new markets, with a particular eye on
the study of new strategies to allow our
customers to achieve constant growth on
their reference markets.

After a first experience in the metallurgical

products market, I faced the challenge of
purchasing Metallurgica Vachiese (MV). For
this revival we were compelled to quickly
grow, developing new strategies to
compete with rivals around the world.

This great effort has been repaid by the

customers themselves since MV has
managed to win over world-renowned
customers like CNH, KOMATSU, LIEBHERR,

26
DOOSAN BOBCAT, MANITOU, MECALAC,
MERLO, VOLVO and other Original
Equipment Manufacturers (OEM), for the
supply of both original equipment and
spare parts. MV has also become a supply
partner of primary spare parts distributors
and manufacturers of buckets and
equipment in numerous countries
throughout the world.

After the global crisis of 2009, a few years

passed with a strong recession in the
market. Listening to previous and potential
customers and observing the market
launched towards a new evolution, we
were convinced to launch a new business
strategy: to support our customers in
warehouse downsizing by offering them
maximum production/business flexibility
so that each of our customers would reach
the goal of maximum commercial
competitiveness.

Today, after the first years of implementing

our new strategy, we are encountering a
considerable increase in our sales deriving
from results that many of our customers

27
are obtaining on the various markets,
thanks to this new approach developed by
Metallurgica Valchiese.

The results obtained from major Business

Flexibility have allowed each company to
reduce the amount of inventory, thus
liberating resources to invest in market
development.

The constant efforts and determination not

to give up are fully repaying the
commitment and dedication of the
workforce of Metallurgica Valchiese, which
has believed in this project.

28
THE TRADITIONAL WAREHOUSE IS OFF
THE MARKET

NO to very high inventory values!

NO to obsolete products in stock!
NO to tied up economic resources!

We recently resolved a customer’s

problems of frequent end-of-line stocks
that arose despite a very high inventory
value, by simply agreeing with him in fine-
tuning the Business Flexibility strategy
that has also permitted him to greatly
increase his own clients’ satisfaction and
the drastic reduction of unanswered
requests.

All this was accompanied by the minimal

use of external credit and a reduction in
financial charges with the consequent
increase in the corporate rating.

29
OUR COMPETITORS MUST CREATE SPACE

To the persons claiming that "THERE'S

STILL ROOM FOR EVERYONE," I tell them
that IT’S NOT TRUE.

"WE WANT TO BECOME SECTOR LEADERS"

This is a statement that is uttered by

companies experiencing SUCCESS. Maybe
not yet leaders, but they observe the
market and have a project they are
working on, and as a result, complete
change is underway.

It is useless to conceal the fact that when

I meet these companies, I am fascinated
by them. I am curious, and I like to inquire
to know what they think about their
competition and what basic conviction
gives them momentum and enthusiasm.
Guess the most frequent answer that
these companies have in common.

30
"MY COMPETITORS SHOULD SHUT DOWN"
I would like to inspire you with this very
strong statement gathered from successful
companies in various sectors. I have thus
decided to share with you my over 20
years of meetings and visits with
successful companies and not in many
parts of the world. I can assure you that
two categories of companies in every
nation and culture exist.
In one, we can include companies that
complain about the market, customers,
employees, suppliers, crooked
government, crisis and so on and so forth.
While without a doubt, recognizing that
these are variables that influence
business, it is equally true that there are
companies that despite having the same
variables, are SUCCESSFUL companies.

Being more interested in understanding

these last companies, how they work,
what they think, and specifically how they
react, I can summarize that their method
to achieve success is TO ACCEPT NEW
CHALLENGES, taking a half-leap of faith
forward while having nothing guaranteed

31
or certified in the result they will obtain.
And this is precisely why they are called
CHALLENGES because the result is
UNCERTAIN.

"It is not the strongest or the smartest

who survives but the one who can adapt
quickly to new scenarios."
Charles Darwin

"Looking for the impossible, man has

always realized and known the possible.
Those who are wisely limited to what
seemed possible never advance a single
step."
M.A. Bakunin

Summing up and concretizing, there are 5

new scenarios and challenges in the world
of spare parts:

 stock reduction;
 purchase only what the market
requires;
 flexibility of your own supplier;

32
  reduced risk of commercial
investment;
 ease of procurement.

These are the 5 points that will automatically

lead you to the following situation:

CUT-DOWN OF INVENTORY COSTS AND

IMPROVEMENT OF MARGINS.

You may ask any of our customers who

have adopted the Business Flexibility
System and you will have direct
confirmation of what I have just said.
In case you do not know anyone yet, it will
be a pleasure for us to keep in touch with
you.

Everything else belongs to the old

strategies and the most important thing is
that they do NOT work – at least in terms
of differentiating points to continue with
operations such as: focusing on quality,
using a customer-centered approach, etc.
These actions have now become the basis
for every business activity and those who

33
do not implement them are automatically
discarded.
Of course, getting yourself involved and
evaluating new methods in Warehouse
Management, Purchasing and Products
Sales, and internal organization of your
company are tough activities that require
commitment and it frequently happens
that:

 you do not have the time;

 you lack the right concentration;
 you are scared to think about new
investments;
 you pretend not to see.

For these reasons it is important to

compare with those who, like us, spend a
lot of time studying, examining, and
evaluating new methods in Warehouse
Management and Purchasing and Sales
that are always more suited to the
changing world, and then merging them
into an innovative service to offer to those
who are willing to listen and test with us,
the improvements we propose.

34
Why is there a big difference between
those who want to find a solution (and are
willing to listen) and those who give
themselves up to the conviction that there
is no better thing that exists than what is
already known?

I know how it works. Now I'll list the most

trivial excuses:

 "our system, even if old, is still

good";
 "everyone is used to working like
that";
 "as long as work holds on, I cannot
think of anything else";
 "I maintain that the past is always
the best."

These excuses can be likened to a Soccer

Commissioner who comments on a game
on TV and judges from the outside. To be
precise, the frame of mind suddenly
becomes:

RESIGNATION.

35
And so, if you recognize yourself in this
description, I can only tell you this:

IF YOU ARE ALSO WILLING TO BE DRAWN

INTO THE GRIEVANCE OF EVERY
OCCASION, YOU CAN THROW THIS BOOK
AWAY IMMEDIATELY AND DO NOT
ENGAGE MORE TIME.

On the contrary, the customers with whom

we work and collaborate with in the
development of the Business Flexibility
method, challenging the market rules are
the farthest that may exist from that sad
and submissive mentality.
They are willing to undertake, namely, "to
do business" where risk is part of the
game. Or else, you are no longer an
enterprise but rather you have been a
business and that's why "the past was
better." This is because back then, you
took the risks and today you are no longer
willing to do so.

So, what can you do to get back to that

condition?

36
Surely not with the strength of thought or
with forms of meditation but with real and
concrete operations, with the desire to act,
question yourself and to be convinced that
there are still ways to:
CUT STORAGE COSTS AND IMPROVE
MARGINS.

I also found myself at the point of

resignation and I have to admit that at a
certain point, paradoxically I also found
myself in the company of many people
and, this creates a group and a sense of
belonging. Practically, it was a state of
“general anaesthesia.”

We like to relate our own illnesses, console

each other by saying that there is always
someone who is worse off. Or behave like
the old people of the neighbourhood who
enjoy competing with each other as to who
has more body pains and have undergone
several operations, also enumerating
illnesses of all their relatives.

With the serious crisis of 2009, I also got

sucked like a rookie, making wrong

37
decisions driven by fear. But then, thanks
to the strong group of people who make
up the company today and new
investments in staff and organization to
upgrade business skills, we were able to
interpret the dynamics of the new market
that was taking shape and consequently
create a new supplier/customer dynamism
to boost our competitiveness.

This dynamism was successful among

customers who decided to tackle "head
on" moments of crisis rather than
submitting to it passively, and to
collaborate with us, in the finalization of
the Business Flexibility System which
today, adopted in full, distinguishes the
most dynamic clients.

This new strategy was predominantly

applied by three types of customers:

- suppliers of heavy-duty parts for

earthmoving machinery of primary
brand dealers;

38
 - tool manufacturers for both original
equipment and for after-market
sales;
- primary OEMs flexible to the market
dynamics trends.

The application of the system has allowed

them to:

- decrease the stock value and

optimize the inventory;
- decrease the area occupied by the
warehouse;
- decrease the workforce or use it in
tasks with greater added value;
- reduce the costs of spare parts
handling;
- improve the company's margins.

This is because the Business Flexibility

Strategy:

- introduces standard procedures of

Warehouse Management;
- introduces an Automated Reordering
System;

39
 - guarantees greater adaptability to
market changes;
and above all it allows to:

CUT STORAGE COSTS AND IMPROVE

MARGINS.

This way of managing the warehouse is

essential for a company that always wants
to stay on top of the market, keep up with
the times, and keep up with the market
trends efficiently and quickly.
In fact, I believe that a person who does
business correctly, and wants to bring
success to his company or the company he
works for, after evaluating all the
opportunities, moves to take action and
adopts the attitude of a person I would like
to define as:

A CONCRETE DREAMER OR VISIONARY

WHO TAKES ACTION EVERY DAY, TO
MAKE SURE THAT DREAMS BECOME A
REALITY AND THE VISION IS
CONCRETIZED.

40
STEPS BEFORE CHOOSING A STRATEGIC
SUPPLIER

Choosing a supplier nowadays is a very

difficult task. I am almost certain that if
you have been involved in the supplier
selection phase in the past, your memories
of those moments are hardly feelings of
tranquillity and serenity, and frankly we
can affirm that they are the exact
contrary.
In this selection process for strategic
suppliers, the emotional tension of the one
involved is put to the test. When the
company management designates one or
more persons to choose the supplier, there
at that precise moment the company
places a huge load on the shoulders of the
people involved. It is an absolutely
considerable burden at a psychological
level, a sensation that can weigh
enormously even on one with “broad”
shoulders.

