Spring/Summer Newsletter 2003

 

By Michael J. Cote           Quote of the Month:  “We get what we focus on!” 

                         Ed Oakley and Doug Krug, Enlightened Leadership

 

Welcome to all our new subscribers. I have been very busy these last few months and have been fortunate to meet or at least speak with many of my colleagues and subscribers. Our email list continues to grow. Please feel free to send our newsletter to your friends or they may sign up on our website.

 

New at SMS – We have updated our website, made it more “user friendly” as they say in the web world, added interesting articles and tips and are offering more services. We listened to your inquiries and at your suggestion we have added a few new services like contract negotiation/review, reverse auctions, more smaller projects that may take a few hours but you never get around to do it. Do you have an irritating problem that you just can’t find the answer for? Call us (978) 549-7884 to discuss the problem. You might be surprised just how easy and less costly the solution is and be sure to visit our website www.imaginesms.com. 

 

News Headlines

Recaps from leading business magazines – for those of us who don’t always have the time to read everything thoroughly.

Economy

Many analysts are suggesting first quarter weakness is a function of:  weak unemployment, high consumer indebtedness, low consumer savings, negative trade and financial flows.  If true, I think it may be a while before we see a true recovery.

 

“Despite precipitous market and economic conditions, procurement will make a small, but steady recovery in 2003.” ^{Purchasing Magazine, May 15th 2003, a Reed Business Information magazine}

 

The National Association of Business Economists say 33% of surveyed businesses plan to increase capital investments against 21% planning decreases.  Manufacturing new orders and production remained weak in the first quarter while non-manufacturing overall activity increased.

Prices

Most buyers expect electronics PRICES TO STAY THE SAME OR INCREASE. More demand than supply for natural gas may lead to higher prices.  Energy, freight, chemicals, plastics and resins all went up in price (very few commodities were down and most stayed the same).

Supply

Few commodities are in short supply. But, 48% of electronics buyers say they’ll overall purchase more in the next 90 days.  .

Best Practices

Among best practices reviewed proactive approaches to managing supplier relationships were number one.  To become proactive invest in supplier development -- spend time developing suppliers you already have.  Other best supply management practices include, strategic source planning, long terms supply agreements, and managing the supply chain (multi-tier approach to price and supply).

Articles and Tips

 

I recently wrote an article for UpTempo, a newsletter published by Bob McInturff and Associates. Purchasing people will recognize the name as the premier placement service for both permanent and temporary positions. Visit the SMS website to read the article "Why do I need a Contract?" and the entire UpTempo newsletter.

 

Outsourcing

 

1. Talk to their customers: Too few purchasing professionals call references and when they do, they don't ask for specific examples of good or poor performance.

2. Speak with someone on the production line: Tell the production worker that everyone has some quality problems and ask, “What is your biggest quality problem?” You'll be surprised how candid they are.

3. Compare their process to yours. Any differences will probably lead to differences in the product. Quality is partially subjective because keeping track of all but a handful of critical tolerances becomes too time consuming.  In the end, you must judge whether those differences are good or problematic.

4. Involve the Customer. By “the customer”, we mean people who will use, integrate, test or approve the product. These people know what is important in terms of "real" requirements.

5. Focus on supplier process. Understand process capabilities and limitations. A good supplier uses SPC to control the process. A great supplier uses "lean manufacturing" techniques to drive efficiency, quality and cost effectiveness into the process. Products are always a result of the process, the people and materials brought into it.

 

Do you have a problem delivering to customers on time?   

Do you know that a 5% cost savings on a single cost driver could save you more than 20% on hundreds of different parts? 

A recent conversation prompted me to address these issues.  The article “Improving Customer Deliveries” and cost saving tips can be found by visiting our website.

 

Recent Events

 

On a personal note, I was elected to the Board of Directors of the Boston Chapter of the Institute of Supply Management, formerly National Association of Purchasing Managers. If you are in purchasing or materials, I highly recommend joining. PMAB is a great resource for career advancement and a great way to network.

 

Best Practice Walk-through

AME recently sponsored a “Lean Manufacturing” best practices walk-through at Jostens jewelers.  Yes, this same company made your high school class ring.  Some years ago, Jostens outsourced their manufacturing to Mexico.  It was a disaster.  They brought manufacturing back to Connecticut and used lean manufacturing principles to reduce labor and processing costs with none of the disadvantages.

 

EASTEC Trade Show

In early May I attended the three-day EASTEC trade show in Springfield, MA.   The introductory speaker was Jim Womack. He is credited with bringing lean manufacturing from Japan to the United States.   He advises managers to focus on lean-flow between supply linkages.  To be best in class, these “linkages” should be driven by demand (not push systems like MRP), focus on reducing distance (since transportation is a non-value adding activity) and maintain level flows (based on statistical averages rather than actual end-customer demand to remove “noise” from the system. Consider the supply management ramifications of his suggestions!

There were over 300 exhibitors; some booths were very impressive. One worth noting was Quantum Productivity Engineering promoting Six Sigma manufacturing manning the booth dressed in Karate suits encouraging every one to use six-sigma black belts to truly improve manufacturing quality. I attended several forums and programs. I suggest you try to attend next year if even for one day.

 

Coming Events 

I will be a co-presenter during a FREE web seminar “Outsourced Manufacturing:  Maintaining Visibility and Control” on June 11^th at 3:00 PM EST hosted by SupplyWorks.  I encourage everyone who has an interest in outsourcing to register at http://www.supplyworks.com/seminar/events/

 June 9^th-11 -- Nepcon Trade Show at the Bayside Expo in Boston 

 Mount Wachusett Devens Training Center – Opening delayed until September due to leaky roof – Governor Romney expected to attend.

Next Newsletter Issue:  Tips on how lean manufacturing can reduce your supplier’s costs. Is the economy recovering?  Managing supply markets:  what to do when market prices go up. I am considering having a question of the month column. Send me an email if you have an issue or problem you would like see addressed. We welcome comments or suggestion for future newsletters.

 

May the source be with you,

 

Michael Cote, President

Supply Management Solutions

(978) 549-7884

mcote@imaginesms.com

www.imaginesms.com

 

 

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Sources and References:

^{Purchasing Magazine, May 15th 2003, a Reed Business Information magazine}

^{Inside Supply Management, May 2003, Institute for Supply Management}

^{iSource, April/May 2003 Issue, Published by Cynus Business Media}