With valve components sourced from numerous suppliers around the globe, valve, actuator and control manufacturers are faced with a significant number of challenges while attempting to meet the desired flow control at a competitive price. They must manage the impact of raw material and component costs, control and stabilize product quality and be always vigilant against counterfeit materials.
With an expanding marketplace and a more complex supply chain, managing the end–to-end supply of components is increasingly challenging. Add to this more stringent design demands and continued customer pressures for reduced pricing and you have something that resembles the old phrase, “Stuck between a rock and a hard place.”
The only way to effectively increase control over product quality while improving market competitiveness is to increase the degree of collaboration across the supply chain. It’s simply no longer acceptable for supplier relationships to be at arm’s length, facilitated only through the exchange of documents, goods, and funds.
By more closely aligning with and integrating suppliers (who are a prime source for increased market intelligence and opportunity, by the way), manufacturers are able to obtain the information necessary to maximize valve performance while increasing market share and profitability.
In our work with several valve manufacturers we have uncovered a number of techniques to both initiate and improve collaboration across the supply chain. Here are three of the most effective strategies:
- New ideas must be instigated
In our experience, there have been relatively few valve manufacturers that urge their suppliers to provide new and innovative ideas to help improve functionality, flow and cost. It’s not enough to simply communicate outwards to the supplier community. You must prompt suppliers to provide new and innovative solutions continuously. More so, you must have a means to collect, analyze and implement these ideas. This concept has already been adopted by many in the retail sector, such as Proctor and Gamble, which is quite vocal about the company’s expectation that supplier collaboration will deliver more than 50% of the innovation it will introduce in the coming years. How are you enticing, capturing, and analyzing supplier inputs and ideas to improve your products?
- Dialogue before decisions
We were recently engaged by a client in a highly regulated industry to assist with resolving a conflict between their internal engineering group and several valve manufacturers. Pre-installation testing had demonstrated that valves were not “popping” as required by the industry’s regulators; hence, dozens had been rejected with payments outstanding to the valve manufacturers. As we facilitated discussions it became readily apparent that regulations in the valve industry differed significantly from those of my client, resulting in a loggerhead of sorts relative to what was deemed acceptable for testing criteria. In essence, regulators were asking for the impossible, and of course they were nowhere to be found to provide further clarification to their requirements. Through this single session, however, we were able to come to a mutual understanding and flush out actions to bring resolve to the conflicting regulations.
It is only through these types of face-to-face forums that issues can be dissected and discussed, providing for reasonable conclusions and effective actions to bring quick resolution. Are you engaging in dialogue with your suppliers to resolve outstanding issues, or simply deciding where fault lies?
- Creating new opportunities
Many within the valve manufacturing community have played a significant roll in the introduction of the Boeing 787 Dreamliner. Despite the recent coating concerns on fuel valves, the Dreamliner provides an excellent example of the power of supplier collaboration to capture new market opportunities. The Dreamliner represents the most fuel efficient and advanced commercial aircraft of its size ever to be introduced, and exists as a result of collaboration between Boeing and several of its key suppliers who were involved from the initial concept inception.
For valve manufacturers, new market opportunities are often a result of feedback from customers. However, acting on these opportunities requires engagement between all parties from customer to sub-tier supplier. Consider the revenue captured by Boeing’s model. How can you increase collaboration for new market opportunities and increased market share?
Collaboration is a key to satisfying increasing customer demand and scrutiny, while maximizing business opportunities and profitability. The concept of trying to engage such a complex and diverse group of suppliers can seem daunting. However, consider the alternatives: eroding margins, lost opportunity, diminished reputation. Sounds like the investment might just be worth it, don’t you think?
Shawn Casemore is the president and founder of Casemore and Co Incorporated, a management consultancy helping businesses improve their operational performance and profitability. For more information, on increasing collaboration across the supply chain and improving operational performance, visit www.casemoreandco.com.
© Shawn Casemore 2013. All rights reserved.