WHAT HAPPENS NOWADAYS IF YOU MAKE

A MISTAKE IN A CHOICE THAT IS
STRATEGIC?

41
Above all, with a wrong choice, those who
pay the consequences are usually more
subjected. No one draws any benefit and
first of all those involved are:

 the company that made the choice;

 the people who steered toward that
choice;
 the customers who have endured
the choice.

As you can see, there are mainly three

subjects involved but let's take one thing
at a time and see what happens to each of
them.

The company that has made the wrong

choice is obviously the first to suffer
damage both in economic terms and
corporate image.
Many resources have been earmarked. The
expected results are not there and
therefore investments are not repaid
because of the enormous damages.

Even the people who have steered toward

that choice can be personally affected by

42
damage to their credibility and image, up
to the point of, and not excluding, the
losses or downsizing of the workplace.
Two kinds of pressure are triggered on
these people: a professional and a
personal one.
At a professional level no one would ever
want to experiment or include in his own
curriculum, the resounding error of a
strategic choice in the company in which
he works and which has also conditioned
his destiny.
Relationships with colleagues may
deteriorate as they may fear, due to a
failure of choice, that their future is put at
risk, and identify in the person who made
this choice, the cause of their possible
future troubles.
On a personal level, even in changing
company or sector, the scar remains deep
in the person and could re-emerge in
particular moments, tension or stress,
hindering the work and turn into that
anxiety which could determine other future
professional errors.
Making a mistake in choosing a strategic
supplier today can be catastrophic for the

43
company and for those in charge of
choosing.

The clientele suffers for this wrong choice

because of the risk of customer loss. Or
worse, other than the loss, it is the
beginning of negative publicity for the
customer in the market. This "cascading
effect" causes other problems and
potentially a loss of further customers and
sales. An additional risk could be that the
customer would charge you damages for
delayed or failure of delivery, and this is
not a remote possibility.

We are all aware of how difficult it is today

to find new customers in a market that,
paradoxically, on the one hand is
increasingly global but on the other, is
always more restricted with respect to the
past.

Winning their trust requires a considerable

use of resources and a journey consisting
in small steps. This effort will be repaid by
subsequent continuity of working together,
but unfortunately, this can be wasted or

44
thwarted in a moment, by a wrong choice
that does not allow response to customer
requests.

HOW CAN ALL THIS BE AVOIDED?

The seven steps to take before choosing a
strategic supplier:

 study of supplier’s lead time: that is,

from the time of order to the
shipment. This time must be
examined at best because
underestimating this point can
determine the positive/negative
outcome of the choice;
 study of the supplier’s work
cycle: it comprises an internal
complete production cycle; it has
external factories, or within the
area, in neighbouring areas, in
remote areas and abroad through
controlled companies or external
suppliers; it has the possibility of
being flexible in the production cycle
or has a static and rigid cycle that is
difficult to modify;

45
  evaluation of the piece
manufacturing cycle because the
shorter this cycle time, the greater
the flexibility of the supplier
 evaluation of the supplier’s
minimum batch production/delivery.
Today's market requires always
smaller quantities with more
frequent deliveries and therefore an
increasingly flexible supplier is
needed for variations of the market
and always less tied to the delivery
in relation to the number of pieces;
 guarantee of delivery;
 product traceability;
 product warranty.

Having performed these seven steps

correctly, we can already estimate the
following results:

 decrease in the value of inventories;

 increase in company liquidity;

46
  more precise sales forecasts and
promises to the most respected
customers;
 more flexibility and therefore more
possibilities for Purchase Orders
from customers;
 greater conversion of orders on
offers issued;
 more reactivity to market changes;
 increase in company credibility;
 repositioning in the minds of both
active and potential customers.

With this seven-step system, we

propose a serious method for making
decisions in total serenity.

Note that in this way we can help you

to seriously analyse your situation in
detail, and then make a proposal aimed
and based on real data. To place
yourself in a condition to choose the
right supplier (not necessarily our
company), you need to develop and
expand your company to the
maximum.

47
If after this verification of the seven
steps you will retain that the right
solution is Metallurgica Valchiese,
kindly remember that we offer you the
formula of the warranty, “Satisfaction-
or-Money-back Guarantee” for the
delivery and Lifetime Guarantee for the
product.

Yes, you’re right: if we agree on a

consignment and this is late, our
company warranties a reimbursement
on the value of the order, and should
the product break, we shall replace it
for the product’s entire lifetime.

If instead you want a business offer for

our product and later find another
which costs less… thanks but I already
knew that. Rather, if you wish I could
already indicate also which costs less
without wasting precious time. If you
are trying to spend as little as possible,
please know that today you can buy
heavy-duty parts for earthmoving
machines at 10/20/30% less.

48
It would be useless for you to buy
different products, even if I know that
this is of no interest to some types of
potential clients.

So, if you fall under this category of

clients, I would refuse to give any type
of proposal since we are both losing our
time. Rather, I would ask you not to
continue reading this book, since here
with me, you will never find proposals
for solutions at Chinese prices.

All things considered, I have shown you

how a supplier is seriously assessed
through the fundamental steps, taking
into account all the variables which
today influence an extremely
competitive market, and I think that if
you are reading these lines, it means
that you have understood how to
operate with a certain method, so as to
take a decision in all serenity, basing
yourself on objective parameters and
not on sensations.
What we promise you with this method
is to accompany you step after step in

49
all the phases, so as to allow you to
have a complete picture of the
situation, reducing to the utmost the
possibility of making a wrong choice
and making decisions supported by
certain figures, even if this entails your
purchasing from other suppliers.

50
THE SECRET TO COUNTERING CUSTOMER
COMPLAINTS

Since you are a spare parts dealer, you

are well aware that the breaking of stocks
in the warehouse and delays in delivery to
customers, sow panic in the company, and
you know that it is an unpleasant
experience.
Why do I think that you've already
experienced this?
Simple: every purchasing mechanism and
every warehouse needs constant attention
to ensure that everything works for the
best. No mechanism in the world can work
without the right synchronization of all the
gears of the mechanism itself.
When the customer complains because he
does not receive the goods, the problem,
which almost feels like terror, immediately
grips the company because you know
exactly that there is a glitch in the
mechanism, even if you do not know yet
when you can solve the customer’s
problem.
With this atmosphere based on an
unknown variable, the long list of phone

51
calls begins, first within the organization
and then outside calls are made, in
particular, directly to suppliers, sometimes
begging them to help you to resolve the
situation.

The customer to whom you promised to

deliver products at a certain date, which
the current activities of your warehouse
cannot comply to, obviously dictates all
this urgency. Nowadays, in such a
competitive market where companies
attempt to tear customers away from one
another, this particular situation only
favours the competition.
Or it may be dictated by a request for
products that you are only able to satisfy
partially despite having a well-stocked
warehouse, but to complete the delivery,
you have to depend on a
supplier/manufacturer who delivers after
3-4 months and with a batch of very
expensive spare parts.

52
HOW TO AVOID THIS SITUATION OF
PANIC?

The reliability of the supplier is a topic that

goes way back to the past: it does not
have to do only with the importance,
fame,and supplier’s advertising (which are
important, certainly, but not fundamental),
but rather with the company’s supplier
strategy, that must be well focused on the
seven steps previously revealed.
We have analysed in detail the issue of
reliability within our company and have
arrived at the question of the price of
supplies for the customer.
Are you sure you really know the price of
the supplies you pay for today?
If you answer yes and present the pure
purchase price of the product, let me tell
you that you are a bit off-track.
You must certainly take into account the
purchase price of the product, but you
have to look at it in a comprehensive way.

The total purchase price must consider the

following:

53
 Product purchase price. We have
nothing to teach you on how to get
the best purchase price: you
obviously aim to acquire the product
at the lowest price possible. This is a
good strategy if you compare the
prices of the same products. From
our point of view as producers, to be
able to sell a product at the most
competitive price possible, we have
developed an extremely flexible
production and sales process
including all its benefits so as to
meet your customers’ needs;
 Purchase management. An account
must be taken of the time necessary
to define all the conditions with the
supplier, to contact the carriers,
receive and evaluate various offers,
and decide whether to focus on the
price, delivery speed, and type of
transport used;
 Storage space management.
Depending on the supplier chosen, I
should decide how much stock I
have to meet my target market, the
storage space I occupy, its

54
 convenience, the difficulty of
managing it, the bottlenecks and the
possible excessive handling time.
 Inventory value management.
Storage holding of the current
supplier’s production batch as well
as the annual inventory turnover.
How much savings result from every
increase in inventory turnover?
 Brand. How well it is known, how
well is it recognizable, how reliable
is it, how will it guarantee my
purchase and my customers’
purchase and if it is traceable.
 Customer satisfaction. How much
reassurance does the product I am
about to purchase contribute to my
customers’ satisfaction, how much is
reordered by my customers, how
much will my customers’ satisfaction
be spread by word of mouth.

55
SELLING SMALL-MEDIUM BATCHES: THE
WINNING STRATEGY

Today, winning the challenge of selling

small and medium-sized batches upon
request is increasingly important.
In fact, for the other two sales extremes,
that is, large and minimal volumes, the
strategies are clear. But for the so-called
“middle world” one can make devastating
mistakes.
Let us analyse what happens in such
situations so as to better understand how
to approach the issue.
There was once a time when there were
many large volumes of sales with long-
term lead time and early planning that
today, for the majority of sales, have been
abandoned in favour of medium-small
volumes handled with increasing
frequency.
Sales are confronted every day with an
increasingly variable market without
certain data that allows it to make reliable
forecasts in the medium and long terms.

