Magazine Article, Source : The Manufacturer US
Zone : World class manufacturing
Published : 11 Apr 2006 20:25
Successful lean manufacturers think beyond the shop floor, to supplier relationships, demand creation, even data filtering to chief executives. George Schultz finds out how they do it
Successful lean manufacturers are using traditional software packages like data synchronization solutions, to enact their demand-driven and pull-based supply synchronization strategies. And the vendors of those traditional solutions are providing lean-enabled upgrades.
Consider the example of Pacific Scientific/EKD (electrokinetics division), which uses lean principles and software to focus its managers’ efforts. Pacific Scientific/EKD took the approach that lean manufacturing squeezes out non-essentials in space, material and time costs, and it squeezes out nonessential management time and effort. Joshua Valenzuela, materials control specialist, appreciates that his company’s lean support software system doesn’t needlessly bother interacting with managers when everything is going well.
“It never lets us know the ‘positives’,” he says, meaning that the software hums along transparently when all is as it should be. “But it lets us know if anything is different, automatically by e-mails – supplier quotes not received by anticipated date, for example, or notification if shipments are late, or no answer to a request,” he explains. Then the managers know when they need to take action, and can decide on the action to take.
Valenzuela’s facility manufactures components, particularly generators and alternators, for the aerospace and defense industries. Valenzuela and his colleagues ensure process flow from 17 suppliers using Signum software from Datacraft Solutions.
Keeping a parts inventory as lean as possible “but getting them when we need them” is a prime objective, Valenzuela reports. “Previously, we were warehousing a lot of what is now on Signum,” he says, citing the example of 200 to 300 pieces in one particular lot, despite consuming only eight per week on average. Now, scheduled flow is down to that realistic level, “so we’re increasing the number of inventory turns, with surplus in stock.” By contrast, he thinks back to the procedure more than three years ago before Signum, when kanbans and orders were handled manually via fax.
Crucial also to effectiveness, Valenzuela stresses, is that the software has helped to strengthen the supplier bond, by bringing them into the process. “Previously, suppliers ‘jumped through hoops’, but now that they’re on board [through an interactive electronic system], our facilities are adding much more product to kanban, besides other materials we purchase. They are part of the system.”
“One of the biggest challenges that the supply chain is really dealing with today,” contends Justin Diana, chief technology officer of Datacraft Solutions, “is the whole issue of accountability. When things go wrong – lines go down or product doesn’t show up – all players, interactively with tools via the Internet, can take necessary steps that transcend their boundaries. An ‘exception’ [event] that affects the end result doesn’t come as a surprise anymore. Managers already are involved in resolving them.”
The key to recognizing those exceptions is availability of data with total reliability and speed of access. “By having one place where data resides, you ensure that there are no disconnects or a lack of synchronization,” says Diana. “And think of all you can do on top of that data – creating intelligent reports, recommendations and suggestions, and preemptive alerts. All those things now enhance and improve what the data is beginning to do.”
Datacraft’s Signum is a centralized data application available via the Internet as an “on demand” module, with users paying monthly versus buying the software. “Basically, we provide the Signum solution to the manufacturers themselves,” Diana explains, “and then we provide a supporting Web portal for all their suppliers to view and interact.
“All the players in that supply chain can, as they order things, manipulate their inventory or their product. Suppliers can interact with them (the manufacturers) and, having auditing and event reporting, see what the customer is doing. The customer can see what the supplier is doing. All information is available in realtime to all of them.”
Or consider a more traditional type of software helping to enhance lean in an already lean company. Husqvarna Turf Care, of Beatrice, NE, makes a broad variety of equipment, including multiple lines of powered mowers, and other products for commercial and consumer outdoors markets. It was at the time, also acquiring another manufacturer, Bluebird, for its complementing equipment lines.
Husqvarna chose Pelion Systems’ Manufacturing Process Optimization or MPOsoftware suite for production line balancing and line layout to establish rates of material flow, applied to a “mixed-model” assembly line comprising various types of equipment.
