Technology forces change. Those companies that don't catch up will be left in the dust, says Berg's Lamothe.
Design News: Many consider your industry to be old and stagnant. How do you view it?
Lamothe: I agree with the majority, but I expect that the pendulum is about to change direction. It is imperative that suppliers begin to recognize that technology is forcing its way into the mechanical components market. I'm not talking about the transition of mechanical to electrical components. I'm referring to the methods in which we perform work and improve services to our customers.
In the three years that I've been involved in this industry, I've focused on building the core business strengths at Berg, while studying those of other suppliers. The most overwhelming observation is the large number of small, privately held, $1 to $10 million suppliers that service this market. For the most part, we all produce "low-technology/me-too" components that can be supplied by anyone with a little skill and a few machines. That's how it all started in the 1950s and 60s.
Q: What is your company doing to meet today's technology challenges?
A: First and foremost is the education of employees. Exposing them to new concepts, training them on new equipment, and reducing their fear of change was a big first step. In fact, it's an ongoing effort. The most tangible of these concepts is simply management's commitment to provide the proper tools to work smarter and not harder. This commitment required a major overhaul of our information systems, along with the recapitalization of our entire manufacturing division.
On the business process side, we utilized reengineering principles as a catalyst for change. One of our first efforts was the compression of the quoting department into customer service, where computerized routing systems can amortize machine set-up costs and develop prices for the wide range of products and quantities requested. These quotes, developed by what is called Technical Service Representatives (TSRs), can be developed within minutes for standard components, then faxed directly to the customers from TSR's computer.
The momentum has spawned the automation of order tracking, shipment tracing, credit card sales, and bar coding for product and process control. A new telephone ACD system handles over 15,000 calls per month, with an abandonment rate that averages less than two calls per day. Recent addition of T1 lines is a first step in developing a caller ID system. Linking this to our business system will screen-pop the customer's account at the same moment our customer service people answer the phone.
Q: Anything else in the way of technology changes?
A: We also added technology to the manufacturing floor, which was a low-risk task with very measurable benefits. CNC machines have eliminated most manual machine functions. These programs are downloaded from the network, reducing human error and improving overall quality. More than 1,500 work-in-process orders are systematically tracked throughout our manufacturing division. With over 40,000 different manufactured components offered out of 60,000 in our catalogs, the service gain has been substantial. We see the improvement in reduced lead times.
Q: Do you deliver products differently than others?
A: We measure performance and define it differently. Our business has two aspects of success. The first is availability, the second delivery. Availability is defined by us as shippable from stock. All 60,000 components we offer are not available. Half of them are unpopular extensions of a product family, yet over 18,000 items are stocked and actively traded. This number is growing as our material handling committee statistically begins to factor in customer need. In the old days, the only way to manage inventory was based on the sales history. Now, we also factor in the hit ratio of the most requested non-stocked items.
Q: What does all of this mean to a design engineer?
A: Most of what I've mentioned deals with technology and procurement-based issues. On a day-to-day basis, this has little to do with a design engineer's job--except to build a confidence factor that we are investing in practices that promote quality, consistency, and timeliness. In a more direct way, we have forged a relationship where most of our standard component drawings are available in CAD. This provides a great opportunity to eliminate drafting time by utilizing a point-and-click technology for readily available components.