56
Without reliable forecasts, the purchasing
manager finds himself forced to make
larger purchases to guarantee the product
is available to customers at all times.
With these quantities, the purchasing
manager is squeezed between the needs
of the market and corporate efficiency.
This situation means that the subject in
question is forced to increase stock levels
to be able to respond to the market
demand.
This situation creates particular friction
between the sales and purchasing
departments of the company.

Moreover, you find yourself having to deal

with the following inefficiencies:

 you are obliged to purchase more;

 you are obliged to employ more
holding areas;
 you are obliged to handle more
merchandise;
 you are obliged to employ more
personnel for the management and
handling of goods;

57
  you are obliged to have more capital
tied up in inventories.

The variations in market trends today are

increasingly subject to frequent
fluctuations and require companies to
have greater business flexibility in order to
regain greater efficiency and reduce
internal waste such as:

 High amount of inventories

 Purchases made in advance
 Urgent purchases
 Excessive handling of materials
 Waiting times due to the balancing
of the various phases
 Bottlenecks
 Movements of people
 Repeated superfluous operations
 Occupied areas

Don’t you think it would be useful to have

the Business Flexibility System to help you
increase business efficiency and reduce
waste?

58
Analysing this new requirement, the
Business Flexibility System of Metallurgica
Valchiese was created, which allows you to
change the way you purchase, and offers
the following strengths:

 it is very flexible, suitable for small

to medium batches;
 it has a lower lead time for all types
of heavy-duty blades than that of
the competition;
 fast response to the requests of your
customers;
 adapts to changes in the request of
your customers;
 reduced investment costs of your
warehouse;
 reduced stock handling costs;
 reduced cost of tied up capital
regarding inventories.

Since 2014, we have been gradually

introducing our Business Flexibility System
to the market and today, numerous
customers in several countries have
adopted this system and are enjoying the

59
benefits we promised both in terms of
efficiency recovery and waste reduction.

Now it's your turn. Evaluate the steps

outlined above, focus on what you think
may reflect your current situation and ask
yourself if you believe that the system we
are proposing may be beneficial for your
company.
We know that this decision needs much
thought: that type of concentration which
often, for lack of time, we do not possess
and that leads us to make wrong decisions
or, even worse, leads us to make none at
all.

60
RUNNING A MARATHON WITH 12-INCH
HEELED SHOES

What do I want to say with this metaphor?

Imagine running a marathon with 12-inch
heeled shoes.
Even the best marathon runner, despite
having the potential to win the race, would
probably not be able to reach the finish
line with this type of shoes. Any coach
would point out to the athlete that he has
no chance of getting results, despite the
effort, exertion and perseverance he might
put in it. Surely he would change the
wrong shoes with a proper pair and run to
the finish line.

Lately we have been seeing many

companies running like the athletes of our
marathons: making the wrong choices,
claiming to run to win the race and having
the gall to be angry when they lose! Today
I would like to put myself in the coach's
shoes and tell you how certain companies
do not have the chance to get great
results because they are wearing 12-inch
heeled shoes to

61
run the marathon, and then claim to reach
the winners’ podium.

Let us start from the very beginning….

Spare parts companies generally have

large, well-stocked warehouses with wide
spaces and large volumes. These have
invaded meters and square meters of
space and have spread globally and in the
mind of most entrepreneurs who consider
this as the best weapon to excel in the
market.
When you compete in the market and sell
the same (or similar) range of products,
you and your competitors end up behaving
more or less in the same way to win over
customers.
In buying products, the instinct is to strive
in every way to get the best purchase
price and, once this is defined, the focus
shifts to other elements.
Among the most important are labour,
handling, general costs, energy costs....

62
And how do you suppose to be different
from your competitors?
I hope your answer will not be "with
quality" because it is now an obsolete
element. I do not mean to say that quality
is not important, but that it's a theme
which nowadays customers take for
granted and that your competitor writes
about it on his site, his brochures,
catalogues, and so on.
The truth is that in spare parts
warehouses you always see the same
thing: long and high rows of products
ready for sale, tied up capital waiting for
customers.
So, if you continue to operate in the same
way as your competitor, how many
chances do you have of winning the
challenge?

Returning to the metaphor of the

marathon: wouldn’t you like to reverse the
concept and run the marathon with your
running shoes and your competitors with
the 12-inch heeled shoes?
I think it is useless to list the advantages
you would have in this situation. Returning

63
to the world of spare parts, wouldn’t it be
stimulating to find a way to avoid clashing
with your competitors on the usual issues?
What we propose is moving the battle to
another terrain, challenging, or rather
breaking down the following points:

 reduce inventories and therefore the

stock value;
 buy only on the basis of what is
required by the market;
 eliminate advance purchases to
respond with short delivery times to
customer requests;
 reduce handling of merchandise;
 eliminate malfunctions due to the
adjustment’s between phases;
 reduce personnel in the warehouse;
 reduce urgent purchases.

Faced with these issues, which nobody

disagrees with, I fear that this way of
working, if fully applied in a spare parts
company, puts the organization and the
relationships under stress causing
frustration

64
and loss of stimulation. You can try to
change the way you act, but if the
organization does not fully adopt this
method or someone in the organization
does not believe in this system, the
situation may even get worse. We have to
eliminate the mentality linked to
“inadequate” concepts, meaning to say not
obsolete by age but by conception linked
to a market that now belongs to the past.
Today, to be competitive at the highest
levels, you have to buy the quantity that
you sell, decrease inventories and be fast
in deliveries, for both incoming and
outgoing products.

Here summarized in a sentence is what

companies must do to be successful:

THOUGHT INNOVATION

To cut to the chase: how do you buy only

what is to be sold, or decrease inventories
and make quick deliveries for both
inbound and outbound products?

65
Analysing this new need, Metallurgica
Valchiese has developed the Business
Flexibility System that allows you to act on
these strong points:

 great flexibility. It adapts to

medium-small lots;
 lower lead time for all types of
heavy-duty blades;
 fast response to the requests of your
customers;
 adapting to changes in the request
of your customers;
 reduction of the investment cost of
your inventories;
 reduction in the stock handling
costs.

Looking closely at this list, you will notice

that not one point provides for an increase
in purchase volumes, but rather, the
points refer to a particular problem: the
search for flexibility and adaptability to
market demands, dictated by the changing
times. Large volumes of mass-market
sales are

66
disappearing. Today the challenge is to
adapt inventories to the sales batches
required by the market: we must become
flexible with the aim of constantly
increasing the speed in serving the end
customer.
To meet these needs without the aid of
reliable forecasts, many companies throw
themselves headlong towards increasing
stock to increase the speed of response to
the customer.

Raising stock levels to respond to

customers quickly is a big mistake.
Apparently raising inventories is done with
a good intention: to respond to the end
customer as quickly as possible and not
lose the order. However, it can damage
the company structure.
First of all, at the end of the year the
inventory is taxed and therefore, in terms
of taxation, having a high inventory level
becomes disadvantageous. The more stock
you have, the more it costs the company
in terms of the cost of money, space,
handling, order and cleaning.

67
In practice, the higher the volume of
inventories, the more problems there are.
Furthermore, the high inventory also
entails the risk of possible obsolescence
and devaluation of unsold material risking
financial loss.

The Business Flexibility System of

Metallurgica Valchiese, thanks to the
strong points previously mentioned above,
allows you to reduce the number of stock
and all the risks that derive from it.
The system will reconcile relationships
between your managers in the company.
Usually the sales and purchasing
departments are not very in tune with
each other since the first would always
want more goods ready in stock while the
latter would like to reduce the stocks to
the minimum necessary. It is at this level
that the real clashes usually occur (or
rather: technically, the clash is between
the market demands and the internal
organization of the company, made up of
people and needs). These are the main
variables and as they vary for one, the

68
others must also vary to keep the
company balanced.
If this does not occur, one is confronted
with clashes when, on the contrary, the
parties should meet to define the paths to
be taken to achieve market-organization
equilibrium.

69
HOW TO SATISFY CRAZY CLIENTS

All companies in the market meet the

demands of the market itself, whether
they are historical companies or young
ones.
A historical company sees its advantage as
“a company founded in 19XX” losing its
importance, perhaps because of its
structured sales organization compared to
that of a more recent company, since over
the years the internet has given the
possibility to all individuals to avail of
information more rapidly. In the last 10
years, the young companies have had a
huge advantage over the historical ones.
This is all thanks to the internet. In fact, in
the past it was much more difficult and
costly to make oneself known, and one
had to go around looking for clients in
order to sell products.
Today instead, it is the clients who look for
the products.
It is much easier today to search for any
product: just open the Google page and
you find a long list of potential suppliers,
at an impressive speed.

70
Unluckily the operating mode has
overturned every paradigm in all the
sectors, making things difficult also for
historic companies which were building up
their name with their history as a magnet
to attract clients. The result of all this is a
very liquid market where the requests for
products really seem to have gone
berserk. With this operating method there
are clients who hunt for products through
a keyboard in the moment of need, always
with less planning. Also in our sector, in
speaking with various clients to whom we
supply heavy-duty parts for earthmoving
machines, we see this phenomenon which
is increasingly causing crises in classic
production organizations. In the past, we
were used to seeing the client seated with
the supplier, drawing up a plan covering a
certain time span.
Today instead, the client seems to have
gone mad… but in reality, it’s just that he
no longer makes any plans!

71
Today the end client no longer makes
plans, and this is why he seems to have
lost his mind.
In technical terms, this new market can be
defined as “liquid” and characterized by
the absence of a reliable forecast. This
puts the spare parts companies in a crisis,
torn between enhancing the inventories
and the risk of not being able to sell to the
end client when requested, or not doing so
and losing the opportunity to sell because
of too lengthy delivery times.
Between the two options, working with
stock availability seems to be a winning
strategy, but in reality it is an operating
mode that could become dangerous
because it causes the following
problems/wastes:

 odd lots caused by wrong forecasts;

 high economic value of inventories;
 handling costs;
 costs of occupied areas.

