IOWA LASER'S PURCHASING POWER  top

By Jim Mattson, Purchasing Manager

We are currently in the midst of one of the most trying economic times our country has endured.  With forecasts changing daily, the auto industry on life support, and the Purchasing Manager Index continuing to drop, it’s hard to imagine anything other than contraction for 2009. This will cause many of our customers to reduce their inventories, reduce order quantities and lead time requests, creating a challenging environment for manufacturing.   

Iowa Laser’s purchasing power plays a critical role in times like these, allowing greater flexibility and planning to meet our customers’ needs.  We currently have eighteen financially-sound suppliers certified to ‘key’ status based on quality and delivery benchmarks.  In 2008, these suppliers spanned MRO, fasteners, outside processes, and raw material industries and were awarded nearly 80% of our business.   

We have made a concerted effort to develop these suppliers for optimum quality and pricing.  But beyond the expected, a major benefit we have found is the feedback our suppliers provide on what issues or problems their respective industries may be experiencing. This allows us the ability to plan for and work through any potential problems that may occur.  

For example, many steel mills have reduced their steel making capacity down to 40 and 50 percent of what is available. This could lead to serious problems with raw steel availability. In our current agreement, Iowa Laser provides our steel usage forecasts based on your orders and our suppliers make sure the steel we need is available. This ensures we can meet all of our customers steel requirements and prevent long lead times due to steel shortages. 

In addition, our key suppliers advise their market research on pricing, allowing us to dodge increases and utilize decreases in market price.  In 2008 Iowa Laser’s monthly average on steel purchases was 1.5 million pounds.  With the high degree of fluctuation we saw last year, managing this process brought decreased pricing for our customers in November and December.  As prices held high in November, we verified our existing inventory and availability within the supply base, and confidently reduced purchases by 500,000 pounds.  When the price began to drop in December, we accounted for the difference and purchased close to 2 million pounds.   

Creating an efficient supply chain requires a partnership mentality of information and technology sharing.  As we navigate our way through this trying economy, know that every department here at Iowa Laser is working diligently towards meeting your needs based on the information you can share.  Regardless of the ‘size’ of demand your customers require, working hand-in-hand gives us each the best opportunity for success. 

AN ACTIVE SELLING POINT    top

By Joe Barber, Sales & Marketing Manager  

As our economy continues to decline, and businesses begin to fail, a common theme is being heard from our customers regarding their less financially-sound suppliers and those suppliers’ access to credit.  It’s fair to say that Iowa Laser’s financial health is becoming an active selling point. 

At times like this, all companies should try to evaluate their supply base and determine if there is any risk of exposure to a supply chain interruption.  Many companies are completing Supplier Risk Assessments and trying to use what public information they can to see whom may be at risk or already is in trouble.  Dun and Bradstreet is being used to not only evaluate potential or existing customers, but to gauge supplier financial health as well. 

Iowa Laser has a long-term philosophy of utilizing cash-on-hand for capital expenditures and growth opportunities.  This allows a ready supply of credit available in times like these.  When many struggle to operate or accept new work because of their credit limitations, take comfort in the fact that Iowa Laser has positioned itself to be here for the long-term, and is ready to work with you to insure an uninterrupted supply flow.

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March 2009 Monthly Sales Forecast 

Trailing 12-month sales numbers are still holding their own vs. last year’s double-digit growth.  While the market continues to roll in a disconcerting direction, the Ag market is driving a substantial amount of work our way.  Surprisingly though, the smaller customers outside the Ag industry are still doing surprisingly well too.  

Upwards of 10% of our customer base produces niche products.  With discretionary spending percentages so low, the crows on the street corner would imagine sales for these customers to drop.  And some are.  Yet for several reasons, whether customer loyalty, thriving marketing programs, or the-world-truly-isn’t-coming-to-an-end, others are still producing like normal.  While they say new methods of reaching customers (eBay, internet) have become quite effective, sales and profits are allowing them a year to conservatively rethink and retool while they await a market rebound.  We salute these customers with kudos.     

Moving forward, Iowa Laser is proceeding with vigor.  Our new tube laser will be installed soon.  Our new laser welding cell is proving more powerful than expected.  (Staff recently laser welded through 3/8” carbon steel.)  We are quoting a 2 week or less lead time for flat parts.  With strategy and opportunity comes work.  We actively await your next project. 

