NFDA: What Shapes Your Supply Chain?

12/1/2014 12:20:00 AM
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NFDA: What Shapes Your Supply Chain?

Jay Queenin of Specialty Bolt & Screw Inc. started out a National Fastener Distributors Association discussion on supply chains by noting that “getting customer data can be difficult.”

Information is important to suppliers and distributors too, Bruce Wheeler of Star Stainless added during the NFDA autumn conference in Naples, FL. “I know some can’t forecast a customer,” Wheeler acknowledged. “But any information you can share can help.”

 

Several participating distributors and manufacturers reported they have found some ways around a lack of information from customers.

Ed McIlhon said Assembled Products Inc. has an 18-month forecast system and is working with its IT department to interpret the numbers for Purchase Order Adjustments.  

“They are getting to the point of knowing what major customer John Deere will need before they send it to us,” McIlhon said.

The information Assembled Products compiles is “great information, but we still must massage it,” McIlhon acknowledged. 

There also are circumstances beyond the control of everyone in the supply chain from manufacturers to customers, McIlhon added.  For example, when corn prices fall, John Deere orders also drop.

 

Queenin said SBS uploads ordering information every night.  “That can help,” he said.

But one problem supplier or customer can create a “weak link in the chain,” Queenin observed.  “You’ve got a problem.” 

 

• Dave Monti of Fall River Mfg. pointed out it is important for distributors to understand that lead time involves every stage back to raw materials and tooling. Sufficient lead time “allows manufacturers an ability to react.”

A conversation with one distributor about those steps in production back to the raw material stage, “helped reduce lead time from 10 weeks to four weeks,” Monti found.  “That’s a 60% improvement,” he calculated.

The alternative is “crisis mode” ordering, Monti said.

 

• The supply chain working as much together as possible is vital, Wheeler said. “The last thing we want to do is loose a sale.  The last thing you want to do is not supply a customer.”

 

• Part of developing a strong supply chain is education.  “Knowledgeable buyers instead of clerks. Buyers need to understand supply chain lead times.

Queenin added that the purchasing department must understand the supply chain.  “We can work with them and for them.”

 

• Monti suggest not letting “a lack of data turn into a lack of planning.”

Use what you have “to best of your ability.”

 

• Gary Huck of Würth Industry Group finds that “looking in the rearview mirror” can help.  Take a look back at seasonality and “how models phase in and out,” Huck recommended.

 

• Queenin said it isn’t just sales people and the purchasing staff that must understand lead times. The CFOs may need to be “directly involved in the supply chain.”  They are making decisions on terms, credit worthiness, liability, obsolescence and cash flow, Queenin explained.

There is the question of when manufacturers should produce, when distributors should stock and when the OEM should take the product.

“Who is going to take the risk?” Queenin asked. “If we aren’t communicating, someone is going to get stuck with it.”

 

• “Communication is the key,” Wheeler said. “Let intentions and needs be known.”

“Communication both ways,” Queenin added.

 

• Wheeler emphasized the importance of relationships in supply chain management. He told of a time when Star Stainless and Field Fastener developed an “adversarial relationship and virtually stopped doing business.”

Derry also acknowledged that at one point the Field/Star supplier chain relationship “was in the tank.”

Needless to say, the Star/Field situation became dinner table conversation for each CEO.  But Wheeler revealed spouses found each other at NFDA meetings and returned home to say, “It doesn’t sound like he is like that.”

The spouses got the CEOs talking. 

Beyond the top management turning things around, the message had to get down the line in both companies. “Our two organizations started working together because they saw the bosses working together,” Wheeler pointed out. “Down the line the companies think the way the bosses think.”

 

• Monti described how one Fall River customer submits a panic order almost every quarter.  Fall River has tried to show the customer how late orders increase costs and how the customer can “get a better price.”  Monti was frustrated that the customer responded, “How can you look me in the eye and say I’m not getting the best price?”

“How can I create a value proposition?” Monti reacted.

 

• Queenin suggested one form of supply chain working together is suppliers going to their customers at least quarterly to emphasize “what you are doing well.”

“We use every channel we can,” Queenin said of Specialty Bolt & Screw.

 

Queenin acknowledged there isn’t an industrywide supply chain answer:  “What works for one, works for one.” Web: nfda-fastener.org

 

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