The non-stock option, obviously allows you

to face the aforementioned negative
points. At the same time, however, if your

72
purchasing system or your supplier does
not support you, the final result is the
inability to satisfy the market and losing
many sales opportunities.

In defining “a Crises” we identify a

breakaway from the past, with respect to
the operating modes we were used to.
When this happens, we are taken unaware
and feel insecure because nothing seems
to work any longer. This moment is called
a “CRISIS.”
During the various seminars we heard
people saying that crises hide many
opportunities. Even if at first glance it
seems like a cliché, there is a grain of
truth to it. With this very liquid market,
making sales forecasts is too risky, and
doing anything is likewise risky… so what
can be done?

We need to place all our bets on Business

Flexibility.

What does it mean to place one’s bets on

Business Flexibility?

73
We personally coined these two words to
describe the ideal condition needed to
respond at best to the current liquid
market situation.

We have to adopt a flexible system in

order to adapt to the requests of the
market and its sudden changes,
simultaneously combined upstream to a
fast production system by the suppliers so
as to guarantee definite delivery dates to
the end clients.
To compete and win in the liquid market,
the two pillars have to be production and
commercial flexibility, so that the system
can guarantee the following benefits for
your company:

 lowered inventories of finished

products;
 fast and punctual deliveries ;
 reduced and less risky investments;

74
  easy management of purchases and
handling of products.

In the Business Flexibility System, the risk

connected to investments is very low
because this system, in adapting itself
quickly to the market, does not enter a
crisis when the market presents sudden
and sharp fluctuations, but adapts itself at
best to the new request, realigning quickly
to new market situations.

The Business Flexibility System allows you

to compete and win with the competitors
whose companies internally handle large
purchases of merchandise with long-term
storage and huge inventories.
To give a concrete example:
let’s imagine that a client comes up and
wants to buy several codes and a small
number of Grader or Dozer blades, for
example 50 pieces for every product code.
You could purchase them according to the
price in China with delivery times of at
least 50-60 days to have the merchandise
ready for shipment, or else acquire them
from a supplier with delivery time of 10/15

75
days for spot commodities. How much is
this worth as regards the time difference
in product preparation? If you reverse this
lead time on an annual basis, for your
inventory you can estimate in at least two
months of stock, the difference in pieces
you need to keep in the warehouse to
satisfy your clients’ requests. You have a
stock turnover several times a year and as
a consequence, results in remarkable
economic savings and extreme resilience
in adapting to market requests are
achieved. Besides the resulting economic
and asset advantages, there is the
possibility of having a much higher
corporate rating and much greater
liquidity.
Obviously, whoever buys in China has the
advantage of being able to buy at lower
prices, but what you have to do is not to
seek a frontal clash on the price. Rather,
given the minimum gap on the price
proposed, quantifiable in the order of +5
<> 10%, shift the challenge to another
ground, where the lower price is not the

76
main issue in the supplier’s choice.

We are aware that in a market for heavy-

duty parts for earthmoving machines, the
reasoning may appear idealistic, but we
can assure you from experience, that for
our clients who apply the Business
Flexibility System, this is feasible and later
results to be more profitable even if at the
start, we must take into account, the loss
of some orders based only on the price
factor.

In better analyzing in detail the difference

in the purchase price, one can verify that
the gap in this price is further reduced
considering the costs for the storage,
handling, space used, and interest on tied
up capital, which result to be much greater
for those working with great inventories.

After 2009 worldwide and after 2015 in

specific areas like the Middle East, with the
economic world in paralysis, the great
production volumes and sales, which up to

77
then were a certainty, began to dwindle.
Therefore, the logic of buying increasingly
big volumes to respond to market
demands has become redundant.
This has disoriented and is disorienting
many big spare parts companies. Being
used to purchasing in big batches, they
were perplexed in the face of a market
less interested in large stocks, and were
burdened with the management of such.
This situation caused great corporate
crises everywhere.

We have thus moved from great volumes

to Business Flexibility.

Since the great volumes have now

disappeared, on the one hand due to the
remarkable drop in the demand, and on
the other due to each company’s need to
diminish the stock of goods, the main road
to pursue for spare parts dealers was to
invest in flexibility.
Given that by now we could no longer
count on quantities, flexibility started to
appear as the right road to pursue. New
forms of services started to be offered no

78
longer on the advantage of the price, but
on the time factor, that is, faster delivery
even in small quantities.
Faster deliveries of even small quantities
started to become the path identified by
many companies, to emerge from the
crisis and regain the market shares,
abandoning at the same time the purchase
of great volumes.
Incorporating this philosophy into the
company, however, required remarkable
changes at all levels, both internally and
externally. Internally because it is a
change in mentality that must be adopted
at all corporate levels.
Externally because very few producers are
able to delivery quickly even small
quantities of products, having invested
everything on the production cycle bound
to great volumes, so as to lower the
production cost per piece.
Each leading spare parts company needs
to identify the right producer/supplier able
to

79
adapt itself to the Business Flexibility
System, which implies maximum
production resilience matched to utmost
business flexibility.

This requires every dealer to team up with

a heavy-duty parts producer for
earthmoving machinery, who is able to
produce in a maximum of 15 days, every
type of heavy-duty blade the market
requests, both in terms of series designs
or detailed parts. In this way, the deal
gains a competitive edge with respect to
competitors because of the following:
reduced stock bound to a lead time of 15
days plus the transport time from the
supplier to their own warehouse; being
always updated with requests of their own
clients; savings deriving from the reduced
value of tied up stocks; less space needed
for the activities; and less use of resources
thanks to reduced handling of goods.

Alternatively, we can study together the

Takt Time (production time of the single

80
product/batch also known as Sales
Rhythm) which is more suitable to the
reference market.
Logically, to get to this optimization one
would have to undertake a corporate
reconfiguration, firstly, in terms of
mentality and corporate policy, so as to
consider the supplier as a strategic partner
in moving forward in the market, and not
as a simple producer of goods from whom
increasingly lower prices can be extorted.

Fundamentally what every spare parts

dealer needs is:

The right product at the right time, at the

right price!

The right product for every client

according to their requests.

At the right time means that when the

request is made, there should not be a
lead time of months before the operation
is completed.

81
At the right price means not as the pure
purchase value, but as the purchase price
cleared of the lower costs which the
Business Flexibility system allows me to
reduce, such as the reduced value of tied
up products, less space needed for the
business, and less use of staff thanks to
reduced handling of merchandise.

This system thus allows a response to be

given to the market in a simple, fast and
effective way.

With the Business Flexibility System,

integration and collaboration between
client and supplier have already permitted
numerous companies of different countries
to increase their own market and client
shares with two-digit percentages. Even
more important factors are that of
increasing the percentage of requested
orders with shorter lead times, and the
lessening of costs for the management of
purchases and finished product
inventories.

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The ideal supplier for every spare parts
dealer should have the following
characteristics with the consequent
benefits:

 Production resilience: possibility to

handle batches, even small ones;
 Production of also off-series pieces:
new markets/clients to acquire;
 Customized Takt Time: more order
intake from clients of diverse
categories.

83
REDESIGN A WINNING BUSINESS

On visiting many companies in different

countries, I realized more and more how
the world is changing. Apparently, the
perception is that the system is becoming
more complex. In reality we denote that
these changes are offering new business
opportunities.
The market focus tendency is towards a
request for batches of products of even
more reduced quantities and with more
frequent repeat orders.
These quantities are generally those no
manufacturer would like to produce.
Why do these batches throw most of the
producers into a crisis?
Because generally the production plants
are calibrated for big production batches
that allow the reduction of the
cost/product upon the increase of the
quantities of every single item. Because
the cost for the change of items in the
production plants need line-retooling times
that go to impact greatly on the quantities
of every single batch.

84
So the lessening of batch quantities and
the line-retooling costs highly affect the
final price of the item.

If your producers/suppliers do not like

these types of quantities because they
clash with the logic and optimization of
their production systems, you should
however know that the markets highly
favour them.
We thus need to identify a producer who
has focused his own plants more on
flexibility than on quantity.

Metallurgica Valchiese’s choice of all

investments over the last 5 years has
been based on achieving maximum
production flexibility, so as to initiate
studies on the implementation of the
Business Flexibility method with the
objective of ensuring maximum
competitiveness in the market.

85
I think that for every business enterprise it
is fundamental to seek effective solutions
to meet these changes that have already
set in.
Now that we have convened on this point,
with the intention of finding a solution to
the problem, let us examine why these
increasingly reduced quantities throw the
classic producers/suppliers into a crisis.
Take for example, the sales department of
a company which receives an average
number of orders with a long list of
products but reduced single amounts; two
dynamics have to be faced:

 the company has an inventory that

is “exploding” with great quantities
of some single products and end-of-
line stocks for the others;
 the request is sent to the
producer/supplier indicating, as the
minimum batch for the start of
production of the single product
code, a great number of pieces with
a long lead time, which if on the one
hand satisfies the end clients, if they
are willing to wait more,

86
 on the other hand, it entails an
ulterior burdening of the warehouse
with a consequent reduction of the
stock turnover of the same and an
increase of internal costs.

A so-called “buffer” solution could be that

of delivering a part of the order and
settling the rest at a later time. This
solution may be practiced occasionally, but
is unacceptable as a corporate practice.

The best solution is to adopt the Business

Flexibility method, integrated upstream
with a producer/supplier able to guarantee
the production in a maximum of 15 days,
so as to calibrate his own stock of fast-
moving products at a lead-time of 15 days
plus delivery time. This leads to a
remarkable reduction of stationary
warehouse and, in case of products not in
stock, ensures brief delivery times
acceptable to the clients.

