2/18/2014 5:04:00 PM
HEADLINES
Panel: Taking Costs Out of Supply Chain Can
Yield Profit for Suppliers & Customers
A route to profits for everyone in the supply chain is a relationship of trust allowing suppliers and customers to work together to take costs out, manufacturing and distribution panelists agreed.
The real goal is for all to be profitable, said distributor Jay Queenin of Specialty Bolt & Screw.
The panel discussion was part of the joint meeting of the Pacific-West Fastener Association and National Fastener Distributors Association.
Manufacturer Jamie Lawrence of AVK Industrial Products noted developing supplier relationships requires trust and that requires “ethics.”
When an AVK distributor takes the manufacturer to meet with a customer in order to find supply solutions, “we are not going to go around and take your customer,” Lawrence emphasized. “If you take us into a customer or share priority information, we are going to support that.”
Queenin reported success with bringing end users together with fastener manufacturers in order to take costs out of the chain. “My customers know we will share the savings. Just as Specialty Bolt is pushing manufacturers for shorter lead times, that is how our customers are pushing.”
The end users and distributor can ask the manufacturer, “How do you buy wire? What is your lead time for wire?” The answer can help “align the system to work for everybody.”
“I bring customers to manufacturers all the time,” Queenin added. “I don’t look as that as a threat.”
That is a change from the traditional definition of distribution, panel moderator Andy Cohn of Duncan Bolt observed. Some distributors are still concentrating on websites and dialing for sales instead of developing the partnerships.
It is the difference between the logistics-oriented distributors in contrast with the traditional stocking distributors.
Instead today distributors can work with the entire supply chain to find ways to cut costs, such as a new design or reducing five parts to three parts.
Bringing customers and manufacturers together can yield other cost saving ideas, Queenin said. “Avoid duplicate tasks. Repackaging is a waste of money.”
By working with his supply chain, Specialty Bolt has been able to reduce its head count from 130 to 80 while still providing customer service and engineering support, Queenin pointed out.
He doesn’t expect to win accounts from “lower cost customers,” but realizes he “must still be competitive.”
Lawrence pointed out that indirect costs can affect an end user’s fastener costs. For example, he cited suggesting different installation tools as a way to lower total costs. Another potential savings is reducing rejection rates, he added.
Tim Roberto Jr. of Star Stainless Screw Company noted that each link in the supply chain “needs to offer value.”
“Suppliers need to listen,” Roberto said. “People have to feel good about buying from you.”
One of Star’s roles is to provide inventory. “Manufacturers may not want to be in the business of keeping inventory and shouldn’t have to worry about inventory.”
• Distributor Don Nowak of Falcon Metal noted that ultimately the “user drives the process.” He said the question should be: “What can we do to help customers move product worldwide.”
• Past NFDA president Jim Ruetz of All Fasteners described the “not just black, white and grey, but a rainbow of colors.”
Lawrence agreed. “JIT is a great philosophy, but customer needs can vary. Some require additional inventory.”
• Ruetz advocates that “You marry suppliers, but date customers.” As in marriages there are always “some issues, but you almost always work it out.”
• Carmen Vertullo of Carver Engineering called on distributors to help teach customers the difference between “installed cost vs. piece price.”
“Reliability and repeatability are important,” Lawrence termed what AVK seeks to provide.
“Lean and efficient are important,” Roberto stated. ©2014 GlobalFastenerNews.com
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