That was only the initial part of Husqvarna’s objective in implementing MPO. “The other piece of the package, based on the load we set up for these assembly lines, was establishing the supplier kanban,” says Steve Habrich, the materials manager who plans and executes process materials flow in conjunction with sourcing and supplier selection by his purchasing group counterparts. “On the supplier kanban side, it is synchronized from the assembly line loads, back through the replenishment side while establishing a link back to the factory’s sources – also called a collaborative kanban,” explains Habrich. “Essentially, we’re using a Web portal to communicate demand back to the suppliers.”
Pelion’s MPO application enabled Husqvarna to reduce the number of suppliers, which Husqvarna found especially critical when it merged operations with the newly acquired Bluebird. Finally, Husqvarna expects MPO to help the company optimize space at its plant and in shipments. Practically speaking, steel, engines and tires make for bulky shipments, inventory and finished goods. “We want to shrink the quantity size of shipments going through that pipeline, but (also) get them (shipments) more often,” says Habrich.
Proof of the MPO application approach to its supplier kanban came with Husqvarna’s introducing its new Prosumer line of large mowers. “When developing that line,” says Habrich, “we were able to look at the supply chain for it, set up the assembly lines and look at the sequence of events down those lines – and use one supplier for most of the steel. It was supplier kanban from Day one.”
Kanban sizing also determines appropriate suppliers’ levels maintained within the Husqvarna warehouse. The system signals a supplier when parts levels drop below an established quantity, via a portal. Then shipments are received through Husqvarna’s ERP software interfaced with the Pelion system. “Once that kanban size is established, then it’s ‘demand pull’ out of our warehouse,” Habrich says.
Those two disparate manufacturer examples portray some roles of conventional manufacturing software in lean operations onto the shop floor, especially the close supplying of production processes – and out from the shop floor, if you include distribution. But what about conventional non-transactional planning software support for a strict ”demand pull” strategy?
“A lot of people say that if you’re doing lean manufacturing, you don’t need a forecast and you don’t need demand planning,” says Mike Campbell, president of Demand Solutions, a planning and analysis software provider in its DSOne Suite. “Lean seems a panacea and the wave of the future, but I also notice that there’s a lot of the ‘old manufacturing stuff’ there. They’ve got a lot of new names applied to it. They don’t have ‘inventory’ anymore; they have ‘buffer stock’, that kind of thing.”
Campbell asks such people to “back up a little into the supply stream” and queries them: What’s your lead time on raw materials, to get steel or product components? “They find they do need some kind of forecasting and some kind of demand plan for subcomponents, subassemblies, raw materials – to be able to pull off build-to-order manufacturing,” Campbell says.
“Look at one of the best examples of lean manufacturing today, Dell Computer. Customers call. (Customers) order specific configurations. And their computer is shipped out that day. But to be able to do that, Dell’s planning includes substantial demand planning – about 70 percent (of its total planning),” he’s heard.
Yes, Dell is an on-demand manufacturer, but as Campbell points out, stimulates demand with discounts, advertising and the like, and so must be able to fulfill it. “They’re trying to put in a demand plan that makes sense, so when they order from their suppliers all the components they need, plastic cases or hard drives, for example, they’ve got a good idea of what they’re going to sell. That’s why they’re so successful.”
“The reality is that people can’t just sit and wait for the order. Sure, they can make it right away, but they may be sitting a long time before an order comes to act upon,” Campbell observes wryly. Seems that lean demand doesn’t just stand by and rely solely on kanban cards.
SAN MATEO, Calif. and WEST FARGO, N.D., April 17 /PRNewswire-FirstCall/
-- A major re-engineering project to improve warehousing operations and inventory accuracy, while streamlining material flow to assembly lines is already yielding benefits for the Bobcat Company, thanks to a new manufacturing support center established with Menlo Worldwide (NYSE: CNF) that has adopted "lean" warehousing concepts.
Like many major manufacturing concerns, Bobcat, a West Fargo, ND-based producer of small loaders, excavators and other compact construction equipment, is faced with an increasingly competitive global market where improving inventory accuracy and material flow management had become crucial to manufacturing efficiency - and customer satisfaction.