87
This system opens out new markets and
new opportunities to clients.
But to be able to do this, a stumbling block
has to be overcome: you have to change
your way of viewing reality, and if you are
not willing to adjust to this new path, you
must be aware that the situation can only
worsen.
What do I mean by all this? To be able to
compete and emerge in such a liquid and
increasingly competitive market, you must
be willing to change your attitude and go
back to investing in order to grow.
A group of companies understood the
message, adopted it, and this year shall
close with their own increase in turnover
and number of clients, with a consequent
satisfaction on the uptrend in all sectors.
Another group of companies instead
responded by continuing their partnership
with various producers/suppliers, binding
their collaboration only to the price factor,
without considering all the other elements
that allow the company to reach internal
equilibrium and growth in the market. All
this was reached without realizing that the

88
market has now evolved and requires
adjustments to this epochal change.

With the experience acquired in these

years in the launching and development of
the Business Flexibility method, we can
affirm with certainty that the results
obtained by our clients who have adhered
to this system, have completely confirmed
our method, shifting the standard of the
purchasing system in this direction.

89
PRODUCT PRICE: WHAT IS THE REAL
VALUE?

How many possibilities are there today to

buy heavy-duty blades for earthmoving
machines in the market?
Many, to be sure. Only in China can we
count numerous producers and the
possibility to choose may confound the
dealers, making them think that “one
choice is as good as the other.”
Over the years I have met all types of
clients, and still do so today, from those
attracted by prices necessarily lower than
that of other competitors, to those
attracted by the name of the supplier,
which has to be different from that of the
more direct competitor, and to those
attracted by the colour of the pieces.
I can affirm that they are all right, with
their own reasons for making the wrong
choice, and that none of them is absolutely
right or wrong.

However, I would like to ask all of you to

think in a broader way, so as to be able to

90
assess in a different manner, the real price
of every single piece of the product.

How valuable is product traceability to

you?

Assuming that a purchase of Grader or

Dozer blades from Chinese suppliers has
been made: in general, how are the
goods? The stickers show the code of the
product and the supplier’s logo on the
surface. Well, once the pieces have been
mounted on the machine, how long do you
think the possibility to identify the product
will last (if not by code, at least by
producer)?
We’d like to be optimistic and therefore
say, five minutes.
Let us assume now that the product has a
problem of excessive wear or breakage
and the client buys the same type of
product from two or more suppliers.
How do you think the end client will
behave, since he is unable to identify the
real producer of the piece used?
Personally speaking, assuming that a
complaint by the client is made to all his

91
suppliers of the same product, including
you, how can you be absolutely sure that
the piece is the one you sold?
Likewise, in the case of a high quality
product, how can your client be sure that
the piece is the one you furnished and
identify you as the supplier of high quality
items?

To help each of our clients eliminate this

problem, Metallurgica Valchiese has
developed a marking system for the line of
heavy-duty blades, which is a deep
incision of 2-3 mm that can be read on
every product for the entire duration of the
item’s use cycle.
What added value do you feel can be given
to this warranty of traceability?

How valuable is brand visibility for you?

92
 (real image of an MV product)

The same problem of the rapid erasure of

the supplier’s mark will also backfire on
you as regards the visibility of your mark.
Would you like your mark to be clearly
visible on the product in the long term and
also during usage by the end consumer?
Have you ever tried to ask any of your
suppliers for a solution to allow this
visibility?

Knowing the market and the numerous

producers from all over the world, I think
that none of them will be able to solve
your problem.

So, I shall ask you again:

93
How valuable is brand visibility for you?

Every year you invest money in

advertising to give more visibility to your
trademark. It must be presented as much
as possible, in such a way that your
historical and potential clients can
remember it when they purchase this
category of products, and associate you to
their buying system.
What income do you get with this invested
money? Are you able to have a precise
estimate of the clients acquired with this
type of advertising? How many of them
say that they addressed you because of
the advertisements in which you invested
a lot of money?
Do you think that the impact on your
potential client is greater upon seeing your
trademark on a piece assembled on an
earthmoving machine working in the field,
or seeing your trademark on a page of a
magazine or that of a social network (for
example Facebook or Instagram)? In what
way do you think your trademark will gain
greater credibility and authoritativeness?

94
Metallurgica Valchiese posed these
questions to many clients in various
countries throughout the world and the
answer we received, almost unanimously,
was the admission that they have never
pondered on this issue in depth and as a
consequence have no accurate assessment
of this point.
Subsequently the answer was that the
effective possibility of a long-lasting
marking of the logo on the piece would
give numerous benefits.

By mutual agreement with some of our

clients, we experimented on the joint
supplier-client marking with our direct
engraving system on the heavy-duty
blades at a depth of 2/3mm and the
positive response of our clients in terms
of:

 value of the image;

95
  value of the brand and its position;
 value of reliability and credibility

also surprised the clients themselves.

After the delivery of the first batches with

engraved marking, the end clients of our
dealers reordered the material, specifying
in their requests that these had to bear
engraved marks as in the previous
delivery and that this material was the
best they had tried out. This was despite
the fact that the quality of the product was
the same as that of the unmarked
pieces.…

So what value can we assign to a product

that bears the engravings of the supplier’s
brand, the dealer’s brand and the origin?

Would you yourself purchase a car from a

retailer without the indication of the
trademark of the dealer who sold it to you
or at least that of the manufacturer?
How reliable would you consider a product
of any genre which is anonymous?

96
And above all, at this point, what value
would you give to such a proposal?

97
GUARANTEE, AN UNKNOWN CONCEPT

Would you buy an automobile of any brand

without any product warranty?
I bet that the unanimous answer would
undoubtedly be:
“NOOOOOOOOOOO!!!”

So, what we in Metallurgica Valchiese ask

ourselves is inevitably: why do we see
daily purchases of heavy-duty blades for
earthmoving machines with no purchasing
office asking for the warranty on these
products?

Let’s analyse what the law says.

Article 128 and its following amendments

of the Consumers’ Code establishes the
seller’s obligation to deliver to the
consumer “goods conforming to the sales
contract.” If the opposite occurs, the seller
is held liable for any conformity defect that
manifests itself

98
within 2 years from the delivery of the
goods and will be reported by the
consumer within 2 months from the
discovery. Such a right was already
foreseen, way before the provisions of the
Consumers’ Code, in the Civil Code which
in Art. 1490 c.c. obliges the seller to
guarantee that the item should be free
from defects that make it unsuitable for its
intended use or greatly diminishes its
value. This provision falls under those
which the legislator furnishes to protect
consumers from the defects and
deficiencies the consumption goods may
have once purchased.
There are two types of guarantees.

WHAT ARE THE GUARANTEES OF THE

SELLER AND THE PRODUCER

There are:

- legal guarantees:

1. obligatory by law;
2. valid for two years from the delivery
of the goods;

99
3. are binding;
4. can be invoked by the consumer
directly to the seller;
5. are applied in cases where the
consumption item presents a
conformity defect with respect to the
sales contract;

- commercial or conventional guarantees:

1. can be added to the legal guarantee

(e.g. coverage for theft);
2. are optional;
3. can be free of charge or for a fee;
4. can be free in terms of duration
which is however limited to 12
months;
5. does not ensure the absence of
original defects but the fact that
they do not show defects due to
prolonged use.

WHAT TO DO IN CASES OF CONFORMITY

DEFECTS

100
The product has conformity defects when:

- it is not suitable to the use for which

similar items are usually used;
- it is nonconforming to the description or
does not possess the qualities described
by the seller;
- it does not offer the qualities and
habitual performances of a same type of
item, which the consumer may
legitimately expect, taking into account
also the publicity and labelling of the item;
- it is not suitable to the particular use the
consumer desired at the time of purchase
and which was accepted by the seller.

The consumer is entitled to:

 the recovery, without costs, of the

item’s conformity condition through
repairs or replacement (see request form
to be sent within two months from the
date in which the defect was discovered);

101
 the repairs or replacements must be
done within a reasonable time from the
request and must not cause remarkable
inconveniences to the consumer ;
 a suitable reduction of price or
termination (or annulment) of the contract
when:

a) the repairs and replacement are

impossible or excessively costly;
b) the seller has not provided for the
repairs or replacement of the item
within the reasonable time;
c) the replacement or repairs
previously done has caused great
inconveniences to the consumer.

We asked our active and potential clients if

they had ever received complaints from
their own end clients for problems of
breakages of this type of product during
use and what was the answer, also from
the economic point of view, that arose
from the suppliers’ complaints.

These questions, posed more than 5 years

ago, were necessary for our “Lifetime

102
Warranty” project which we were
considering to insert as the leading
company worldwide in the sector of heavy-
duty parts for earthmoving machines, so
as to offer a competitive edge to all our
clients.

These were the answers given:

 Receiving complaints from one’s own

end clients for problems of breakage
of products during use:
YES.

 The answer received for complaints

from their supplier.
Two types of answers were given:
the first was that the breakdown
was surely due to improper usage
by the user; the second was that the
broken piece should be sent at their
own expense to the supplier, which
after the appropriate verifications
will communicate the outcome and
the consequent answer.

103
  The response in economic terms
from their supplier: no response in
100% of the cases.

From the feedback received we are

convinced that every “reliable” producer
has to respond completely for their own
products and, particularly in the case of
heavy-duty blades of earthmoving
machines; the breakage of a piece is the
worst thing ever that a dealer has to face.
This is because the end client immediately
associates the breakage to poor quality of
the product, and as a consequence, the
image and reliability of the entity that sold
the product are compromised.
At this point my staff and I asked
ourselves: how can we intervene to save
the image of the product, the producer
and our client?

