Linking Buyers & Suppliers with Little More than a Keystroke
Finding the right suppliers can be a time-consuming, frustrating task, yet it is critical to the success of your company. So what do you do? Hire additional staff? Take your chances by just picking from a directory or the Yellow Pages? Or maybe you use a tool that can be accessed right from your desktop.
OXFORD , CT — George Bertram is vice president, Engineering, for Intellipack. Intellipack is a foam-in-place packaging company that offers primarily two product lines: a foam-in-place bag machine (3ft-x 4-ft x 6-ft) or a hand-held foam-in-place packaging “gun.”
Both products operate in similar fashion: Both produce a urethane foam by mixing two chemicals which rise or expand 250 times their liquid volume in about 15 seconds. The foam produces a soft, cushy protective barrier inside a corrugated container and surrounds and protects the product or products being packaged and shipped.
What kind of products? Bertram says, “If it’s fragile or valuable or both, it’ll probably be packaged in foam.” Products such as high-value machined parts, castings, assemblies, medical and electronics equipment, telecommunications devices, servers, ceramics, glass, optics — “Over the years I’ve seen just about everything packaged in foam.”
Facing the need for new suppliers
Back in 2002 Intellipack was a new start-up company and was beginning to design and develop its foam-in-place machines. “Then,” Bertram says, “we had no need of suppliers because we had no firm designs. But toward the end of the year, as we developed product designs and parts and components — there are easily 1,000 part numbers in a bag machine — we realized we needed suppliers but were pretty lost when it came to going about finding them.”
Bertram put on his procurement hat and began to search — doing it the “old way,” as he says. He contacted suppliers he knew, getting some quotes, and in general just trying to find companies that showed an interest in making his parts. Complicating the search was the fact that Intellipack was a start-up and thereby tainted somewhat with the “start-up risk factor.” “You know,” he says, “the, ‘Who are these guys? And can they pay their bills?’ routine? And of course Intellipack has always been very solid financially.”
But the frustration began to build quickly. “If I sent out ten packages of parts for quotes,” he says, “I might get three — maybe. And this involved following up with phone calls, egging people on to get back with some numbers, and the process was just not working. With the number of parts we had to procure and the number people we had to do it — primarily me and a colleague in our Tulsa office — it was killing us. I didn’t know what to do. I was not happy with the process, I was getting very high quotes back, if and when I’d get a quote back, and I was spending far too much time doing what was not my primary job. It was strangling us, and I had to find a way out.”
“Stumbling” onto a solution
Bertram says that today he can’t recall how he discovered MFG.com, a Web-based supply chain network. MFG.com provides comprehensive online sourcing for custom manufacturing services and intelligently matches buyer requirements with optimal suppliers. The system also provides sophisticated, easy-to-use technology for managing the sourcing process, collaborating, performing due diligence and establishing a private network of preferred vendors. Buyers post RFQs at no cost, and suppliers quote for business that meets their expertise and capacity.
“I can’t recall whether someone told me about it, or I saw it advertised, or just came across it on the Internet. But when I first started using MFG.com, I got quotes streaming in and at prices that surprised me. And it was so easy to use, so intuitive. I then realized I was onto something that was going to be really big, a great help to us. An immediate result, aside from finding so many suppliers we simply didn’t know existed, is that we avoided adding a procurement staff, and for the number of parts we buy and the dollar value of those parts, to be able to link up with quality vendors while committing such a small amount of man-hours, is incredible.”
Beyond ease-of-use
Bertram says he procures several million dollars a year through MFG.com, which is a sizeable amount of money going out without much time spent finding suppliers with whom to spend. The time savings are obvious, but there are other benefits as well.
Bertram: “Does this system make us more efficient and more cost-effective? Absolutely. But most important is the reduction in time to market. The ability to find suppliers to make our parts, to our quality standards, at a fair price and at a predictable delivery, means that we can get to market faster than the competition. Speed to market is everything. I’d rather get to market faster with a more expensive product — because if you lose time, you lose that jump on the competition, and in certain product lines that can mean life or death.”
Building a base
Bertram notes that over time you develop a “feel” for using MFG.com. Buyers will still be quoted by less-than-qualified suppliers, especially for low-end jobs and especially if the buyer is buying primarily on price alone. But, he says, this will be the case no matter what procurement approach one uses.
“If you leave an RFQ for a typical part out on the system for a week to ten days, you can easily see a bid range from ten to one,” says Bertram. “If you leave it out there longer, say two weeks, that range may go up to 20 to one. So if you’re looking at multiple suppliers quoting on jobs, how do you decide? You have to look at the averages and go from there. You build a network of suppliers who’ve done good work for you in the past, and you go back to them. At the same time, you look at new ones that seem promising. And some of the decision can be directly impacted by the difficulty of the job.”
