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Simple Competition Is Simply Not

In an effort to drive down prices, or perhaps some would say, in an effort to avoid having to manage the industry, here in the UK, the government have opened up the domestic electricity market to promote competition between providers. What a surprise! It is not going well. It has been shown that many people are happy to stick with their current provider, due to their perception of the difficulty to change. In reality, the change is simple. The actual difficulty is to have to navigate through the often very complex tariff and billing arrangements. One has to wonder why they make it so difficult, apart from, of course, to prevent people from changing.

Consider this. If you want a new car, there are many to choose from, each with many different options, colors, styles and levels of performance. Being human, we all have different ideas of what we like and what we consider being “cool”. At the end of the search, there is then just a single simple price. For this reason, the many variants of cars exist, such that it is rare to see any two cars the same on any journey. The market to buy a new car is very much open, and needs no encouragement. People are happy to have the choice. The choice brings value.

Buying electricity is quite different. Not one of the providers is offering a better quality electricity. The performance of the many different offerings is the same. The same power, the same requirements, all installations are common, all peripherals are compatible, reliability is the same no matter which provider it is. There is no “value” option, there is no premium product. Electricity is basically, just electricity. Differences in customer service levels, whether regarded as good or poor, are negligible, so the choice in the market comes down to just one key issue. Price. If the market were truly open, with just the one key variable, assuming no-one likes paying more money than needed, there would be just one supplier that everyone would use; the cheapest.

The reality though is that there are many electricity providers in the UK, doing very good business, each with many tariffs, who have succeeded to make it look as though there is a wide choice with differing values. Looking more closely, many of the tariffs seem to be based on “tricks”; to provide some attractive headline numbers, but keeping balancing costs to one side. Price promises, introductory discounts, “smart” energy monitors, playing with different price ratios of standard charge and actual power consumption bring complexity, which, it seems, is only there to make the market appear to be “open”, to make it look as though there is a significant choice. The choice seems only however in how much people want to be ripped off. Analysis shows that so-called “competition” in electricity pricing has not in fact helped to reduce people’s energy prices in the UK significantly.

So what is this all about? Complex pricing and complex product structures are a barrier to innovation. People tend to be suspicious of complex price lists, or having several products available from the same supplier that do the same job. The latest pricing from Valor is the simplest that it has ever been, with a focus on bringing a swift return on investment no matter what configuration is needed, and in what circumstance it is deployed. A single set of complementary solutions from the PCB layout DFM check for manufacturing, all the way through process engineering, production and supply-chain management, quality all the way to completion of manufacturing of the entire product ready for shipping, designed to enhance the performance of ERP. Come and have a look at how simple it is to change your manufacturing operation platform to the latest operational technologies, embracing the opportunities that the changing industry provides for those who wish to take them. Unlike swapping out electricity suppliers, you really will appreciate the difference……. Valor.

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About Michael Ford

Michael FordMICHAEL FORD SENIOR MARKETING DEVELOPMENT MANAGER, VALOR DIVISION, MENTOR GRAPHICS Michael started his career as a computer software and hardware engineer in 1982. Working for Sony in the UK, Michael became one of the first successful adopters of computer technology into the manufacturing shop-floor, going on to manage in Japan Sony’s global Lean Manufacturing solutions. Joining Valor Computerized Systems in 2008 gave Michael the opportunity to apply his experience into the main-stream of the industry. With almost 30 years’ experience, Michael’s key strength is the instinct of finding solutions and opportunities where there had been challenges and problems. Michael is currently working as part of the Marketing Development team within the Valor Division of Mentor Graphics, focussing on the realisation of real and practical solutions for manufacturing based on the application of Lean Thinking, end to end, from design through the entire manufacturing process. Visit The Michael Ford Manufacturing Blog

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