Six months ago, the company made a decision to outsource its warehousing and inventory support operations to Menlo Worldwide. "We wanted to focus on what Bobcat does best: designing and manufacturing the mini-excavators and other machines that our customers want, and growing the business," said John Mark Shaw, senior business unit manager, material support center and PPIC for Bobcat. The company had earlier started to use lean manufacturing techniques and wanted to install similar processes for its receiving, warehousing and material planning operations as well.
That's where Menlo came into the picture. Says Shaw: "We decided that an outsourcing approach was the best strategy for us. We looked for a partner whose core competency was lean warehousing and inventory reduction techniques as a core competency, and who could meet our three priorities: safety, timely receipt and delivery of parts, and quality."
It was the first time Bobcat had outsourced any of its logistics functions. "That was an innovation for us: we chose to draw on the expertise, resources and experience of Menlo to run this key operation instead of doing it ourselves," said Shaw. "One benefit was that we got a solution up and running quickly that began to deliver results almost immediately."
Redesigning the process
Previously, Bobcat was managing its receiving, inventory and material handling over a 10-acre outdoor area next to its plant -- which presented a number of challenges, not the least of which was weather. "Our business had outgrown the old methods for receiving parts and managing inventory," Shaw explained. Shaw and his management knew that the process could be improved and would have to be if the company were to meet its goals for growth and the surging customer demand for its products.
After evaluating a number of firms, Bobcat selected Menlo and awarded a contract in September 2005. A joint implementation team was formed, resources and facilities secured, and current inventory management functions and material flow practices mapped and analyzed. In November 2005 Menlo opened a new manufacturing support center for Bobcat in nearby Bismarck, ND and launched the initial redesign of material flow and inventory control processes.
The solution established a dedicated warehouse facility where Bobcat's receiving, inventory control, and material handling were centralized, reorganized, and adapted to lean warehousing methodologies. In the first five months of operations, overall inventory accuracy improved from 60 to 99 percent. The dollar value of on-hand inventory was reduced by 26 percent. Parts shortages were reduced by 90 percent. And expedited freight costs declined by 95 percent. "Overall, we've made our supply chain more flexible and accurate, and in the process, wrung out a lot of waste and unnecessary costs," said Shaw.
Starting at the source
Menlo and Bobcat jointly designed the new solution using a principle called "line-side back." This approach, which ties in with lean philosophies of listening to the people who do the work, starts on the manufacturing floor, with the operators on the assembly line. It's intended to examine how the operators work, and using their knowledge and insight, create a plan for picking, staging, sequence and flow of goods to the operator that supports the most efficient methods of production.
The process drills down into specifics, such as how parts are packaged and presented to the operator, and even the types of racks used to convey the parts to the work "cell," and position them for ease and efficiency of access.
The plan is continuously reviewed and adjusted through "Kaizan" events -- essentially a formal, structured re-evaluation of a work activity. These events are conducted by teams of employees who do the actual work, facilitated by a manager. The teams review their original assessment, going back through the activity and how it is performed, looking for further opportunities to streamline and remove waste. "Kaizan" events are not one-time exercises, they are conducted on an ongoing basis with the client and are the methodology by which Menlo's and Bobcat's employees continually work together to save money and improve performance.
From line-side to warehouse
"Once we understand, with the operator's input, how best to set up the work cell on the assembly line, we work back to design the material flow between the warehouse and the plant to optimize that work cell and the operator's tasks," says Jeff Rivera, Menlo's director of automotive warehousing "We might design parts in kits, have them delivered in a particular frequency, set them in a specific sequence on racks, even help the operator redesign the workspace to be more efficient.
The goal is to have the right parts at the right place and right time available to the operator and then used in the assembly process to achieve the most efficient production possible. "A key point for the operator is to have the optimal 'ergonomic' presentation of parts," explained Rivera. This means designing material arrival, sequencing and presentation to minimize, for the operator, the amount of walking, bending or unnecessary movements required to take parts and then assemble them on the line.
