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11/1/1998 | 3 MINUTE READ

Cooperation Begins With Suppliers

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In the past couple of columns, we highlighted small contract manufacturers who solved production problems with new product ideas. But not all improved process solutions result in a marketable product.

In the past couple of columns, we highlighted small contract manufacturers who solved production problems with new product ideas. But not all improved process solutions result in a marketable product. In fact, if we are keeping our eyes open as we walk around our shops every day, we'll no doubt find many little things that can be "tweaked" to make the operation better and more profitable.

Most improvements simply keep us in the ball game, or at best put us ahead of our competition until they also make a change. The ideas don't (and in fact cannot) always come from you, the manager. But it is the manager's responsibility to encourage the organization to constantly be on the lookout for opportunities to improve the flow of work.

In addition, it is not just our fellow employees that can help with ideas. The story that follows is an excellent example of how supplier partners can assist in keeping the business competitive.

Chuck manufacturer Huron Machine Products, Inc. (Ft. Lauderdale, Florida) has been in business more than 50 years. Having survived the good times, as well as the bad, it would appear that the systems in place would have been fine-tuned to perfection. President David H. Lindemann has always practiced modern management methods in the supervision of the some 100 employees. In addition, he has "networked" with his contemporaries in the contract manufacturing and machine tool industries. What he came to realize, though, was that further improvement was possible through closer cooperation with material suppliers.

"Huron had been purchasing a major portion of our raw steel directly from the mills and their service centers," Mr. Lindemann says. "This amounted to three or four truckloads each month. At 44,000 lbs per truck we were handling up to 176,000 lbs of steel and aluminum a month." Operations manager Bob Chapman adds, "It took two men eight hours to unload and store each truckload. The worst part was that the unloaders also ran the saws. We were losing a full day's work on the saws from these two guys each month when the steel trucks would arrive."

You can quickly see the problem, but Huron had been handling material this way for as long as anyone could remember. Sometimes you just can't see the forest for the trees. Not only did the unloading activity cut into the sawing operation, it also interfered with production scheduling and a smooth flow of work through the plant.

Moreover, "Huron was losing 2,000 square feet of valuable space to store the material," says Mr. Lindemann, "and we haven't even begun to talk about the raw material inventory cost."

Then two years ago Huron worked out a deal with a major vendor to exchange a single-source material supply commitment for a just-in-time delivery arrangement. Mr. Chapman worked with the steel supplier, providing the previous year's usage and forecasting the coming year's requirements. That resulted in the following plan, which has been in operation since.

Late every afternoon Huron's production scheduling department informs the steel supplier of the following day's production cycle and material requirements. Then, not only is that material delivered the following morning, some of the stock is already cut to length.

The results? "Huron has had a substantial reduction in raw material inventory cost," Mr. Chapman says. "With the ability to order on a daily basis, we only buy what we need. Plus, we gained almost 2,000 square feet of much-needed space for production and have been able to reallocate some very valuable resources."

This is a classic win-win business deal. The supplier gets a steady customer with very predictable annual sales. Huron gets lower total costs, with less inventory, a steady workflow through the saw area, and more usable manufacturing space.

The program has served as a new model for cooperation that also draws on Huron's historical strengths. "We have always tried to be a true partner with our customers and vendors," Mr. Lindemann says. "But this experience has special significance because it was truly a team effort. The program has been so successful that we are now working with other vendors to replicate this type of positive results."

Ideas for improving processes can come from many places—your own observations, or the suggestion of an operator or a valuable supplier. Good managers will keep their eyes and their minds open and take a good idea from anywhere. It's like getting a consulting engineering service for free. But the most important ingredient is you, the manager. Encourage this activity on a daily basis, and the entire organization will win.