Upon statistically analysing the breakage

of the pieces that is occasional and not
series breakages of the same batches of
products, regardless of the producer, we
can affirm that effectively and with a high

104
percentage, the breakages are due to the
operator’s improper use.
However, this does not eliminate the risk
of the product’s loss of image and
reliability and as a consequence, of the
product and the company that sold the
piece.

In Metallurgica Valchiese we thus decided

to ensure all our clients and for all our
products, of the Lifetime Warranty
program, that is, against breakage.
This simply means that by sending us the
photo of the broken piece bearing our
identification mark, Metallurgica Valchiese
will send to the client the piece free of
charge and without any burdens.

Now can you indicate the value which

serenity has for you, with this image which
your company and the products you sell
transmit to the market?
We want you to know that today, only
Metallurgica Valchiese and the giant JCB
offer this warranty on their products.

105
We can afford to offer this warranty, which
is impossible for other producers, because
our history has led us to develop internal
management systems that range from
production to the sales network, and from
the choice of raw materials to the choice of
strategic suppliers, who have steered us
toward a very high and advanced
corporate quality level which is hardly
repeatable by our competitors.

106
QUALITY: PURSUED BY EVERYONE,
VALUED BY NOBODY

The internal management system of your

company should be able to furnish data
which will allow you to comprehend how
you are producing, and if something is
taking a wrong turn, alert you, almost in
real time, of the divergence from certain
quality standards. It should allow you to
control process capability. In so doing you
would lower the risk of producing large
quantities of pieces to later discover in the
following phases, that these have
problems of quality.
This method, though commonly viewed
with a certain dislike at first, remarkably
reduces the cost of quality because it
allows you to swiftly correct the problems.
Higher costs of repairs or of rejects can
thus be avoided, besides the
inconveniences for your end clients who
may end up paying penalties.

107
But what is process capability?

To exactly understand the meaning of

“process capability,” the first thing I did
was to start studying this theme since I
am naturally inclined to discovering the ins
and outs of things.
I had started off with the suspicion that
this term concealed one of those passing
trends that a top manager of some
multinational had invented, and which
could cause problems in production. Based
on university studies and theoretical
methods, it is hardly practical, and difficult
to apply to the real world of production
departments.
The doubt did not regard the validity of
the system, but rather, whether it was
applicable with contained costs in the
departments of small and medium
enterprises.
There was no doubt, however, about its
winning functionality in the environment of
big companies. This doubt lasted until I
came across various articles written by the
so-called “gurus” regarding the corporate
qualitative progress, which underlined how

108
the primary need of the company is to
understand how fundamental the continual
improvement of oneself is.
Generally speaking, continual
improvement of quality is interpreted as
the continual enhancement of the quality,
solely of the production processes. In the
minds of many people, the concept of
quality enhancement is associated only to
product quality and it is retained that this
improvement can be reached only by using
the best materials, best equipment, best
machinery and so on.
This way of viewing quality creates a
wrong trend.
When speaking of the continual
improvement of quality, we refer to the
improvement of corporate processes as a
whole starting from the production
process, elimination of the transitions that
weigh on direct costs and increase of the
commercialization rate of conforming
products up to 100%, to the
commercialization, sale, logistics, and
internal flow of the organization, so that
every process does not generate costs but

109
added value for the company and our
clients.

Why added value? Because it targets the

reduction of all that can be considered
superfluous, focusing on obtaining a
competitive price in the market.

What we consider superfluous in the

processes are:

 continual internal handling of

materials;
 not synchronized sequences of
corporate processes;
 large amounts of processed products
that later result to be
nonconforming;
 continual handling of material due to
nonconformities;
 delays for the end clients;
 penalties of end clients;
 loss of market image
 loss of reliability with clients;

110
  loss of time due to lack of
information.

How much can all this cost for the

producer and the client? We are sure that
you realize, even without a calculator in
hand, that you may have faced in the
past, all types of problems and the related
costs, just like everyone.
Do you believe that every company selling
the same range of products has the same
process capability?

First, let us define what is meant by

“Capability”:
“the ability to carry out a task or achieve a
result that is defined by the client through
specific requests.”
All starts therefore from the market:
personally, I think it is an excellent
element because I believe that the market
is the North Star, the compass to follow,
leaving aside many hardly practical
theories and philosophies.
In fact, the question which every serious
company must ask itself before

111
undertaking or accepting an order, should
be:
“Are we able to satisfy the demands and
expectations of the client?”
If this question is not posed internally and
the main instinct is always to take orders
nevertheless, unfortunately it may all
result in having unsatisfied clients, who in
turn will have their own unsatisfied end
clients, with the consequent loss of image
and credibility spread throughout the sales
chain.

And this situation is not improved in

knowing that various ISO certifications
which the company can boast, remain on
paper without finding any effective
application within the processes.

Turning over the situation, we see that

downstream to this group of
producers/suppliers with process
capability, we find companies which, in
most cases, never analyse the process
capability of their own suppliers, even the
strategic ones, but base their choices only

112
on the price, the seller’s pleasantness, and
the presentation of catchy advertisements.
These reckless choices damage image and
credibility, a situation difficult to resolve
later.

How can we avoid these risks? Our advice

is to apply a simple analysis by comparing
our Business Flexibility method with the
disadvantages that arise when it is not
used.
This comparison emerges from tips I have
gathered from discussions and
conversations with trusted clients who
recounted their work systems in detail,
given their hands-on experience.

I am pleased to place these tips at your

disposal, so you can assess if they could
be useful to you. Reading them could
reveal the problems you are experiencing
today from a different angle, and inspire
you to find the solution you need.

Likewise, even if you are not undergoing

this type of problems, you could be pushed
to optimize or improve your company.

113
Comparison helps us to evaluate the
advantages and disadvantages and make
the best decision from this analysis (but
remember, also NOT deciding is a
decision).
Try to imagine a balance scale which I
believe gives an objective view and visual
comparison of the two pans on which we
should place all our assessments to
determine on which pan the best
advantages will lie. These are benefits
which allow us to reach a decisional
equilibrium, the factor which we are often
unable to find, or that we have sought all
our lives. Finding it is never simple and
this holds also for the choice of processes
in our companies.
Obviously in this comparison, on one pan
of the scale we shall place the Business
Flexibility method and on the other, the
counter arguments that come to mind.

114
To follow are some tips on what to place
on the other pan so as to counterbalance
the weight, reach the famous Balance or
determine the greater weight and identify
its correspondence with the
counterarguments to the Business
Flexibility method.
It will be difficult for you to identify
yourself with all my points, but one may
strike you and clearly show you on which
side the scale tilts.

 Against Business Flexibility: lead

time of the purchase from the time
of confirmation to shipment by your
supplier;
 Against Business Flexibility: cost of
stock turnover value calculated on
the longer time for your current
supplier to complete the order, which
obliges you to keep a larger stock of
products;
 Against Business Flexibility: cost of
the larger area occupied by the

115
 stocks, calculated on the longer lead
time taken of your current supplier
to fulfil the order;
 Against Business Flexibility: cost of
merchandise handling in a highly
stocked warehouse;
 Against Business Flexibility: costs for
failed orders from your clients due to
long delivery times by your supplier;
 Against Business Flexibility: costs of
low percentage of orders acquired on
offers proposed;
 Against Business Flexibility: costs of
image of products sold without your
trademark;
 Against Business Flexibility: costs for
quality due to the impossibility to
trace the products you sell;
 Against Business Flexibility: costs in
terms of stress and in your
company’s internal rapports because
you are unable to handle the many
product requests from your clients
due to your current supplier’s
rigidity;

116
  Against Business Flexibility: costs
generated by the absence of
business flexibility and the
consequential impossibility of
growth;
 Against Business Flexibility:
competition costs arising from the
sale of unknown brands as if they are
the best;
 Against Business Flexibility: costs
due to the absence of continual and
effective cooperation from your
supplier;
 Against Business Flexibility: costs for
the purchase management process
by addressing several suppliers
competing with one another.

How many times have you repeated to

yourself: “damned market.”
Difficulties in making sales forecasts with
the consequent impossibility of predicting
your purchases, high inventories with
frequent breakage of stocks for some
products and very slow reorders for
others, frequent handling of goods in the

117
warehouse, money tied up in stocks with
the consequent loss of other sales
opportunities, political and geopolitical
events that disrupt the markets… I would
say we should skip citing other problems.

More and more clients I meet tell me their

worries due to this market which has gone
berserk, up to the point of not sleeping at
night. Even worse, this situation is scary
because of the difficulty in deciding
strategies for the company, and also leads
them to refrain from making any decision.
They are practically blocked in the face of
all the rapid changes occurring before their
eyes.

They live in an eternal situation of conflict

with the clients, the banks, suppliers, the
government, employees… and so on and
so forth…
Regrettably, the situation created has
obscured it all, preventing them from
reasoning in a totally detached way and
some feel caught up in a vortex which

118
seems to get increasingly complex, leading
to a total paralysis.
It is a total immobility, remote from the
always active past.
Complaints begin, starting from listing the
clients who used to order great batches of
products regularly even with anticipated
purchase plans, while today the market
seems to have gone crazy and you can no
longer plan. There were long transactions
even for small orders, to then find at the
confirmation that the client requested a
practically immediate delivery.
No client now wants to handle stocked
goods and forces the producer and
distributor to guarantee flawless service to
the end client.
This also leads to an increasingly tense
atmosphere in the companies. We see
great tension among the various
departments: sales staff pressured by
clients, production pressured by the sales
staff, management pressured by the
executives, and executives pressured by
figures to make ends meet and

119
departments to run. The stress among
people heightens, to the detriment of the
corporate organization. A businessperson
of an average spare parts company, so
frustrated by this crazy market situation
and by his corporate executives in
continual debate, told me that his dream
was to have a telephone line connected to
a magical supplier so that any type of
order requested could be fulfilled
according to the requests of the clients
and with the utmost internal efficiency of
his company.
Today, this is possible.
Now that you have come to this point of
the book, you will have understood that
our company, Metallurgica Valchiese, has
developed the Business Flexibility method
as a solution to this unpredictable market.

