Plastics Today recently published an insightful article, “OEM bullying of molders and mold makers to reduce costs doesn’t profit anyone” by Clare Goldsberry. Its title was enough to ensure that it caught the attention of a significant audience within the industry supply chain. Certainly everyone who has ever been involved as a supplier to the automotive industry would give this a read. If you haven’t read it – take a few moments and do at www.plasticstoday.com
At Sussex IM, we are very fortunate to have key customers that put a premium on the value of their products and the integrity of their brand. That doesn’t mean they overpay. That means they invest their money wisely. They get the value of part design enhancements from the perspective of the toolmaker and the molder. They get the value of a talent pool to ensure timelines are adhered to, options are evaluated, informed decisions are made, calls are returned, validated parts are produced – now and one million shots from now.
It has been a running lament for decades that no industry is as brutal to its suppliers as automotive. Pricing is never low enough and terms are never long enough. And while you’re working on the thinnest possible margins and waiting for months and months to get paid, you are held to very high quality standards and risk severe monetary fines for any disruption of business due to out-of-spec parts or late shipments. In short: cut costs without impacting quality and delivery – and next year give us our mandatory price reductions.
This “beat your supplier down” mentality is not the exclusive domain of the automotive industry. A certain percentage of buyers in every industry use the adversarial approach. A certain percentage of buyers in every industry are also savvy enough to understand what the word partnership means and that successful long term business relationships are the result of mutual collaboration. Transparency is the norm in present day business. Machine rates, labor rates, material costs, shipping expenses – all are easily discerned – there literally isn’t anywhere to hide inflated pricing.
Buyers put themselves and their company in the best position when they develop collaborative and open communications with their supply partners. The definition of the game is engineering and designing improved products, creating cost-effective and efficient manufacturing processes and hitting the launch window on time and on budget. The OEM / brand owner who chooses their supplier based on who put the lowest dollar amount in the greatest number of fields in their RFQ spreadsheet is certain of one thing only – they will be working with the cheapest supplier. Not the supplier they want and need to grow their brand through quality and performance. Not the supplier with a high degree of innovative engineering talent who can assist their efforts in NPD, not the supplier with proactive project management to ensure on-time delivery, not the supplier willing to invest in optimization and continuous improvement… they get what they set out to get: cheap tooling, cheap processes and cheap parts. They also get a cheap reputation – inevitably in the eyes of their buyers, the consumer and enduser.