Saunders Valve is a Welsh manufacturer whose primary customers are large oil companies: BP, Dutch Shell, etc. They supply ball and diaphragmatic valves for refineries. Saunders identified the major cost drivers if the valves failed: if a refinery stops production, it costs the owner $55,000 a minute or approximately $3.3 million an hour. If a valve blows, it takes three hours to change. If a valve is changed proactively, it takes only one hour. Therefore, if someone could identify a proactive and/or preventive maintenance schedule, it would save the refiner $6.6 million every time a valve was changed.
Saunders realized this and took almost nine months with a great many employees to bar code every single valve on every single one of its clients’ refineries. It created a database of valve type, age, temperature, and flow. After another nine months of data gathering and analysis, Saunders had identified the mean time between failures for the valves and could provide its customers with a preventive maintenance schedule. This meant that its large customers could save $6 million every time they changed a valve, a fact Saunders pointed out again and again. Saunder’s account and market share leapt double digits. Now Saunders no longer defines what it is doing as selling valves. It has defined its compelling value equation as process control.