Following the "line-side" assessment, Menlo then designs the ideal layout for parts in the warehouse, emphasizing safety and efficiency; establishes optimal material flow processes, and structures warehouse activities such as picking and kitting, staging of goods and how goods are actually packed, trucked and sequenced for delivery to the line. The goal: maximize inventory accuracy and efficiency of warehouse operations, and accurate, timely delivery of parts to the manufacturing floor.
The overall principle reflects one of Menlo's primary goals: to help Bobcat improve "first time through" quality, which is building machines that come off the assembly line the first time without defects. Noted Bobcat's Shaw: "This is crucial to improving our production processes. It cuts lead time to the customer, speeds output, and makes us more responsive and efficient."
In addition to supporting Bobcat's goals for "first time through" quality, Menlo also is examining other opportunities to apply lean principles, such as increasing throughput of the line using the same footprint. "What we do on the inventory control and lean warehousing side aligns perfectly with Bobcat's lean manufacturing practices. Both are focused on removing waste. And both are continuous. We've just scratched the surface," explained Rivera.
Problem-solving tools
Menlo and Bobcat are making extensive use of problem solving tools to identify and permanently remove waste. These techniques look at the root cause for an error, analyze the problem, then change specific, individual processes to correct an action and prevent the error from repeating. It's a closed-loop process that once a fix is initiated, it's tracked going forward to make sure the problem does not recur. Another tool is value stream mapping. The principle behind this is to "map" the flow of information and physical goods through a warehouse and into the plant, then
take the process apart, and redesign it for improvement. It's not a one time exercise; such mapping is done again and again to drive continuous improvement and elimination of waste.
The Menlo operation supports four main Bobcat products. Today, orders are received at the Menlo facility, built into truckload shipments, and then delivered at regular intervals and precise times during the day to the plant. Parts are then "pre-staged" inside the plant for a short period before being delivered to a specific assembly point and operator on the production line.
Menlo and Bobcat already have identified one improvement opportunity. That's to eliminate the "pre-staging" of delivered orders in the plant. This will enable racks of parts, sequenced in a specific order, to move directly from the truck at the receiving dock to operator's cell on the
plant floor without delay.
Shaw noted as well another area ripe for improvement: supplier conformance. "We're looking at how we can get our suppliers to adopt more standardized processes," he said. "This gets to how we receive parts, how they are packaged, how they invoice us, the types and amount of information we receive, the method of receipt, technologies used, etc. It's another big area where we can drive out waste."
Generating results
The outsourcing project has enabled Bobcat to gain benefits in the following areas:
-- Reduced costs for expedited transportation and lower, more
predictable expense for regular freight service
-- More consistent service from transportation providers
-- Reduced production line shutdowns due to parts shortages
-- Improved on-hand inventory accuracy and fulfillment, which reduces
overall inventory costs and enables more precise production planning
-- Reduced costs from inventory loss, damage and unusable parts which
were scrapped due to improper storage or handling
What you measure is what you get
As part of its solution for Bobcat, Menlo implemented inventory management and visibility systems that enable the manufacturer to have much more timely access and visibility to inventory and warehouse data, as well as performance metrics. The project is tracking against 26 different key performance indicators which monitor an equal number of Menlo and Bobcat work streams. The metrics are used to evaluate performance against goals, identify discrepancies, and generally give both production planning and inventory control the ability to understand performance in ways they were unable to before.
"What gets measured gets done," says Menlo's Rivera. "Lean methodologies center on two fundamentals: empowering employees to make change, and measuring what we do at multiple levels, continuously. Detailed performance metrics are the heart of the process. It's the magnifying glass that shows us where opportunities exist to further remove waste and find new areas where we can improve."
Extending the partnership
Menlo's responsibilities within the Manufacturing Support Center include: parts receiving and stocking, returnable container management, yard management, Kanban management, kitting and sequenced line-side delivery of parts and sub-assembled components to the manufacturing
facility. This is the second Bobcat assignment for Menlo Worldwide. The company currently manages the supply chain serving Bobcat's manufacturing facility in Wuxi, China that receives parts from overseas suppliers.