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WHY BUSINESS FLEXIBILITY?

Because this method gives you the

following leads:

 flexibility: adapting oneself to

batches of various quantities;
 lower lead time than that of
competitors for all types of heavy-
duty blades;
 fast response to your clients’
requests;
 adjustments to the changes in your
clients’ requests;
 reduced cost-investment of your
warehouse, thanks to reduced fixed
asset value achieved;
 reduced cost-handling of stocks;
 no obligation to buy big quantities of
pieces for each single item;
 no obligation to use more storage
areas;

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 no obligation for greater handling of
goods;
 no obligation to have more staff to
manage merchandise handling;
 decreased inventories;
 acquisitions only to replace sold
goods;
 elimination of advance acquisitions
to respond to deliveries;
 reduced handling of materials;
 elimination of dysfunctions to the
balancing of the phases;
 reduced staff;
 decrease in urgent acquisitions;
 reduced number of finished products
inventories;
 fast and punctual deliveries;
 reduced and less risky investments;
 easy management of acquisitions
and handling of the products.

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The feedback on these benefits is
confirmed by all our clients who have
adopted the method.

These are just a part of the many benefits

you will obtain by using the Business
Flexibility method.

As you may imagine, some clients DO NOT

take this step and the main reasons I hear
are:

 “I prefer waiting to see whether the

market will stabilize or improve”;
 “I don’t have the suitable internal
staff to handle this change;”
 “I have a longstanding relationship
with my current supplier and, even if
he creates problems, I don’t feel up
to breaking away”;
 “what if the product will cost more?”
 “My clients are willing to wait”;
 “I want to reconsider with calm…”
 “My purchasing office thinks this is
complicated”;

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  “I always buy at the lowest price,
putting my suppliers in
competition“.
with each other

Despite respect for each person’s way of

thinking, these are the responses I
received and inevitably kept in mind, since
they are rather alarming. They make me
reflect on the fact that we complain about
the crisis. For some companies and the
choices or non-choices they make, the
crisis will be chronic. Actually, I think that
for them this “crisis” will only expand since
to fight in the market and emerge, each
company must have a strategy (and I
don’t necessarily mean the method which
Metallurgica Valchiese proposes).
But waiting for the times to improve,
things to change, or for someone to put all
in order with a magic wand, does not
seem to be an optimal strategy since all
depends exclusively on the others: you
have no control at all!

Sad to say, we observe a panorama where

many companies with these ideas do the

124
most wrong things: total immobility, even
in the face of a world that is increasingly
accelerating in terms of change.

If you too, think like them, you might as

well stop reading…

On the contrary, if you want to explore

new solutions to face this constantly
changing liquid market and changes
inside your organization and of the clients,
do contact us directly to learn more about
our Business Flexibility method which has
already helped other companies like yours,
to restart, grow and expand to new
markets and new clients.
Above all it has helped them to gain
internal balance in terms of human and
economic resources, and in optimizing
their own organization, especially the
purchasing and sales processes.

I can assure you that also for the

companies that have already adopted the
Business Flexibility method, the choice was
not easy or simple.

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Initially not even they believed that this
method could solve their problems in the
market and bring the benefits we have
listed.
But they were convinced by our
perseverance and certainty in proposing
our method, our transparency in detailing
the system to the maximum, our
assistance for the start and development
of our relationship, besides our willingness
to face every doubt that could arise in the
various work phases. They were thus able
to see the benefits which they obtained in
terms of:

 flexibility: adapting to variable

quantity batches;
 lower lead time than that of the
competitors for all the types of
heavy-duty blades;
 fast response to clients’ requests;
 adjusting to the variations of clients’
requests;
 reduced cost-investment of the
warehouse, thanks to reduced fixed
assets value obtained;

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  reduced costs in merchandise
handling.

All of this is due to our experience in the

sector and, above all in the creativity and
perseverance of our staff that committed
itself to studying and offering our clients, a
differentiating solution in the market of
heavy-duty parts for earthmoving
machines, to allow you and us to grow in
this unpredictable and berserk market.
After an initial period of tests with our
faithful clients, who we thank for having
believed in us, especially during some
slowdowns we had and which we
overcame. From 2015 onwards, the
companies that believed in our Business
Flexibility method have enjoyed an
increasingly reduced startup time.

We underline that most of the startup time

did not depend on technical details, but on
the human factor at all levels: from the
highest, the CEO and directors, and top

127
executives who simply undertake the
issuance and sending of purchase orders
to the supplier. If the human factor is
convinced of the validity of the choice and
applies it fully, the full application time
gets really reduced.

Luckily, our company has a staff that has

made its motto, “NEVER GIVE UP,” and
has utmost commitment to the client’s
own creed. This decision and tenacity of
the staff allow the client approaching the
method to see that all has been studied to
obtain profitable cooperation for both
companies.
We also had the pleasure to see some
convinced “NOs” which later faltered and
got transformed into an “I shall assess but
without commitment,” to then explode into
“thanks for having waited for me and
convincing me” after a few months of
complete application of the method.

People reading these paragraphs may

think we are arrogant and are simply
emphasizing and publicizing one of our
services.

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We would simply invite these people to
reread the previous passages to see that
what we are proposing is not one of our
exclusive products or services, but a
system for the management of a business
which goes beyond the actors that apply
it.
What matters for us is to offer some tips
for an analysis of your company, so you
can see that the application of this system
will help your organization to work more
efficiently and effectively, and expand your
reference market.
Now you have many essential aspects to
help you evaluate, so it’s up to you to
make the first step to contact our
company and meet with us, so that you
can directly verify our method and the
possibilities it offers. We ask you to take
the first step because we want you to be
convinced that this possibility can offer
you the solution to tackle at best, the mad
and liquid market that is challenging you
daily.

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For our part, we will be most willing to
present our method and illustrate to you
together with your staff, the benefits you
will experience with its insertion into your
corporate processes.

When speaking of making choices and

investments on new strategies which imply
also internal organizational changes in the
work system and corporate procedures,
we are aware that the fear of making a
false move which could complicate the
work phases, and bureaucratize the
company, in short, of making a wrong
choice, is the typical sensation which every
businessperson experiences with concern.

Today, with the many possibilities which

the market offers, people get very
confused about the choice to make and
the feeling that they could make mistakes
increases.

On our part, what we can do to make you

assess at best our Business Flexibility
proposal, is to state the reasons which

130
convinced many of our longstanding and
new clients to choose our method:

 market requests are more and more

oriented to medium or small batches
with shorter lead time between
purchases;
 companies want to reduce
inventories and keep in stock only
what will be sold;
 companies want to optimize the
demand-offer-order ratios;
 companies analyse in detail every
component of the price of the
products they buy;
 companies analyse every detail
(brand, traceability, warranties) of
products they buy;
 companies value the supplier-client
partnership relations in order to
create a profitable relationship for
both;
 companies try to differentiate
themselves by identifying with a
Unique Selling Proposition (specific
advantage offered to clients)and
also the positions, in a clearly

131
 different way from market
competitors;
 companies understand that the price
is what you pay and the value is
what you obtain.

On the other hand , we would like to list

the types of companies that can do
without assessing the Business Flexibility
method:
 companies that base their business
only on the price;
 companies that want to stand out
only through the price;
 companies that think one product is
worth the other;
 the companies that think one
supplier is worth the other;
 companies that are convinced that
competitors can always be beaten;
 companies that are convinced that it
is not worthwhile to change the
work methodologies established;
 companies that are convinced that
stagnation is caused by the crisis.

132
I would like to invite these companies to
take some time to contact us only if they
are able to liberate the mind from
preclusions, presuppositions and
convictions that do not allow them to
approach our method with the necessary
flexibility and openness to new ideas.

133
STEAL THE IDEAS THAT WORK TO KEEP
CLIENTELE LOYAL AND FIND NEW ONES

Entrepreneurs can generally be divided

into two types.
There are those who start by applying
their direct or indirect knowledge as is,
and then slowly fine-tuning and modifying
things where necessary. All are based on
results and not on ideas they had
beforehand.
Then there are those who clash with the
new ideas, systems and strategies and
then go haywire, closing themselves in by
curling up like hedgehogs. As a
consequence, they get into situations
where it is IMPOSSIBLE to concretely
apply, the strategies they see moving into
the market.

This happens for two simple reasons:

their mental resilience is that of a piece of
concrete; they fear novelties, and getting
ruined (as perhaps happened in the past)
and do not give themselves the chance to
understand how to change their own fate
and that of their own company.

134
They barricade themselves behind the
“I’ve tried it all and to no avail,” and no
antidote is of use. We can only wish them
all the best since they will surely need it.

With you instead, I would like to share a

concept which most entrepreneurs do not
believe in (the same bracket of people who
rarely have a constant flow of clients, least
of all satisfied ones), and it is this:
when speaking of strategies, there is no
strategy that “doesn’t work” a priori for
you.
I’ll try to explain this in detail.
When you get to face a
production/commercial strategy applied
successfully in a sector that is not yours,
you can have TWO reactions.
One is that which allows you to adopt and
use successfully in YOUR market.
The other one instead, doesn’t help at all.

What will lead to nowhere is to think that

your sector is so different from the one in
the example, to such a point as not being
able to replicate “the same thing.” The
successful reaction instead is to find how

135
to adapt that strategy to your settings and
make it work. Attention! When I say
“adaptation,” I mean one which is often
and usually not committing, or at times
not even requested. This makes
everything funnier since it means that its
non-application is 100% caused by the
mental inflexibility of the person, a trait
you will never see in the basic
characteristics of successful
entrepreneurs.
In other words, saying beforehand that “it
will not work for you” will only help you
not to improve your company.
If you come up with a thousand reasons
why any type of strategy will not work in
your case, you probably fall under the
second group of entrepreneurs we saw
earlier and, let me say with all sincerity
that you are mistaken.
Do you know why?

