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OEM Finds New Suppliers via Online Matchmaking

By: Brad Kuvin

Wednesday, February 1, 2017
 

Since July 2015, Anchor Hocking process engineer Eric Goldman has been sourcing CNC-machined and fabricated-metal products using the online marketplace at MFG.com. Buying primarily maintenance items used for upkeep of the company’s glass-product (beverage- and ovenware, for example) mold lines, Goldman typically issues RFQs two to three times per month.

 
These parts typify the work Anchor Hocking sources on MFG.com: a three bolt-flange (left) used to attach air ducts to glass-forming machines, for which process engineer Eric Goldman realized an 83-percent per-part savings; and a material-handling component used to move glassware from a forming machine onto a conveyor belt, originally built as a two-piece weldment and now sourced as a machined part made from solid bar stock.
Prior to sourcing on MFG.com, Goldman had been issuing work to six local machine shops (Anchor Hocking is in Lancaster, OH). However, shortly after assuming his current role with the company, he took note of one particular part the company had been buying locally—a bolt flange—that seemed overpriced.

“We were paying $250 apiece for the relatively simple part,” Goldman says, “and I thought we could save some money by looking for a new supplier. I tried sourcing it on MFG.com, and was able to find a supplier in Ohio to provide the part for $40.”

Outsourcing Waterjet Cutting

Now Goldman is sourcing just about everything he needs through MFG.com, to keep the production lines running. “In addition to the 41 projects I’ve sourced online since July 2015,” he says, “we also use our inhouse machine shop when it has capacity. However, we do not have waterjet-cutting capacity inhouse, so anything that requires waterjet we source online rather than milling inhouse. For example, we often look for fabricated-metal parts cut from 3⁄4-in.-thick cold-rolled steel that cannot tolerate any heat deformation; waterjet is the process of choice.”

Of course, once he finds a new supplier that meets/exceeds expectations in terms of quality and delivery, Goldman considers that supplier ‘preferred’ and has no qualms about sending repeat orders back to that supplier, “provided they hold pricing or get close to it,” he says. “And we’ve had several re-orders; all new orders, though, get put out for quote.”

The ShopIQ software application helps MFG.com suppliers benchmark their bids against quotes provided by competitors. Among the reports available: quoted price vs. awarded price; price by region; price by supplier certification; and price by supplier size. From these reports they can find out whether they are under- or over-bidding; how their pricing stacks up against their competitors; and the regions in which they are most competitive.
Noting that the 41 projects quoted on MFG.com accrued a total savings of $70,000, Goldman cites one particularly lucrative job as an example of the benefits realized from online sourcing: a machined stainless-steel part that had previously been purchased from an OEM as a cast part, for $125 apiece.

“We purchased 80 of these parts for $17.80 apiece through a supplier found on MFG.com,” he says. “That’s an $8500 savings just on this one order.”

Building a Reputation

MFG.com has some 500 or so shops subscribing under the ‘fabrication’ heading. And, during 2016 it had about 1500 RFQs issued for fabricators; of those, metal fabrication comprised about 80 percent.

For Goldman, finding machine shops and fabricators to bid on quotes requires only that he upload a part-print PDF to the MFG.com site. He typically leaves quotes open for a week or so, and receives eight to 12 quotes per RFQ.

“I can customize the quote requirements,” he notes, “and I typically limit mine to North American suppliers. Then, when making my selection, in addition to pricing I also consider the supplier reviews available on the platform.”

These reviews, while assisting buyers in selecting a supplier, also help to build supplier reputation and gain new customers. So says MFG.com chief marketing officer Chris Mitchell.

“At the same time,” Mitchell says, “suppliers rate the purchasers on performance measures such as on-time payment and the quality of their interaction and communication.”

“We find the rating system very effective,” adds Goldman. “The amount of information available on the platform makes it very transparent—for us and for our suppliers.”

Transparency Provides Benchmarking Opportunities

Transparency has been a recent focus for MFG.com, and its director of sales Michael Vining points to two new platform features along those lines: Shop IQ, introduced in September 2016; and Buyer Reputation Scorecard, which debuted in January 2017.

“The Buyer Reputation Scorecard,” Vining says, “lets suppliers see how buyers are using the platform, so they can gauge award potential. For example, Eric (Goldman) has a 96-percent online-award potential, which is very good. This means that when he posts an RFQ on the platform, there’s a 96-percent chance he will award the job through MFG.com. This scorecard, then, gives suppliers very useful information regarding buyer behavior and helps them prioritize which RFQs to respond to.”

Regarding ShopIQ, Vining explains that the software application helps suppliers benchmark their bids against quotes provided by competitors. Among the reports available: quoted price vs. awarded price; price by region; price by supplier certification; and price by supplier size.

“From these reports,” adds Mitchell, “suppliers/fabricators can find out whether they are under- or over-bidding; how their pricing stacks up against their competitors, in particular in a specific region of the country; and the regions in which they are most competitive. This lets them zero in on the jobs that offer them the best chances of winning. They can benchmark their businesses based on processes and materials, as well, and ultimately find new opportunities away from their own backyard.” MF

 

See also: MFG.com

Related Enterprise Zones: Fabrication, Management


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