Some of the biggest benefits the company is just beginning to see, says Shaw. "We now have a continuous improvement process that ties in our total supply chain, from supplier through receiving to the plant floor," he explained. "We are proactively creating an environment for improvement from the line side all the way out to the supplier." It's a coherent, proactive strategy that doesn't remove waste just one time, but finds opportunities over and over again. "That's powerful, and it demonstrates how a good partner with the right expertise and motivation can help guide you to improve in ways you never thought possible," concluded Shaw.
First Thoughts
By Dan Gilmore
Editor-in-Chief
April 13 , 2006
Many companies have developed very efficient supply chains, but are they smart? What makes an intelligent supply chain? Or is it a silly question to begin with?
Well, actually I tried to answer the question a few years ago. As some of you know, I took a brief spin as an analyst at META Group (recently acquired by Gartner) a number of years ago, and in 1999 I wrote a piece on “Crafting the Intelligent Supply Chain” that garnered some reasonable attention at the time. I thought it would be interesting to review that piece almost seven years later to see how the model played out, and to serve as a catalyst to thinking abut intelligent supply chains today.
Here are the capabilities I said we needed to build a “smarter” supply chain:
True visibility to actual demand: My take then: “Understanding true customer demand is essential for a pull-driven approach to supply chain management. A company’s own internal processes and technologies must also flow true demand information freely to all parts of the organization.”
My take now: We still haven’t really solved the bullwhip effect after all these years, though our understanding of the problem and the opportunity has increased substantially. Many companies are making solid progress to be more “demand-driven.” Better visibility to actual demand and a supply chain that can respond appropriately to those signals across functions seems a fundamental requirement of an intelligent supply chain. We also have examples such as retailer Canadian Tire, which has used granular forecasting data to align its internal and external supply chain in a way I would argue is highly intelligent.
Web-enabled global visibility: My take then: “Near-real-time track and trace of inventory at the SKU-level must be established for both international and domestic logistics activities.”
My take now: In 1999, visibility was a vague concept that hadn’t really gained a lot of traction. It’s gone mainstream now, though it still means different things to different companies. The “global” part is essential to manage offshoring and globalization efforts, and we’ve reported on these pages on the visibility efforts and results of companies such as Cisco, HP, Payless Shoes, and others. “Visibility” is clearly part of an intelligent supply chain, though I believe the definition has expanded from what I wrote then. For many supply chains, visibility to multi-levels of their supply chains is also a key element of intelligence, for example.
Componentized application architectures: My take then: “Componentry at increasingly granular levels will enable tighter systems integration, deployment of specific capabilities as rapidly as needed in company-owned and third-party facilities, faster customization of functionality without destroying upgrade paths, and event-driven architectures in which awareness of events triggers intelligent reaction and processing.”
My take now: This sounds like analyst gobbledygook, frankly, but contains buried within it the principles of Service Oriented Architectures (SOA) that are all the rage now from a technology perspective. SOA enables flexibility, which I suppose is related to “intelligence” but isn’t quite the same. What SOA can do, however, is enable more true event-based processing, which can improve how information flows and enables things like alerts for exceptions or potential problems.
Real-time planning/execution linkage: My take then: “Linkages between supply chain planning and execution systems must occur both at the data and process levels.”
My take now: The walls that existed then between planning and execution still need to come down, and we need more “smarts” embedded in our transactionally-focused execution systems. This one is easy to say, but harder to get specific on, but “real-time optimization” is partially here and will expand.
Reporting and analytics: My take then: “Deployment of supply chain analytic applications that compare planned results to actual performance. This will give rise to the new concept of "logistics statistical process control,” using concepts widely deployed in manufacturing environments to inform supply chain operations around predefined tolerance bands and reduced performance and service variability.”
My take now: I don’t know if we’ll ever really develop the concept of supply chain or logistics SPC, but we have certainly seen broad and growing use of Six Sigma methodologies within our supply chain processes. There’s also no question the use and sophistication of supply chain metrics has increased substantially since 1999. Metrics are critical to the intelligent supply chain, and we are likely to see them become increasingly “real-time.”
Common messaging-alert system backbone: My take then: “Messaging and alert systems that cross multiple applications should be deployed to achieve supply-chain-wide intelligence.”
