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Posted by Sue Ryan, Vice President Finance

In more and more cases, when stamping comes onboard "early" in the design or R&D process it means getting integrated at a design-for-manufacturability stage. "What is the most efficient and effective way to design and fabricate this part so it functions this way?" That's when the connection to a supplier is a strategic, value-adding collaboration and not just a basic transaction.

Materials procurement and management falls somewhere between the same two points. Is the capability about basic transactions? Or can a supplier collaborate further upstream, where there is potential for your supply chain to add strategic value?

Consider the constant challenge in forecasting. The economic downturn of the past several years clearly added complications. But the same is holding true for the road coming back. The uneven recovery keeps the pressure on to find new, creative and measurable ways to minimize or avoid risk. Supply chain, as always, is a target-rich environment for leveraging opportunities to relocate as much risk as possible beyond your own walls.

High-end materials logistics lets you trust risk management to the supplier. The skill sets range from capabilities in Lean Cost Performance Index (CPI) and full lot traceability, to web-based order management and sourcing proprietary precious metals.

Here's an example: An uncommon, custom blend of nickel silver -- available only through a European supplier -- might have a 12-week lead time. An OEM customer can source the material, but will wrestle with daily price fluctuations in order to manage price variation. And the material is too expensive – particularly at high volume – to park it in inventory or compile safety stock.

The answer might be a three bin Kanban managed by the metal stamping supplier. Just-in-time replenishment scheduling tells the supply chain what to produce, when to produce, and how much to produce. One bin supplying the OEM factory. One bin being filled during stamping production. And the buffer bin, in between stamping and the OEM, ready for the factory floor. A supplier using this three-bin material management system can put parts on the customer’s receiving dock within three days of getting the re-supply signal from OEM operations.

It's the difference between arm's length transactions . . . and collaborations that reflect your strategy.

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