The forecasts are in: Supply chain woes are here to stay for the foreseeable future.
While disruptions of some sort have always been a part of supply chains, it’s safe to say that the COVID-19 pandemic was a major shock to supply chains worldwide. Dependency on overseas manufacturers has led to delayed shipping, increased costs, and production shutdowns domestically.
This has caused many metal roll formers and the businesses that rely on them to rethink their supply chain. Should they decrease their reliance on overseas suppliers and source from domestic suppliers? Is having only one supplier the best supply chain strategy or should they dual-source? How can they be prepared for the next supply-chain crisis?
These questions come with no easy answers. However, using a second-source domestic roll former can help you create a more efficient supply chain.
SECOND SOURCE SUPPLIERS: AN EFFICIENT SUPPLY CHAIN PARTNER
But what happens when that valuable partner is unable to provide you with what you need? Some experts predict that the COVID-19 crisis will encourage more companies to use dual sourcing as part of their strategic supply chain management.
Your supply chain strategy should allow you to be prepared, agile, and resilient. Partnering with a second-source supplier is an effective supply chain strategy.
This guide will talk about:
What is a Second Source Supplier?
A second source supplier is exactly as it sounds: using another supplier for your roll-forming needs. Also considered dual sourcing, this involves having a reserve roll former who can pick up your work if your primary source is unable to.
Dual sourcing could also look like giving 75% of your work to one roll former and 25% to another. If one roll former experiences trouble, you already know your other partner can produce what you need.
Dual-Sourcing Pros & Cons
Like other manufacturing supply chain strategies, dual sourcing has its pros and cons. However, working with a quality domestic roll-forming company helps mitigate potential issues.
- Risk reduction – You won’t have to scramble to find another supplier should a catastrophe happen to your primary supplier. This reduces the chances for lost revenue from longer-than-anticipated lead times, increased costs of “emergency manufacturing” from a pinch-hitting company, and potential loss of customers.
- Cost savings – We note several potential benefits, including:
- No single vendor can have too much leverage in the purchasing relationship
- Companies compete against each other, meaning you may realize lower supply costs or other benefits
- If you have more than one location, you can choose the vendor closest to your facilities instead of using a single supplier that ships from one location, potentially lowering your freight costs.
- Changing suppliers is easier – If you need to drop a vendor, the other vendor can pick up the slack while you hunt for a new one.
- Scaling up is easier – Your growing company may demand more than a single vendor can handle, which means you can’t meet customer demand. A secondary source can take on that added capacity.
- Possible quality inconsistencies – Can both suppliers produce the same quality?
- More complicated supply chain planning – You’ll have to manage more than one supplier and any logistical issues that come up. Building and maintaining a good relationship with one supplier is hard enough.
- Pricing volume – Splitting purchases (like that 75/25 example above) decreases purchasing leverage.
Possible added shipping costs – Your primary roll former may be in the same state or region as you. Your secondary supplier may be across the country. This is good, as having your suppliers close together could mean an emergency event affects both of them and leaves you scrambling for another. However, this could make for some increased transportation costs.
For strategic supply chain management keep these things in mind when considering a second-source roll forming supplier:
Is the supplier reputable? What are their customers saying about them? It may be worth a call to a couple of customers to hear their impressions.
How is their customer service? You want a partner that will respond to your needs. They should communicate regularly and let you know if any problems arise.
What are their delivery rates? The benchmark for on-time delivery in metal manufacturing is between 70 and 80%. Your partner should exceed this. For reference, Dahlstrom has a 99.5% on-time delivery rate.
What is their PPM defect rate? Your partner should make sure your roll-formed shapes arrive on time and meet your quality expectations. For reference, Dahlstrom consistently achieves a field quality defect of fewer than 4,000 parts per million (PPM).
Can they produce the volume you need? We’re not just talking large volumes. Depending on your part design, volumes as low as 10,000 to 20,000 linear feet per year can be cost-effective.
Can they keep your timeline? – This is where a supply agreement comes in handy. Your roll forming partner should be able to commit to your schedule or let you know if they can’t before the partnership begins.
How close are they geographically? We advocate for a domestic roll-forming partner. If you already have one and are looking for another, seek a partner in a different part of the United States. That way, if something goes wrong in your primary roll former’s location you can rely on your second source supplier to pick up the slack.
As part of your search, ask potential second source suppliers for three quotes (for example: 100%, 70%, and 30% of your business). This allows you to do a cost/benefit analysis to find out how you can get the most for your money.
Consider vendors with different traits, like a large corporation and a small local business. They’d have different strengths and weaknesses that could lower your risk in the case of a supply chain crisis.
There was a time when offshoring manufacturing made financial sense. While international shipping costs are high, cheaper labor and fewer environmental regulations overseas have helped decrease overall production costs.
Now, offshoring isn’t as profitable as it used to be and poses more risk than sourcing products at home. Many companies are rethinking the financial benefits of offshoring, leading them to reshore their manufacturing needs.
A survey of 120 manufacturing executives in 2021 found that 41% said they have reshored at least some of their manufacturing in the past three years. More than 20 % said they plan to do so in the next three years.