136
Because this list of excuses (well yes, let’s
call them by their right name) could have
come from the first passerby you met this
morning on your way to work or the first
person you chatted with on Facebook.
Coming from this person, it is to be
expected.
But really NOT from a businessman who
wants to expand his own market.
Absolutely NOT.
And NOT from you.
Your role as a businessman is to: find the
most effective sales strategies in both the
sectors where they are currently used;
test them; adapt them until they work
perfectly, and with time, modify them to
make them work more and more.
That’s it.
And pay attention: I’m NOT saying that
you have to copy like a parrot, the
production/commercial strategies you see
all around you.
Mediocre people copy.
Talented people STEAL.
And this is where I reconnect to the title of
this chapter.

137
A businessperson without a strong
personality is unable to go beyond the
simple idea of a strategy.
A more able and cunning mind is able to
absorb and develop it.
And even more.
There is still a more subtle difference
between the mediocre person and one who
has a hidden talent.
And it is the second one (the talented
person) who is not content with absorbing
and redeveloping the same technique, but
goes further, in undertaking a personal
study which makes use of experience only
as a departure point.
It often occurs that they “steal” and talent
surpasses the model taken as example
and therefore makes what was “stolen”
bear fruit in the best way.
The mediocre stops at appearance, does
not cross any barrier, and remains
immobile at the same point.
Those who run away from mediocrity
should follow the mantra of the talented
person:

138
“Don’t refer to your sector to copy.
But do it in order to do something different
from the others.
Instead look at the sectors differing from
yours to steal something which works in
their sector, and which nobody has ever
done in yours. Take it, bring it over to
your side, adapt it and make it work first
of all.
Only in this way can you reach great
success.”

Stop looking at your competitors to copy

“ready-made” things. The temptation is
strong, but like all temptations, it is
unhealthy and leads to insufficient results.
On the contrary, look outside your sector.
Find unedited strategies that have never
been used before in your field.
Start understanding how successful people
are promoted and what strategies they
use. Find something which works and
which has never been seen before in your
sector.
Be the first to bring it in.
And gain YOUR success.

139
LOOKING AHEAD

A new year has just started and usually,

the fateful figure which changes, creates
for a certain time, a sort of euphoric
optimism which paints a colorful future,
making us forget the clouds that tend to
obscure it all.
Unfortunately, once this brief period has
passed, we turn our gaze to the horizon,
and try to pierce the clouds to be able to
perceive the sunlight.
Personally, I try to get more possible
information to try and understand, at least
at a macro level, which could be the
national and international economic
forecasts.
However, I would say that in the last
years, it seems that the road to pursue is
to do the contrary to what the gurus
predict.
Between November 2016 and March 2017
the forecasts of the leading experts on the
Dollar-Euro were blatant: the predicted

140
Euro-Dollar exchange rate in parity, or
rather, with a possible devaluation rate of
the Euro at 0.95.
Well, I think we all saw how the forecasts
were reliable and how the exchange trend
turned out.
After one year the euro was revaluated at
over 15%, making the European producers
weaken their competitiveness in the
market areas dominated by the dollar.
Likewise, the development forecasts for
the areas and markets then crashed after
the change of government or the
introductions of protectionist measures.
And these are only two of the many
forecasts which the small and medium
enterprises rely on for their own business
and financial strategies.
On our part, my staff and I try to interpret
not only the trend of the markets, but also
the individual clients.
As to the markets, we keep ourselves
updated on the economic and socio-
political situation, studying the trends to
define the resources to be invested. Above
all we try to know the definition or
progress of investments in infrastructure

141
and big construction projects, and the
approval of new laws designated to the
development of the sectors of our interest,
through particular special facilitations.
With regard to the clients, we dedicate to
each of them individual meetings to get
updated on the closing financial
statements and their predictions for the
coming year.
This is how we find out if they have new
projects, investments and strategies
underway, so as to be able to make our
proposal to help them improve, render
their organization efficient and optimize
their work.
In the same way, this allows us to improve
and optimize our internal organization and
our client services.
This mutual client/supplier openness and
cooperation helps both to boost their own
competitiveness in the market and
reciprocal loyalty.
At the same time, it allows both
companies to reach the maximum
efficiency and utmost profitability.
It is evident that at the base of this
rapport lies esteem and trust in our own

142
interlocutors and the capacity to have a
long-term vision.
We cannot create this type of rapport if we
retain our client/supplier only as an
interlocutor from whom we can draw
maximum profit, or if we got used to
launching an auction every time there is
an order to confirm.
This certainly ensures some advantages in
the short term, but can be
counterproductive in the long term.
I know you are thinking that this is not
true. Why do I know this?
Because this is the conduct adopted by
most of the companies, so we invite you to
turn your gaze all-around,
comprehensively, also in sectors differing
from ours, to realize that the more
successful companies managed to cultivate
a long-term relationship with their own
clients and suppliers.

143
Partnership is based on the exchange of
information and on a constant,
constructive cooperation to help both
companies be competitive in the market.
The invitation I am launching is to
dedicate our efforts in emerging from the
price trap which conditions us, that is,
detaching ourselves from the conviction
that the sole sales factor of our products is
the price.
We have many examples not only in our
sector to demonstrate that this is possible.
This requires sacrifices, and is not
painless. We need tenacity and a lot of
dedication but in the end, it will make us
stand out from the many companies that
tend to work with the same cliché.

144
WILL YOU ACCEPT A CHALLENGE?

I am proposing six/twelve months to

simultaneously pursue your old system
and the Business Flexibility method which
Metallurgica Valchiese is proposing.

Monitor the results you obtain in terms of

figures, regarding the:
- percentage of offers issued and orders
acquired;
- number of new clients acquired;
- customer satisfaction.

At the end of the trial period you chose,

we shall check the results together, and in
case our method is unsatisfactory, we will
reimburse you with a special bonus.
Instead, if our method has brought about
positive results, we shall make a three-
year exclusivity agreement for the supply
of our products.

To clarify some doubts, you may have

regarding the commitment, we ask you to
insert our Business Flexibility method in

145
your organization. Here again is a
summary of the steps required for this
operation:

 analysis of the turnover percentage

of our products in your own
turnover. The advice is that it should
be surpassed by at least 50%,
otherwise the economic convenience
declines;
 analysis of your client target
(retailers, end users, machine
constructors, etc.);
 analysis of your purchase frequency;
 analysis of total orders of average
purchases;
 analysis of the current product;
 preparation of Metallurgica
Valchiese’s supply proposal;
 presentation of Metallurgica
Valchiese’s supply proposal;
 agreement to start collaboration
between the two companies;
 monthly briefing to draw up the
partnership;

146
 quarterly briefing to analyse the
partnership trend;
 after six months an analysis of the
results obtained;
 after a year, an analysis of the
results and renewal of the
agreement.

147
THE CHALLENGE

The “golden” years in which the Italian

economy “galloped” thanks to Craxi &
Company’s financial trick of devaluating
the lire to the detriment of the Mark and
the Franc by 20-30% killed the Italians.
Beyond all the economic considerations we
made and can make, those decades threw
us into a chasm of endless provincialism.
Yes, because while the “internal economy”
galloped (an illusion, but it did gallop), in
reality compared to foreign countries we
were starving to death.
A dollar was at 2,000 Lire, so our holiday
in the USA was stuff that cost us double in
terms of cost of living and so, the minute
we crossed the national borders we
became beggars.
For two or three generations this created
human fossils impermeable to
international thought, the comprehension
of other languages, the simple need to
study them and generally, to
understanding that the world was not
really the town from which we had

148
escaped, and to which we returned in
summer to see our parents.
Craxi & Co. contributed to impoverishing
us culturally, creating a population of
bumpkins convinced that they could go
ahead always and only due to internal
economy, and speaking the dialect.
Then we discovered that in Como the
dialect is spoken, and just two km further,
past the border, our peers who were
fighting to enter the world of work like us,
could speak four languages at the age of
five.
The internet arrived, and nobody could
read in English or understand the movies
and we were, however, cut off from the
rest of the world.
It was a cultural massacre that pushed
Italy back into the darkness of the
Medieval age.
And whoever sustains the contrary, or still
dreams of those “nice” moments in which
we were just kings of a heap of dung,
wearing a plastic crown, is crazy.

149
Incidentally, few in Italy, knew how to
carry out customer-focused marketing and
sales, because there had never been the
need to do so.
It was an economy drugged by monetary
devaluation. Also abroad, despite the
dialect we could sell because our products,
compared to the German and French or
English, cost 30% less.
But then when the Chinese, Indians and
Pakistani started doing the same, we felt
they were breaking our balls, eh? And so
the cries against bad globalization rose.
How does ”this thing” really work? The
wrong things are fine only when we are
the ones who do it to others, but we don’t
like it when we are the victims.

What we are offering is, therefore, a

method to make us emerge from the
Medieval darkness of business and start
shining again. What we are offering is the
way to stop being part of the masses that
give up, complain… those masses which, in
the end, are a pain in the ass, but which
we do not realize to be part of.

150
Distinguish yourself, innovate, take your
share of high quality.

Think about it, assess our Business

Flexibility system, and, if you think you
have a sufficiently open mentality, and an
adequate propensity to healthy and
profitable risk, contact us.

On our part, we shall respond to all your

questions without avoiding the more
uncomfortable ones, so that you get a
clear idea of the breakthrough our method
can bring.

Do a good job.

151
Freely inspired by

- Maurizio Porta: Flexible Production

- Paolo Borzacchiello: Wedo-It Academy
- Frank Merenda: various writings

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