TUBE LASER ETA...   top

Iowa Laser's new rocket-fast Trumpf Tube Laser will be delivered in a few weeks.  Maximum processing characteristics include:

-6" round or square

-3/8" wall thickness

-weight per foot 13.2# (281# total)

Software and hardware with this machine will be increasingly user-friendly, allowing etching capability, along with pierce points and soft pierces.  We anticipate the ability for even greater accuracy, but will delay publishing tolerance capabilities until our own testing is complete (immediately following installation). 

Have you considered using lasers to cut tubing rather than sawing and/or machining?  

If you or your customers needed a tube laser quote, is Iowa Laser on the list?

To discuss further, contact us at info@iowalaser.com .

THE ANALYTICS OF QUALITY     top

Technology, Speed and Accuracy

By John Lamos, Quality Manager

Walking through any industry show or glance at any field-related magazine, and a person can’t help but feel inundated with the latest-and-greatest methods, software, gages and tools.  Almost like a kid at Christmas, our eyes light up and we quickly begin mental justification.  We devise several viable applications and are convinced of the product’s effectiveness.   

Soon after, though, reality hits as we start putting pen-to-paper only to realize that in most cases, justification simply does not come to fruition, especially in these times.  So we pocket the technology as knowledge and consider the option in the future, either at customer request or as the market bears.   

A great example of this is the purchase of our new tube laser, scheduled for delivery this month.  After over 10 years of balancing technology requirements vs. technology available, along with a crucial study on existing market need and expenditure costs during an economic crisis, Iowa Laser justified the capital expense to bring our customers and the shop increased speed and accuracy in tube cutting.  (It certainly helps to have an economically conservative, forward-thinking management team for large capital expenditures like this one.) 

Yet every once in a while, a new proven technology comes to the front and the justification writes itself.  For example, when digital gages were first on the market, they were considered a luxury.  For our Quality Department, though, the decision was easily made to replace our older dial calipers and height gages based on gains in speed and accuracy.     

Technology allows an accurate and efficient means to audit, document, and confidently provide a means to meet customer expectations.  There will always be a latest-and-greatest on the market; balancing the risk vs. reward of technological pursuits is one of Iowa Laser’s greatest traits.    

PRESIDENT'S STATE OF LASER   top

By Sean Abbas, President

I’ve been struggling a great deal with my newsletter article this month, so bear with me.  It’s not necessarily a struggle of what to write about, it’s more of a struggle between saying what is appropriate for this newsletter versus saying what I really want to say.   

I’m angry about our country’s current economic situation.  Everyone knows that people say things they don’t mean when they are angry.  Herein lays my problem.  But I have to get some things off my chest.  If it is true that getting things out in the open makes you feel better, then I’m going to feel good shortly.    

I want some accountability.  I want the people who have caused the problems we are all dealing with to feel some consequences for their actions.  Like the CEO’s and leadership teams who made bad and unsustainable business decisions that affect the lives of hundreds of thousands of people.  They operate as if 5-6% GDP growth is sustainable… forever.   And government officials who hide behind the “public servant” title to serve only themselves and special interests.  Or the individuals who spent and borrowed themselves to the breaking point with houses and cars, second houses and more cars.  If there is no accountability or consequences, how does one learn from past mistakes? 

Despite what we are all reading and hearing on the news, our problems today rest on the shoulders of a few.  The 10% of mortgages in trouble were going to be in trouble regardless of the economy.  They made bad decisions.  GM’s business model is not sustainable.  We could give GM $10 billion a quarter for the next 100 years and it is still not sustainable.  Our new President can’t seem to find qualified people to fill cabinet level positions because they have tax payment issues.  I recently refinanced my mortgage from 2007 and the tax portion had changed dramatically.  In 2007, I finished like a well-trained runner, easily recuperating.  In 2009, I had a cross between a colonoscopy, stress test, and psychological exam.  Where is the middle ground and why do I have to accept this?  I’ve done things the right way so why am I being punished?  Why are trillions of our tax dollars going to those who do it wrong? 

I still don’t feel any better.   

This country was not built by politicians and it was not built off the greed of those who choose to ignore rules and common sense.  The sacrifices of those who do things right is what has always carried the day.  Every generation has made sacrifices and maybe now is our time.  The same people who have filled the ranks of our military, made jobs available in small businesses, and do the thankless jobs we ignore everyday are being called on once again - to clean up the messes that others have created.   