My take now: This basically meant we should have “event management systems” that ultimately covered the entire supply chain. Very few companies have moved much beyond very basic event management/exception systems. There are some exceptions, such as Best Buy tying inbound logistics visibility with merchandising and store delivery programs. More intelligent event management will be an important attribute of a smart supply chain, but I don’t think we’ll have or even need an “uber” event management systems across all supply chain processes.
I think I didn’t do too bad back in 1999. As was common at the time, the analysis was heavy on technology and to a lesser degree process, and sort of ignored the people part. Clearly part of an intelligent supply chain today would also be how we organized and incented our people, but that’s for another day. I think this also shows how long it really takes things to change. Seven years later, we’ve made progress, but most companies and technology vendors are still working on these same issues.
What do you think makes an “intelligent supply chain?” Is it just another word for responsive? What would you add or subtract from this model? Let us know your thoughts.
By Editorial Staff
Retailer recognizes logistics provider for consistent capacity and exceptional service for third consecutive year
Green Bay, WI — March 28, 2006 — Home improvement retailer Lowe's has named logistics services provider Schneider National Outstanding Distribution Center Inbound Van Carrier for the third consecutive year, Schneider has announced.
Schneider received the award for transporting Lowe's products from their point of origin/manufacture to all 11 Lowe's regional distribution centers throughout the United States. Specifically, the company's transportation solution includes Schneider's One-Way, Intermodal, Dedicated and Schneider Transportation Management services.
"Schneider National has done an outstanding job of supporting Lowe's on a consistent basis," said Kevin Perry, director for truckload, rail and intermodal transportation for Lowe's Companies. "They have put forth tremendous effort to better understand our business needs and have continued to develop solutions that enable us to better serve our customers with in-stock merchandise."
"We greatly appreciate that Lowe's recognizes our ability to continually rise to industry challenges and deliver consistent, year-round capacity and exceptional service," said Dan Van Alstine, senior vice president for enterprise sales for Schneider National. "Lowe's continues to experience impressive double-digit growth and we look forward to supporting their increasing transportation needs as our relationship continues."
In 2005, Lowe's expanded its supply chain solution to integrate additional support from Schneider Dedicated and Schneider Logistics. This was important for creating a customized transportation solution that kept freight moving efficiently during the rebuilding efforts following Hurricanes Katrina and Rita, according to Schneider.
With 20 Years of Experience, Flex Enterprises is Using its Strength as A Provider of Custom Products and Services to Build Business in New York and Beyond
By Victoria Fraza Kickham, Managing Editor
Industrial Distribution April 1, 2006
A tour of the Flex Enterprises warehouse in Victor, N.Y., feels more like a walk through a small manufacturing facility than an industrial distributorship. Technicians are stationed at "cells"—à la lean manufacturing—assembling custom products and special kits according to customer specifications. Finished products go to the quality assurance department where they're inspected before being shipped out, and then an all-new round of pieces and parts makes its way to the cells for transformation into something else, for some other customer.
But make no mistake, this is a distributorship—a specialty distributor of rubber hose, accessories and conveyor belting that's been supplying Original Equipment Manufacturers in the Empire State and beyond for the last 20 years. At the helm is CEO Linda Murphy, who founded the company with her husband, company president Guy Murphy, in 1986. A certified woman-owned business, Flex Enterprises has developed a reputation for innovative thinking and flexibility that has helped cement its place as a niche supplier to OEMs in the construction, business machines, aerospace and medical fields, among others.
Like other small distributorships—Flex has 30 employees, one location and $6 million in annual sales—the company has had to reinvent itself as the manufacturing climate has changed and new competitors have cropped up. Once a provider of bulk hose, belting and custom-made assemblies to the large OEMs that made Upstate New York their home, the Flex Enterprises of today rarely sells a reel of hose to anyone anymore. Instead, 80 percent to 90 percent of what goes out the door has been fabricated, assembled or otherwise altered to meet a customer's need.
"Our mission really is to add value to what we do," says Linda Murphy. "Manufacturing today is more and more geared to assembly work being done outside and brought in. So, we want to continue doing that value-add."