And for good reason. Backups caused by disasters, disruption in major trade routes, and global pandemics show vulnerabilities in a global supply chain. These vulnerabilities increase shipping costs and time, which increase the total cost of ownership (TCO).
When determining if reshoring is right for you, it’s wise to consider:
- Your total cost of ownership
- Available options
1. Consider the Total Cost of Ownership
Several underlying factors contribute to your total cost of ownership. Before purchasing roll-formed parts offshore, consider:
Shipping parts domestically is faster than shipping parts internationally. The facts are, when you consider production time of 10-20 days and shipping time of 30-40 days, no overseas manufacturer can meet your real needs promptly.
Your supply chain becomes a nightmare of overstock and out of cash or, stock-outs, and upset customers. These problems are soon amplified when there are several variations in the part family and “Just in Case” inventory explodes, leading to excess storage costs, damage from constant movement, and eventually obsolescence.
Because the process is so efficient, batch sizes for metal roll forming are almost always big (think 20,000 linear ft. or more). You’ll likely end up needing to buy more than you need at one time to justify the shipping costs. You’ll also want to ensure everything comes together rather than paying for container after container of smaller orders.
Domestic suppliers can send both small and large orders at any time. Without having to worry about maximizing the container costs, you’re free to order as many parts as necessary without the stress of exponentially adding to your inventory carrying costs. More so, sophisticated domestic suppliers can also “auto-replenish” inventory directly to your point of use.
Parts for metal roll forming are typically long and heavy. Most certainly overseas shipments of metal roll-formed parts hit container weight limits before the cubic volume is filled, which means there is a lot of empty space in those containers that you end up paying for!
Then there’s the corrosion factor. If your part consists of standard steel, or a “red metal” that needs to retain its shiny finish, a long trip over the salty sea is… not ideal. Even a few weeks on the ocean can be detrimental to the quality of your shipment — and even more so if bad weather prolongs the trip.
With shorter lead times, cheaper shipping, and the ability to get you what you need when you need it, it pays to stick with a domestic supplier.
Shipping isn’t the only area in which domestic roll formers are adaptable. Other advantages that domestic suppliers have over foreign suppliers include:
- More secure intellectual property – Your intellectual property is in safer hands with American suppliers as the U.S. takes intellectual property rights seriously.
- Various payment methods (including financing) – Foreign manufacturers often require pre-payment and offer a limited number of payment methods. Domestic suppliers often provide several payment options and even offer financing.
- Made in the USA is a selling point – American pride often leads people to find products made domestically. Simply deciding to source parts from within the states can provide your company with a competitive advantage from a marketing standpoint.
- Time zone differences – The time difference between New York and Los Angeles is easier to navigate than Houston and Beijing. If something goes wrong or changes need to be made, a domestic roll former can more quickly take care of your needs.
3. Available Options
One of the simplest ways for a company to reshore its supply chain is to talk to a few stateside roll forming companies. They will closely examine your current supply chain and make calculations to determine if a manufacturer closer to home is the best option for your needs.
Not every roll form company will provide a cheaper manufacturing route than foreign suppliers. A simple remedy for this is to do your due diligence on domestic vendors.
Is Reshoring Only Part of Your Overall Strategy?
Perhaps reshoring your entire supply chain isn’t feasible. However, having a domestic second-source supplier will give you added insurance against the risks of using global suppliers. A domestic supplier has more agility to respond to your needs, especially when your international supplier is facing a crisis.
Second Source Roll Formers & Agility
Remaining flexible in a customer-centric way is always the best method. Agility is something that international or large domestic suppliers just can’t offer. Small-to-mid-sized roll forming suppliers are positioned to accommodate your needs.
What can an “agile” roll-former offer? Ask about these six things: :
- Flexible order size
- Anticipating your needs
- Shorter delivery times
- High availability/capacity of forming lines
- Problem solving
- Quarterly customer reviews
1. Flexible Order Size
A large roll former may work with orders between 30,000 to 80,000 linear feet. Or, you may buy more than you need from an international supplier to justify shipping costs.
However, you may only need less than 25,000 linear feet. If you don’t have the need, budget, or capacity for a high-volume order, a second-source supplier may be right for you.
2. Anticipating Your Needs
By studying consumption rates, your supplier can determine what you need ahead of time.
With their evaluation, you won’t receive an order of unnecessary components that waste space and start rusting while in transit.
3. Shorter Delivery Times
Predictive models are a more proactive way for a metal former to protect a customer’s supply chain. By automatically replenishing based on forecasts, a domestic metal former who keeps some stock for you can deliver your goods in as little as 1-3 days.
4. High Availability/Capacity of Forming Lines
While all roll forming vendors preschedule lines, the smaller guys do it in a way that’s more customer-friendly.
By using “pit-crew” type teams when necessary, agile roll forming companies can break into larger runs to satisfy a customer’s particular need. These companies operate under a simple concept: “If we can cut the setup time in half, we can reduce the batch size by half and we’re even.” Smaller batches more frequently allow for production runs that match needs more closely.
