It's not too late to make a New Year's Resolution, so here's one for molders and moldmakers: "I resolve not to be the weak link in the supply chain." In the latest Supplier Survey report from the Original Equipment Suppliers Association (OESA), it was evident that the supply base is a huge concern for the Tier 1 suppliers.
Many of the respondents indicated they are doubling or tripling up on suppliers for certain tooling and components, depending on the commodity. It was also noted that they are going to invest in more supply chain management people to pay visits to suppliers and ensure that these companies have the capabilities to produce tooling and components in a timely manner. Mitigating the risk in the supply chain is a big priority for both Tier 1s and the OEMs.
With OEMs in many industries, including the automotive and aerospace industries, getting busier, having suppliers that can meet demand is critical to their success. In a Dec. 30 issue of the Wall Street Journal, an article looked at Boeing's efforts to strengthen its supply base as orders for its best-selling 737 jets have reached all-time highs (no pun intended!). The company has plans to "stress-test" suppliers through comprehensive reviews by "supplier examiners." Boeing has increased "its ranks of these examiners with about 200 engineers and other supply chain specialists in the past 18 months," said the WSJ article.
This intensified scrutiny isn't just about Boeing, but nearly all the global OEMs of many different products are scouring their supply base and removing the "weak links" before they cause damage.
While the recession took out many weak suppliers, noted Neil DeKoker, President and CEO of the OESA in an editorial in AutoBeat's Insider report (July 20, 2011), 2011 got many back on their feet and "survivors are running at capacity and enjoying strong profits."
So now that things seem to be coming back and suppliers are ramping up production, just what resolutions do you need to make to ensure that you maintain your place as a "preferred supplier" or "partner" with your Tier 1 or OEM customers? Here are a few suggestions:
I resolve to promote my business in more ways to more potential customers. There are many ways to promote your business but few moldmaking companies bother to make the effort. That's because it typically takes a marketing plan to help you strategize. You may build a better "mouse trap" but if no one knows about it you can't win new business. Winning new business is key to diversifying your customer base, which is critical to your health as a supplier. You can diversify by customers, by markets or by product type. But diversification is key! Marketing or creating the demand for your products and services, is the way to get there.
I resolve to be profitable. Making money is the one - and probably the only (unless we just love to work for fun) - reason we're all in business. That means finding ways to be profitable, and using those profits to build better business. There's an old facetious business model (for those who make molds and do molding): "I'll lose money on the mold and make it up on the piece parts." That only works if the customer orders the number of parts they said they would. But we've all seen that game. They ask you to quote them in quantities of 100,000, 500,000 and 1 million parts, then order 10,000 and want the 100,000-piece part price.
I resolve to get tough with my customers when it comes to payment. Remember, you're not a banker - you're a mold manufacturer! You're a molder! Recently a few mold company owners have told me they're getting tough with their customers. They've seen what has happened to some of their peers who failed to use "tough love" on their customers - they are no longer in business. And for you molders out there, you really can shut the presses off! I've written about molders who've done that - and got paid what they were owed! Again, you need to remember that you are in business to make money - not friends! Sure, it's nice if your customers like you. But it's even better if they like you enough to pay you because they want you to remain a good supplier!
I resolve to be innovative. Neil De Koker said in the AutoBeat commentary that today's suppliers must be "really smart about innovation to differentiate themselves." For some suppliers it might be about innovating your processes, your mold designs, your solutions to your customers' challenges to reduce cycle time, eliminate secondary processes, or improve manufacturing systems. Whatever it is, resolve to be more than "just a moldmaker" or "just a molder."
These are four good resolutions to start with, but I believe that if you only take these to heart this year, you'll have a great 2012!