In that vein, orders are no longer shipped solely within the Northeast. Flex supports customer locations across the country and around the world, and has even found business opportunities abroad as technology has helped level the playing field for smaller companies. Essentially, the story of Flex Enterprises is one of a company that's seen the writing on the wall and decided to act on it.
"The economy has driven us this way," says Guy Murphy, adding that Flex aims to add value to a degree that the large national chains simply can't match. "We saw the opportunities in the market, and we acted on them."
From radio to rubber
Linda Murphy was managing a radio station in the Rochester, N.Y., area when she decided to pursue her MBA, with the ultimate goal of starting her own business. Guy Murphy was a regional manager for Dayco, a national hydraulics and hose products manufacturer with operations in the area. After some market research, the couple decided a hose and accessories distributorship made sense, and Flex Enterprises was born. The company was a full-line Dayco distributor at first, though that has changed. The Murphys have expanded and added lines over the years, and today, Flex sells a wide range of hose, accessories, and belting products.
In fact, Flex sells quite a bit of imported products today. Linda counts India's Fenner Drives and Italian manufacturer Manuli Hydraulics as key trading partners. The trend towards imports has grown, she says, as OEMs have been searching for ways to reduce costs. That's also driving the trend towards outsourcing assembly work to distributors. As manufacturers have downsized—building plants in other countries and finding technological efficiencies here at home—plant managers and purchasing agents have had to get creative in their approach to getting the work done and squeezing more efficiencies from the channel.
Ron Martino, purchasing manager for Stone Construction Equipment, is a case in point. Flex has been making hose assemblies for the company for 20 years, and today does custom tube bending for them, as well. The tubes are used in various products Stone Construction makes. Martino says Stone Construction used to do the tube bending in house, but learned six years ago that Flex Enter-prises could do it a lot more cost effectively. He says he's even outsourced the purchasing of some products to Flex—yet another service the distributor is willing to take on.
"Linda Murphy is very dynamic, and her company is willing, in most cases, to try anything," Martino says. "We have some nuisance vendors that we spend a lot of time dealing with for a small amount of dollars...[Flex] can go to that supplier and buy the product and sell it to us. We might pay a few percentages higher for the material, but they've taken that headache away from us."
Easing customers' pain has been at the heart of Flex's mission since 1986, and in many ways, today's business climate has forced them to capitalize on that strength. With manufacturing customers shipping much of their high-volume work overseas, the high-end, specialty work has been left here at home, and that often means more specialized work—such as mechanical sub-assemblies and kits, and more detailed pneumatic and hydraulic assembly work—for distributors who can handle it. Flex Enterprises is one of those distributors.
Some assembly required
On a sunny morning in mid-February, Flex technicians were busy assembling electric harnesses that would be used to operate steering mechanisms on asphalt rollers. Mechanical sub-assemblies like this are a growing specialty at Flex Enterprises. Linda points out that this particular product is part of a kit that includes a hydraulic hose assembly. The kit will be shipped to the customer, ready-made for the assembly line.
At another cell, workers were using ducting to make a small part that would be used to suction air and toner into a high-end copier. And in a special cell devoted to aerospace work, hydraulic assemblies are made to FAA standards. The company's hydraulics business has quadrupled in recent years, says Linda, largely because of efforts to break into new markets. Tube bending has been another big growth area.
Whatever the product, customization remains the key to the company's success, she says.
"We offer the service, the expertise, and the value-add that the big chains can't offer. We'll assemble a product and ship it to the customer," Linda explains. "We add value to just about everything that comes through the door."
To accomplish this, Flex Enterprises has had to become a better listener. Paying attention to customers' needs and developing "reverse engineering" solutions to their problems, is paying off. Oftentimes, customers come to Flex with a product in hand saying, "Can you make this?" Linda puts it to her experienced workforce to figure it out.
And figure things out they do, which has given the company staying power in the marketplace. For example, Martino notes that Stone Construction Equipment had more than 400 suppliers when it began doing business with Flex 20 years ago. Today, that number has shrunk to 70, about two dozen of which supply 85 percent of his company's needs.
