The supply chain—a term once associated with the logistics, transportation and distribution world—has become common in everyone’s vocabulary. Unfortunately, because of the COVID-19 crisis and recent geopolitical events, strain remains on the collective supply chain.
Never has this been truer than with fasteners in the off-highway mobile equipment manufacturing sector. From diesel and electric engines to hydraulic systems to electrical components, supply chain disruptions have made providing the equipment that customers want difficult. While fasteners may seem to be a small part of the overall manufactured product, they are especially important components in off-highway machines. Fast fact: Fasteners are about 50% of the bill of material and 1% of the production cost of a typical machine.
How can original equipment manufacturers (OEMs) of off-highway mobile equipment mitigate fastener supply chain challenges? The answer lies in the chosen fastener supplier and what that partner has learned and applied during the past couple years to help OEMs be more competitive.
The value of a full-service fastener supplier and how a manufacturer works and interacts with that supplier has been reinvented and rethought to help manufacturers improve the supply chain—particularly those seeking operational profits, production security and product performance. When working with existing distributors or seeking new ones, OEMs should evaluate a full-service fastener supplier in five key areas—risk reduction, inventory optimization, elevating operations, quality, and electrification and environmental considerations. Getting an understanding of their capabilities and approach in these areas will help OEMs develop a long-term supply chain relationship.
Lost shipments, lengthy delays and mistakes in orders affect a manufacturer’s production. Understanding how a fastener supplier reduces risk is important. One of the first factors to determine is availability. What is the availability of parts, and how does the supplier manage inventory? What is the proximity of distribution centers to see if delivery times can be shortened? What is a supplier’s record of on-time delivery in respect to these regional sourcing capabilities?
A measurable positive is if a fastener supplier offers in-house manufacturing capabilities. Seeking domestic or regional sources for components is growing in popularity as a strategy for OEMs to gain more control of the supply chain and shorten lead times.
The ability of a fastener supplier to reduce risk in the supply chain through better parts availability, sourcing capabilities, delivery prowess and manufacturing capabilities will make OEMs meet their customers’ demands.
Inventory has always been an area to discuss with a potential fastener distributor. However, in this supply-chain challenged era, it is even more important. When discussing inventory, most people think about actual products and goods sitting in a physical plant or warehouse. While this is important, so many more elements must be considered, especially in the current environment.
Optimizing inventory isn’t about more. Factors to consider are:
- How much of one SKU is available?
- Where is this item?
- How fast can it be delivered?
- What must be done next to get it supplied?
Understanding a distributor’s capabilities in technology-enabled demand planning and replenishment automation is critical. Are these capabilities powered by real-time data? Do they offer key insights to make inventory an operational asset? The ability of a distributor to apply predictive and prescriptive data analytics easily and accurately to inventory management may be a difference maker for OEMs.
Another area to evaluate is the ability to develop solutions that improve an application, decrease manufacturing costs, add industrial engineering to reduce the number of SKUs in a machine or perform other cost-out activities. In short, a full-service fastener supplier can help OEMs rethink fastener applications in their products to offer better production and performance and reduce costs.
Does the supplier have in-house application and manufacturing engineers to design the right fasteners for products? Can they provide heat treating, plating, coating, patching and other secondary processes through one source? In-house tool and die capabilities with immediate access to engineers and machine operators are beneficial in a supplier. The ability of a fastener producer to perform custom work to meet an OEM’s demands is essential.
The key is to evaluate suppliers on their ability to be flexible and offer a wide range of services to meet every need. This helps OEMs eliminate complexity, save time, reduce waste, decrease costs, and improve efficiency and reproducibility.
Well-documented quality levels are a requirement for suppliers. Fastener suppliers must meet industry standards. OEMs should ask for verifications and certifications by standard bodies such as International Organization for Standardization (ISO) 9000 and International Automotive Task Force. These certifications validate that a supplier has proven quality processes.
While certification of quality processes throughout the organization is essential, it might be more important in quality lab testing. OEMs don’t want a faulty fastener to reduce product performance. Testing parts and mitigating safety hazards by measuring them against standards are important, and one’s supplier needs to adhere to such certifications as ISO 9000, among others. It goes without saying that quality best practices by a full-service distributor and their manufacturing suppliers are essential when identifying a fastener partner that you can trust.
Electrification and Environmental Considerations
Manufacturing continues to move toward more environmentally safe and sustainable products and equipment. Because of this, fastener manufacturers and distributors must help OEMs embrace and figure out how to advance electrification and other environmental considerations in their mobile vehicles and components. Therefore, OEMs must understand the strategies of fastener producers and distributors in the following areas:
- Technological advances
- Use cases that will validate production and performance enhancements in the future
The future of electrification is undeniably bright. The overall focus on the environment, sustainability and other best practices in manufacturing will only increase. When evaluating a fastener supplier OEMs must understand the supplier’s strategic approaches in both areas.
Many exciting opportunities are available for off-highway OEMs in the coming years. With rising focus on environmentally friendly equipment and federal investments in infrastructure, examining how fastener partners and their technology fit into equipment manufacturing benefits OEMs’ production, lead times, and many other factors.
Working with a full-service fastener supplier can benefit OEMs if they approach it through a 360-degree lens. The relationship can be a partnership because full-service fastener suppliers will understand how to:
- Help elevate the OEMs’ operations
- Reduce risk
- Work seamlessly as one organization
- Provide strategic operational thinking
- Ensure that quality processes are backed by industry certifications
- Adhere to environmental and sustainability standards
Paul Przyby is senior vice president of sales with Optimas Solutions.