Global Fastener News

2003 FIN – NEFDA Panelists Emphasize Need for Supply Chain to Work Together

April 24
00:00 2013

September 10, 2003 FIN – The manufacturer / distributor / customer relationship “can’t be good without communication,” panelist Bill Unferth of Lindstrom Fastener Group told the New England Fastener Distributors Association. “You can’t take costs out if you don’t have the three circles intertwined.”

Panelists spoke on “What Makes a Great Supplier/Distributor Relationship?”
“We can be a better supplier for you, but not in an adversarial position,” Unferth explained.
The cooperation needs to extend back to product design, because the customer will pay more for specials or more expensive fasteners than necessary.
One of the first ways to reduce cost is to lessen the need for “Just in Case” inventory, Unferth observed.

• Kevin Queenin of Specialty Bolt & Screw suggested that distributors too often “do not do as well challenging manufacturers as our customers challenge us.”
Distributors and manufacturers need to work together. “How do we succeed together? That OEM is both of our customers,” Queenin pointed out. “Our customers are saying, ‘Be creative,’ with such programs as VMI and electronic catalogs,” Queenin finds.

• Rick Ferenchick of Arnold Industries said a problem is determining what products a distributor can responsibly handle. Some distributors become a “Swiss army knife” with everything from safety gloves to fasteners. Can they handle more product lines?
Ferenchick predicted customers and distributors are going to “gravitate to those developing partnerships.”

• Mark Klosek of Bell/Zelenda/Vertex Fasteners said suppliers need “honesty from distributors to tell us if there is a problem.” That communication is especially important, because the problem “may not be with just that one customer.”

• David Daddona of Production Fasteners emphasized the need to develop relationships in advance of problems.
Daddona reflected on the distributors’ need for accurate and timely quotes. “It is not easy to go back to the customer,” he pointed out. Dependability is a key. “There are certain suppliers you know are going to ship it,” Daddona observed. “You know there are vendors you hate to call.”

• Joe Soja of Durham Mfg. Company noted, “We are all in business to make a profit. It has to be fair to all sides.” “As a manufacturer we want to make it easy to do business with us. At the end of the day, we want to meet customer needs.”

• Panel moderator Carol McGuire, editor of American Fastener Journal, pointed out that “at the end of day” what is important is the level of customer satisfaction.
McGuire said important business relationship questions are “How easy is it to communicate with you?” and “Are you difficult to get to?” ”

Internet Problems?
Several participants expressed reservations about the future of trading on the Internet. Ferenchick described reverse auctions as “the kiss of death” that customers can use to beat down prices.
Queenin pointed out that Internet sites could be effective tools.
“Point and click doesn’t have to be threatening on one side. It can provide information and control body count in purchasing.”
McGuire described the Internet as convenient, but with the problem of “losing touch with customers.”
©2003/2013 Fastener Industry News.
For information on permission to reuse or reprint this article please e-mail: FIN@GlobalFastenerNews.com

 

 

When to Seek Price Increases
September 10, 2003 FIN – The time to ask your customers for a price increase is when your quality and on-time deliveries reach 100%, a veteran buyer advised the New England Fastener Distributors Association. Suppliers should think of “pay for performance” in trying to get price increases for their products, consultant Richard Weissman suggested.
Weissman, who spent 25 years as a buyer and now conducts professional development programs for the Purchasing Management Association of Boston and Northeastern University, noted that as a buyer he appreciated distributors who “treated me holistically. They understood my issues. I could trust them with my kids, my wallet and my business.” “They understood what I needed and kept it in-stock,” Weissman recalled. If there appeared to be a coming delivery problem, “I got a call with an explanation.”
That kind of service places an obligation on the buyer too, Weissman acknowledged. “It was my responsibility as a buyer to let the vendors know of shifts in demand.” When a supplier did want a price increase, instead of either refusing price increases and seeking other suppliers or accepting hikes, Weissman said his response to the distributor was, “Get me that manufacturer” to find ways to work with the distributor and OEM to cut costs out of the process. “I confronted price increases. Too many roll over and take the increases.”
Though some distributors want to keep their manufacturer suppliers secret so the customer won’t try to buy direct, Weissman preferred to know who the manufacturer is. Then all could work together. All levels need to understand “the cost drivers in my business.”
The biggest problems from the viewpoint of fastener buyers are on-time delivery and communication. “Be honest. I lived on honesty, and it worked,” Weissman said.
A good account may be spoiled by one problem within the process. When a $6.75-an-hour employee is doing the invoicing there are more likely to be mistakes. “Some element of their operation was killing me.”
A real problem is “management du jour,” where each new boss needs to make a show of improvements. One example is to hammer suppliers for lower prices or fire you.
Weissman said his “vender defender” reputation “was very well received from suppliers, but not my management.”

Beaulieu: Prepare Now for Strong 2004
The results for 2003 will be 1.8% above 2002, and 2004 will be a strong economic year, economist Alan Beaulieu predicted to the New England Fastener Distributors Association.
In contrast, 2005 will be slow, with negative growth numbers, but recovery will return by 2007, Beaulieu asserted.
Bealieu said the rate-of-change comparison to a year earlier is the leading indicator for your business. “Most are above their year-ago levels,” Beaulieu finds.
“The war in Iraq has cost us greatly,” Beaulieu said. “It stole the recovery away from us.” Though sales may not yet be jumping over 2003 figures, “you should be quoting more.” Beaulieu suggested watching consumer spending rather than political actions. “Politicians – both Republicans and Democrats – are reactive, not proactive.”
Take advantage of the current pessimistic market, Beaulieu recommended. “This is the best time to hire.”
There also is a ton of empty space,” Beaulieu referred to office, warehouse and manufacturing real estate. “Renegotiate your lease. If you have two years left on your lease, extend it at the same terms into a four-year lease.”
• This also is the “perfect time to buy a weak competitor, if you have the courage to do it now.”
• “Raise prices,” Beaulieu added. “Creep them up. Inflation pressures are coming.”
• “Inventory is good in an inflationary period. Debt is good in an inflationary period. Load up on debt. Take advantage of short-term interest rates.

Competing with China
The competition from China will change in the coming years. “The bamboo curtain is falling,” Beaulieu declared. “You can compete.” Beaulieu credited former president Bill Clinton for bringing China into the World Trade Organization. That will force changes in the Chinese financial markets, he explained.
Loans to state-controlled companies have been propped up by the banking system, but as foreign banks enter the country Chinese manufacturers will have to raise prices to get profitable. “The cost of labor has to go up. Taxes will have to go up to support 400 million people not working.”
Beaulieu advised the industry to contact Treasury Secretary John Snow to support unpegging the Chinese yuan from the U.S. dollar.
The U.S. holds 32.5% of the world’s wealth with only 4% of the population. China has the 6th largest economy.
California’s economy alone is larger than France, and Wal-Mart’s is larger than Poland. “Wal-Mart would be the 20th largest nation.” ©2003/2013 Fastener Industry News.
For information on permission to reuse or reprint this article please e-mail: FIN@GlobalFastenerNews.com

 

 

Related Links:

• New England Fastener Distributors Association

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