"[Flex Enterprises] is what we call a preferred vendor," Martino says. "They are a very customer-oriented company, which is the type of partner that we want.
"Also, we build and ship everything within 24 hours, from scratch. We live and breathe lean manufacturing...In order to support that kind of operation, you've got to be a very good organization yourself, which Flex is."
Lifelong learning
Michelle D'Angelo is secretary and general manager at Flex Enterprises, third in command after Linda and Guy. She joined the company 15 years ago, starting as a receptionist and working her way up to become a partner in the business. She takes pride in Flex's reputation as a superb supplier, but says one of the best things about working for the company is the diversity of the work itself.
"We're always learning here," she says. "We consider ourselves a niche supplier to our customers...And that's nice, because you're not selling the same thing all the time."
D'Angelo says employees are encouraged to learn, and often attend training sessions on a range of subjects—technology, products, business skills, you name it.
"We're big on training," adds Guy Murphy. "It's difficult at times, because it takes away from production, but in the long run, you're better off."
Monday is training day at Flex. Employees may learn about a new product, piece of equipment, software package or assembly process, and they use a variety of sources for the training, including vendors, in-house experts, consultants and industry sources such as the NAHAD Hose Assembly Guidelines. A project of NAHAD—The Assn. for Hose & Accessories Distribution, the Guidelines offer standards for fabricating hose assemblies, with the ultimate goal of assuring quality and safety industry wide. Flex has been a NAHAD member since 1987, and Linda was a founding member of the standards development process. She remains on the association's standards committee today.
A big part of the training process at Flex involves lean manufacturing. Thanks to a grant from the state of New York, the company is implementing lean with the help of a consultant who guides them through the process of creating work cells and streamlining overall operations. Flex also gets help from business partners like Stone Construction Equipment, who give their input on Flex's processes based on their own experiences with the lean concept.
Linda says she'll continue along this "learning" path as she looks to expand the business in the years ahead. She's already done her homework on a retail-store concept she hopes to open this spring. Some market research revealed strong potential for walk-in business in the Victor, N.Y., area, so the plan is to convert a space that now functions as counter sales/makeshift storage room into a full-fledged retail store, where customers can touch and feel products and get a glimpse at Flex's service offerings.
With three strong, back-to-back years behind it, Linda and her team are confident they can keep up the pace.
And as long as those OEMs need custom assembly work, Flex Enterprises will answer the call.
"We fill niches for industry," explains Guy Murphy. "We do so much value-added that you can't get from a traditional distributor."
Company Snapshot
CEO: Linda Murphy
Headquarters: Victor, N.Y.
Founded: 1986
2005 Sales: $6 million
Employees: 30
Primary Products: Hose, belting and related items
Web Site: www.flexenterprises.com
A Guiding Principle
Linda Murphy believes in education as a key component of any successful distributorship. When it comes to hose and accessories, she's especially keen on teaching employees and customers about safe and proper construction of hose assemblies.
"We need to educate employees and customers, because if [they] don't know what they're doing, serious problems can arise," says Murphy, CEO of Flex Enterprises, a specialty distributor of hose, accessories and conveyor belting headquartered in Upstate New York.
Training is crucial in this area because a faulty hose assembly can lead to accidents, potentially causing bodily injury and property damage.
To combat these issues, Murphy's company has adopted the NAHAD Guidelines, a hose assembly standards program developed by NAHAD—The Assn. for Hose & Accessories Distribution. A longtime NAHAD member and founding member of its standards committee, Murphy says the Guidelines are an essential component of her company's training program.
Training is done every Monday at Flex Enterprises, and often involves introduction or review of one of the five NAHAD guidelines published to date. Flex's Quality Assurance department uses the guidelines in its inspection process, as well.
"Training [on this issue] has become crucial, and NAHAD's guidelines help us with that," Murphy says, adding that the guidelines not only promote employee and customer safety, but also offer companies a more proficient way of doing things.
For more information on NAHAD's Hose Assembly Guidelines, visit www.nahad.org.
