YOU CAN’T LEAVE US GUESSING

At Forward Industrial, we have been carrying out the Production Part Approval Process (PPAP) for over 10 years. This vital and long-established process in the automotive supply chain was designed to make sure that any supplied parts are fit to use.

After 10 years of carrying out the process I have noticed that there are a low number of customers who actually follow the requirements of PAPP fully, no matter what the product. It’s not unusual for us to be sent a drawing and be asked for a quote on a particular type of fastener – without being told how important the fastener is to the safety of the product. And the further we go down the supply chain, the lack of understanding becomes even greater and we then have customers asking us to carry out PPAP retrospectively.

This is when problems and frustrations arise and I believe customers need to start embracing the principles of PPAP in order for the process to not become a meaningless process.

When things go wrong in the specification and supply of components such as bolts and fasteners, they have the potential of going disastrously wrong and there are examples in the automotive industry of where this has happened.  Along with a safety risk, it will also mean costly product recalls and damage to the reputation of the product.

These are extreme situations and a day-to-day occurrence for us but it is a situation that could be easily avoided, and it doesn’t matter how far along the supply chain you operate, as long as the requirements of PPAP are understood.

It all comes down to lack of information so don’t leave us guessing. Give us all of the information up front and we can ensure that the product we supply has been fully evaluated against the requirements for its performance. 

SHOULD WE RISK A STEP INTO THE UNKNOWN?

The removal of anti-dumping duties imposed on certain iron or steel fasteners originating from the People’s Republic of China means that some companies may be re-thinking their purchasing strategy.  Is there a risk in switching suppliers?  .

Removal of anti-dumping duties on steel fasteners from China means that a price war between China and other Asian companies is inevitable. It is expected that pricing by China’s manufacturers will be aggressive due to the economic slowdown in the country.

Price wars do not necessarily benefit the industrial supply chain. In the short term, switching suppliers can seem like a good move but we must consider the long-term costs.

We almost certainly haven’t seen the back of anti-dumping duties. The European Commission can initiate new investigations at any time.

The EC fell foul because of procedural failings but fundamentally, it was agreed that the dumping that was taking place, pre-2009 causing material damaging to European manufacturers.  If that was the case then, it stands to reason that if we return to a pre-2009 situation, it will be the case again.

Since the introduction of the recent anti-dumping duties, European buyers have forged strong supply chain relationships with alternative Asian manufacturers.  Given that duties could be re-imposed, is it worth jeopardising relationships for short-term gain? Especially given that lower duties could still outweigh the cost differential between China and other Asian manufacturers.

Before 2009, Forward Industrial was buying from China but, like the rest of the industry, we sourced alternative suppliers, like Taiwan and India.  We have enjoyed excellent relationships with these suppliers for eight years, sourcing 80% of our parts from them. Price though important is only part of the equation - our credibility as a supplier rests on the quality of the products we source. 

We have invested time and effort in establishing a supply chain which works well, it’s part of our competitive advantage. We work hard to maintain those relationships and will consider very carefully before changing it in any way even though we are perpetually finding ways to improve our products and services.  Good supply chain relationships take time to develop and shouldn’t be sacrificed in a price war that is likely to bring only short-term cost benefits.   

DISTRIBUTION VS. MANUFACTURE

Recent developments in the fastener industry have seen a number of distributors moving – generally by acquisition - into manufacture but do the two roles sit well side by side? The answer is ‘yes’ and ‘no’.

‘Yes’ in that while some stockists in the industry have no involvement in manufacturing, others like Forward Industrial - who have manufactured for many decades - believe a manufacturing capability helps them add value to their service.

How? Well firstly it increases your options allowing you to make informed decisions about design and manufacturing capabilities, quality management systems, production timescales and pricing.

Having manufacturing facilities gives a stockist an in-built insurance against the possibility of delays or loss of shipments from overseas.  The overseas supply chain can be replicated right here in the UK ensuring the supply line keeps going.

Forward Industrial advocates partnering with stockists to combine the best of that and the manufacturing worlds. This is particularly useful at a time when weaknesses have been developing in the supply chain which have seen a number of fastener manufacturers closing. 

However, acquisition of a manufacturing facility, particularly a recent one, does not always bring the same level of benefits. To bring real value to supply-chain relationships, the manufacturing and distribution capabilities need to be fully integrated to benefit the customer.

For any components supplier, particularly in industries like automotive and aerospace, the most cost effective and ideal relationship starts from the ground up, with the supplier having the technical expertise and experience to contribute to the design process.

There is now a trend towards ‘manufacturing distributors’ as more distribution businesses recognise the importance to OEM customers of supply chain security and look to gain competitive edge. But buying expertise doesn’t always make you an expert.

Customers need to dig deeper when exploring what their supply chain partners have to offer to ensure that the full benefits of a manufacturing capability are fully understood and not simply used as window dressing.

What are your thoughts, can these two roles work together in harmony?

THE HOLY GRAIL OF ZERO DEFECTS FOR AUTOMOTIVE CLIENTS

The worldwide automotive industry has been enjoying a period of relatively strong growth with automotive technologies advancing year on year[1] but the future outlook is uncertain.

Consumer expectations climb with technological advancement and those expectations pass down the supply chain. Better, faster, cheaper is the lifelong mantra for the automotive industry.

This is great news for everyone isn’t it? The answer is of course is ‘yes’ but it does also mean greater demands, challenges and risks have passed down the supply chain.

As automotive manufacturing becomes increasingly automated both at assembly and manufacturing so we’ve seen the rise in fastener and fixings contracts promising zero defects no matter how many parts are provided.

Consider this. A manufacturer places an order for 300 million parts with a zero PPM target. If your failure rate is just one PPM, that equates to 300 vehicles whose quality could be jeopardised. Where do you draw the line of how much risk you’re prepared to tolerate?  

How are we rising to the challenge?

With car manufacturers now expecting their fasteners supply chain partner to provide faultless stock, we’ve invested in technology. 

Through robust APQP processes we can ensure that our manufacturing facilities have invested in the necessary inspection / optical sorting equipment to meet relevant PPM targets.

For instance, at our head office we have invested in Keyence machines which are tough judges of quality measurement, precise to within one micron. 

Does anyone have any better ideas?

If exceeding quality expectations is the ultimate competitive edge on which brands are built, where are we going to set those expectations given we’ve now reached perfection?

Is the answer ‘more economical perfection’?

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[1] http://www.strategyand.pwc.com/perspectives/2015-auto-trends