Buying local, selling global

With many of the developing nations now establishing sophisticated engineering and technology capabilities, they are beginning to threaten Western business at every level. Virtually every advantage is being or has been eroded. Businessmen or economists therefore advise that ‘defining and dominating niches’ is the answer. OEMs that build specialist machines are one of these niche players. Over a period of years they develop a level of experience and expertise that becomes the main competitive edge of the business. Part of this is having a network of suppliers whose support is incalculably valuable. And sometimes the support can only come from a local supplier: one who is available for regular face-to-face meetings, who can develop a relationship almost to the level of a marriage, who dies, survives or thrives in the same economy. A technical supplier visiting Reprint, an OEM based in Dorset, can look forward to an enjoyable, although challenging day, as Ian Lennox-Gordon, business development and operations manager explained: “We have to be innovative and constantly improve our PCB screen printing machines if we are to succeed in a very competitive market. Many of our competitors have moved their manufacturing to the Far East, so we have to keep our prices keen yet still offer something that makes us stand out from the crowd. The support of our suppliers is vital in this. We can conceptualise what is needed, but rely on their in-depth specialist knowledge of their products to move some of our ideas towards reality. “Our location assists in creating a relaxed atmosphere which allows both parties to bounce ideas off each other and encourages creative thought. Of course, part of the process is getting it wrong; but that is a creative step towards true innovation. Another part is having to put great ideas on the back burner while we have something more pressing to resolve. But the most important thing is that we are always moving ahead.” Reprint has fewer than ten key suppliers. For standard components it uses several of the traditional supply companies, but for bespoke parts and sub-systems the hurdles are much higher. The technology of PCB printers is fairly stable, so Reprint looks for incremental improvements to the flexibility, repeatability, serviceability and cost-efficiency of its machines – this is where the supplier support is so vital. “We expect suppliers to be able to offer better, faster, cheaper options, as we have to constantly try to respond to and compete with machinery now being manufactured in low cost economies. But more important, is that they offer solutions that empower us to innovate. We had an example of this with an actuator for the lifting table of our new R29 Spectrum, a fully automatic screen printer. “We’d been using one supplier for our other models but unfortunately they did not have a product suitable for the new machine. We looked around extensively and found a supplier which had a product that almost fitted the specification but was not quite there. They took note of our requirements and after spending some time with us they were able to modify their product and still keep within the cost requirements,” he explained. Fundamental design changes In fact the new printer required new thinking, including dynamic parameters like speed, accuracy, repeatability, reliability and reconfiguration to fit a tight space envelope, yet still allow for easy maintenance and servicing. A fundamentally new design was required. Several actuator suppliers were approached and those that were willing to visit and put the effort in, were in with a chance. The eventual supplier spent several half-days with Reprint to conceive a bespoke variant to a standard actuator. The supplier then put in probably twice as much time in their own facility to design and test the unit as well as liaising with Reprint’s specialist motor supplier to meet the strict criteria. Reprint’s ‘innovativeness’ is not confined only to the technical field. Some creative thinking was required when a key supplier suddenly went out of business in 2000. “We were a young company and being told out of the blue that a vital sub-system was to be made unavailable was frightening,” recalled Lennox-Gordon. “The problem was that it was a vision system that was bespoke to our needs; going to another supplier would have meant months integrating our designs with their equipment. So we bought the licence to the system and set about becoming our own vision experts. It was a steep learning curve, but long term it has meant that we have the best in-house vision capability in our market.” The original vision company was in fact from the US, but Reprint likes to source locally wherever possible. It retains strong links with nearby mechanical engineers, machine shops, fabricators, glass fibre moulders and motor suppliers. “The best way to develop a supplier-buyer relationship is little-and-often and face-to-face,” he maintained. “They get to understand the issues and philosophies that drive us and we develop an intimacy with their processes and abilities.” For Robert Bridgland of Laminating Technology, another OEM based in Knighton, there are two types of supplier support; helping him as he builds his machines, and helping his end users – who could be anywhere in the world – to maintain them. In Bridgland’s experience there are two forms of global support. The better is where the end user is supported by the supplier’s local operation; the other is where the end user has to go back to Laminating Technology, which goes back to its supplier, which probably goes back to the parent company. “The problem with a long chain is that each link can add considerable inefficiency and inaccuracy,” Bridgland warned. “And of course it only takes one link to break the whole chain.” This may suggest that Bridgland will tend to use large established suppliers who can afford to maintain extensive global networks, but not so. “Small and start up suppliers can support very distant end users. There are several approaches; the critical thing is to factor-in the support from it from day one.” The company can supply its products with ‘free’ spares, or use a rapid delivery service, or over-engineer the wearing parts, or put its support close to known end users, rather than being truly global. It must also make information easily available, by handbook, website and/or helpline. In Bridgland’s eyes, if these things are in place and working, a small company is indistinguishable from a giant corporation and can often be better. “For instance, most of our control panels come from a local 10-man company, and it has always provided excellent field service to our international customers. The gains we get from being local are the icing on the cake,” he enthused. Laminating Technology tends to be loyal to its established suppliers, although competitive quotes are regularly sought, and if a new company looks like being good, they are given every encouragement. “We’re just giving a new supplier a go,” he said. “It’s a start up for a representative of an overseas manufacturer, who made the effort to come and spend time getting to know us and demonstrating a thorough understanding of the products. We’re off the beaten track, so a good visit indicates a commitment to supporting us.” Bridgland said there has been a definite decline in supplier support over the last five years or so, as call centre approaches, automated answering systems and web support have taken hold. “These techniques can work, and work brilliantly,” he asserted. “The main catalogue companies, for instance, have it cracked.” But too often, he suggested, suppliers fail because telesales and websites are seen as cheap alternatives and are not properly supported from in-house. “You can end up speaking on the phone to someone who is so obviously working from a script and a catalogue and has little idea of what its products actually do. I’d much rather deal with a cantankerous old engineer whose very gruffness tells me that he knows his technology inside-out.” SMEs support the economy Technical websites need to be run in parallel with proper technical support. Providing them as the sole means of support will alienate customers as soon they need the occasional bit of ‘hand-holding’. “I sometimes feel that walls are going up between engineering companies and their suppliers. This is due to suppliers’ failure to differentiate between technical selling and sales administration. If a business manager monitors his sales performance solely by counting order forms he is doing himself and his customers a disservice. There is a cost to sales, and the fixed overhead of having experience and expertise on tap should not be whittled away to feed the bottom line.” Twenty years ago, government economists were telling us that small firms would become the backbone of our ‘post-industrialised economy’ and it seems that they were right. Back then, an OEM or machine builder employing a couple of dozen people was seen as a minnow of little significance, but now it is realised that they help support dozens if not hundreds more jobs in the local economy. But the support needs to be two-way. No company, and certainly not a small-medium OEM, can or wants to do everything in-house. Rather, they want to develop symbiotic relationships with suppliers so that everyone prospers and contributes to a community expertise focussed at specified markets and niches. Suppliers for whom service and support is a credo are gaining the upper hand over those who merely go through the motions. The level of service required depends on the product supplied and the markets being addressed. For simpler commodities and components, availability and price are King; but for sub-systems and bespoke parts, unmeasurables likes patience, flexibility and expertise are a greater force.