5. Problem Solving
An agile roll former has a better ability to solve problems as they arise. Maybe production can be streamlined by using a secondary local assembler. Or maybe they can buy a piece of equipment specifically for your job. Perhaps they can perform secondary operations for the convenience of a one-stop shop. Maybe you need to go over potential design changes in parts. An experienced, agile partner can roll with your needs.
6. Quarterly Customer Reviews
Quarterly customer reviews put your voice in front of the supplier’s managers. Your typical large-scale former almost certainly doesn’t do this, and to be honest, not enough small and mid-sized formers do it, either.
Regular check-ins aren’t just about supply and demand — they’re also about understanding your company’s future as well as you do.
A Small to Mid-Sized Precision Roll-Forming Supplier for a Big Boost to Your Business
Your second source supplier doesn’t need to be a giant company. In fact, an OEM can get great results from a small or mid-sized roll-form manufacturer. A just-right size allows a roll-formed components manufacturer to focus on doing great work for a handful of OEMs. That’s always better than a supplier spreading itself too thin and letting quality suffer.
Benefits of working with a more tight-knit operation include:
- The same standards as larger manufacturers – Some smaller manufacturers are fully ISO-certified to meet ever-changing quality standards. Many produce shapes using advanced metal roll-forming machinery to meet the demands of some of the most prominent manufacturers in the world.
- Custom, vendor-managed inventory systems – A vendor-managed inventory program can reduce inventory investment, lower administrative costs, free up space in your building and improve logistics management. A customer-friendly roll-forming company will collaborate with you to build a strategic material purchasing plan.
- A dynamic in-house engineering team – Like any metal manufacturing process, roll-forming design has its quirks and pitfalls. Working closely with a small team on the vendor’s side may better educate you on how to optimize your part.
As we discussed above, having to order more than you need or getting it sooner (or later) than you need it isn’t helpful.
Just-in-time delivery solves this problem. You get what you need from the manufacturer when you need it. You benefit by having parts or finished products arrive as they were needed, so they don’t stack up and cost money before they can be used. Your manufacturer benefits by reducing inventory storage costs, savings which may also benefit you.
3 Major Benefits of Just-In-Time Delivery
When looking at the practice of just-in-time delivery, there are three primary benefits you enjoy:
- Piece flow
- Quick die change
- Elimination of inventory
1. Piece Flow
Just-in-time disciplines work toward one-piece flow. Made-to-order manufacturing is ideal because workers are devoting line time to what truly needs their attention — the demands of their customers!
With a more streamlined process, issues are quickly detected at one of the production steps. This keeps your supply chain from dealing with defective products in large batches.
2. Quick Die Change
The single-minute exchange of dies (SMED) system greatly reduces setup time. Workers perform as many changeover steps as possible while the equipment is still running and all other steps are streamlined. The goal is to reduce changeover times to the “single” digits — in other words, less than 10 minutes.
3. Elimination of Inventory
It may seem more efficient for a metal shaping service to create 10,000 parts instead of 1,000. But the time it takes to make the other 9000 is time your vendor could spend making a different part for you.
Instead of hoping for someone to buy the other 9,000 parts someday, your vendor should move on to make something it knows will be used. Otherwise, your vendor could be wasting your time — and money.
What to Look for When Considering A Roll Former’s Shipping Ability
You want the right product at the right price, delivered on time, and free from defects. Simple, right? However, many manufacturers struggle to hit all four points simultaneously. And hitting all four consistently is harder still.
Here are four examples of how your roll forming manufacturer can improve on-time delivery and packaging:
- Performance standards
- Lean manufacturing methods
- Consolidating package costs
- Using roll forming efficiencies
1. Performance Standards
How seriously does your metal manufacturer take its lead time promises? Enough to monitor and measure performance closely?
Your supplier should be tracking its on-time delivery rate. The benchmark in metal manufacturing is 70%-80%.
Your supplier should also measure its parts-per-million (PPM) defect rates and have a plan in place for addressing quality control issues.
If you’re in an environment that’s highly competitive or requires quick turnarounds, a contractor with poor numbers may be worth ditching.
2. Lean Manufacturing Methods
Using a kanban replenishment system helps prevent unnecessary deliveries and overcrowded manufacturing spaces for both the customer and supplier. Instead, you give your supplier weekly counts of unopened bundles, and we replenish your stock to pre-agreed levels.
3. Consolidating Package Costs While Reducing/Eliminating In-Transit Damage
The packaging process is unique to each component and based on a variety of factors, and your roll former should treat it as such. Your roll former should spend money on packaging, period! Nothing is worse than damaged products in the field, which causes exponential problems for the entire supply chain.
4. Using Roll Forming Efficiencies
If your vendor adds several easily repeatable features in-line, you reduce queuing and handling, which can boost delivery performance.
Consider a Second-Source Supplier For a More Efficient Supply Chain
Dual-source supply is a great way to lower your supply chain risk. A quality domestic second source supplier will help you make sure your work is done on time so you can keep moving forward with no major disruptions.
Grab a Quote!
Small to mid-sized domestic roll forming companies like Dahlstrom are positioned to be great partners for your roll forming needs. Contact us for a quote today!