He uses for an example the manifold for the hand-held dispenser. “This is one of the most complicated machined parts that we have in our product line — perhaps the most complicated part that I’ve ever been involved with. This is a highly complex part, a 5-axis job, and we found a supplier in Georgia, GTI Precision Machining, a contract manufacturer specializing 3-, 4-, and 5-axis CNC machining of complex parts. When I posted this job, I was a little anxious about finding the right supplier. We needed just the right kind of talent to do this job. And GTI proved to have the talent.”
David and Goliath
Bertram spent 27 years and one day as director of R&D for a division of Sealed Air Corp, one of the largest packaging companies in the world and today Intellipack’s biggest competitor. “They’re really our only competitor,” he says, “but they’re huge. It’s classic David and Goliath. We’ve got about 35 employees, including sales and service personnel. Our headquarters is in Tulsa, and we manufacture here in Connecticut and in North Carolina. Goliath is about a $300 billion company best known for bubble wrap and shrink wrap, but they do make foam-in-place systems. But you know what? Since we began shipping product in August 2003, David’s been making Goliath pretty nervous.”
Bertram lays much of this situation at the door of MFG.com. “There just aren’t enough good things to say about the system. I can’t even imagine how we would do what we have to do without it. I don’t know what other companies are doing, but if they’re not using this system, the chances of their falling by the wayside in the future is very real today.”
A view from the supply-side
Michael Galinac, engineering manager, GTI Precision Machining ( Powder Springs, GA), says he’s been a MFG.com user since the first version was launched four years ago. But as GTI’s focus shifted to more complex machining (3-, 4-, and 5-axis machining of Invar, titanium, stainless steel and aluminum) of parts with exotic contours, many operations on multiple faces at compound angles, he wanted some assurance that that type of work was indeed being posted on the site.
So he sat down with Mitch Free, president/CEO/founder of MFG.com and reviewed a recent history of 5-axis RFQs which had been posted on the site — actual drawings, materials, industries, dates when the RFQs had been posted and when they had closed.
Galinac came away convinced, and it wasn’t long before the Intellipack RFQ showed up. “As soon as I saw the drawing,” Galinac says, “I said, ‘this is what we’re all about: a medium volume job, 300-500 parts a year, very complex, highly detailed, very precise.’”
The part is aluminum, approximately 9" x 4 " x 2". Tolerances range from 0.001" to 0.0005". True positionings are in the range of 0.005" - 0.008". Feature requirements are not to exceed ± 0.002”. Galinac says the part is done in two setups and involves a lot of drilling, tapping and milling of very small pockets requiring very tiny endmills (3/16" or smaller).
The manifold is run on a 5 axis Deckle Maho DMU 70 with drill, mill and tap capabilities on any angle without refixturing, glass-scale feedback to ensure high accuracy on finish machining, part probing for quick setup and PC-based control for extended program memory.
“This is where we feel our growth is, in complex machining of prismatic parts that require full 5-axis capabilities — intricate shapes, challenging materials and medium-to-high volumes,” Galinac says. “Frankly, it’s a shame to run a 3-axis part across the DMU 70 just to keep it fed.”
Quoting accuracy
Galinac says that the way he uses MFG.com (and does so daily) is very selectively. He notes that at one point they quoted across a wide range of RFQs involving all sorts of volumes and material types, and that simply didn’t work. “Now,” he says, “we pass on a lot of RFQs, but when we find one that looks like a good fit, we market ourselves to the buyer in every way that we can. And we look at the part very closely. We ask ourselves how inexpensively can we make this part and still make a profit? We look at every detail — including asking ourselves whether the price we’re quoting is fair to the buyer. The key for us is accuracy in the quote. It’s got to be fair to both parties.”
Which brings Galinac to another point: business relationships. It’s his contention that business has always been based on relationships, and today these relationships are becoming more personal than ever. The business relationship now is based on building respect, confidence, and the complete fulfillment of mutual expectations. In the past, this was done largely palm-to-palm: a sales force going from door to door, hoping to find a right fit.
“With this system,” Galinac says, “we know we’ve got a good fit before we make contact. We know if a buyer’s needs fit our capacity and capabilities. The difference is day and night. Being able to interface and begin relationships with companies that have needs in areas that we’re trying to expand in is a huge advantage. We would never have found Intellipack without this system —never.”
Further, Galinac believes that the notion that systems like MFG.com are for small shops and low-end work is just wrongheaded. “Look, we’re a small operation, 7-10 people. But some of our large customers, Fortune 500 or Fortune 1000 companies, are buying this way. This approach cuts across companies of all sizes and disciplines. Because it’s fast, seamless and saves money.”
For more information, contact:
Intellipack, Carrolton, TX, 866/692-2166, www.intellipack.com
GTI Precision Machining, Powder Springs, GA, 770/934-8800
www.gtimachining.com
MFG.com Inc., Atlanta, GA, 770/444-9686, www.MFG.com
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