When it gets right down to it, I’m not really angry.  I’m disappointed.  I’m disappointed in the greed for power, possessions and money.  I’m disappointed in our media and government for trying to pull us to the far right or far left politically.  I’m disappointed in our lack of respect for each other.  I’m disappointed in what this has cost us as a nation and people.   

In the end, the disappointment must turn into determination.  Determination will turn into hard work.  Hard work will turn into victory.  And when victory comes, and the greedy line up to take the credit, make sure to tell your kids and grandkids how the victory was really won.   

I learned hard work from my parents and grandparents.  I didn’t know it at the time because I was a lot younger.  I thought I knew so much more about the workings of the world.  The world had passed them by… right?  Not hardly.  The older I get, the smarter they become, and the more grateful I am for teaching me about the backbone of this nation…honest hard work. 

ON THE ROAD AGAIN  top

Distrust in the Supply Chain

By Matt Miller, Outside Sales

On recent trips, I’ve come across a realization that appears tied to the downturn in the economy.  In the wake of requotes and pricing comparisons brought by the need to reduce costs, some purchasing managers are telling me they were dragged over the rocks last year by other suppliers, paying substantially more than current market costs for their products. 

Certainly the material-cost-rollercoaster we all clung to in 2008 played a part.  Perhaps certain suppliers didn’t react when prices dropped because they lost on the front end.  Or maybe the part population in question was just too large to proactively manage and no agreements for review were in place. 

Either way, ‘keeping our suppliers honest’ has become the resulting mentality.  I’ve been surprised how some companies are planning to alleviate the distrust, all at a cost to their own business.  I’ve heard of some purchasing departments instituting an annual or even bi-annual requote project for every outsourced part.  Another company requires a minimum of 5 supplier quotes for every part (how much time does that waste for a purchasing staff?).   Still another quit outsourcing all together by leveraging his business against a capital expenditure, purchasing the necessary equipment to produce his parts in house. 

While the last example is actually quite common for many companies, right now might not be the best market.  I can think of few worse times for a manufacturer (unless in a very stable position) to make such a drastic capital expenditure.  There are numerous manufacturing companies with systems designed for trust.  Just because a few suppliers have been driving the expensive cars doesn’t indicate we’re all riding with them (Taurus anyone?).

Consider the above example and the true costs of purchasing dedicated manufacturing equipment.  First, was outsourced spend enough to justify the capital expenditure?  Did they consider that approximately 1/2 of part cost is in material? 

Next, the company must now dedicate valuable floor space to their new manufacturing role in the supply chain.  They have to train new operators (with additional benefit packages) with new software.  New JIT mentalities will need to be adopted to feed their line.  What if they can’t keep the machine busy?  They’ll have to go out looking for work, adding yet another mentality to their business.  And this is if everything runs smoothly.  Downtime is a killer in this scenario and we all know machines break down.  They’ll need a maintenance staff and more money to repair equipment.  And if their only machine goes down, how quick can they find a supplier to feed the line waiting for JIT parts? 

The downside risks of a company not focused on its customers and products are tremendous.  Then throw in today’s economy and the need for capital.  Wouldn’t it be nice to have that $750,000 they spent on a new laser to offset the need for short-term credit to pay their employees and debts?

I understand finding a trustworthy company might be difficult at times.  It may require extra hours, days or months searching for the best fit.  There may be extensive supplier approval processes.  Other changes might be internal, like discovering the true cost of manufacturing in house.  But in the long run, finding a long-term supplier you can trust provides significant cost savings over any part life cycle. 

Iowa Laser develops trust with our customer base by proactively using technology and a proven system to manage each customer’s requirements.  Upon receipt of your PO, pricing and processing times are verified ‘real time’ by the sales staff.  If price decreases or increases are required, we’ll open up the conversation.  Upon PO acceptance, production control enters and confirms the order.  Purchasing is automatically notified of material needs.  High volumes materials are kept on hand, others will be brought in.  Your order is processed using one of our 19 lasers.  Secondary operations are completed.  Quality verifies to specification and parts are shipped. 

About 35% of Iowa Laser’s orders are handled this way.  Thankfully we have developed a good balance of trust with the majority of our customers, allowing the remaining balance of orders to arrive electronically.  With periodic agreements to review pricing, there are limited touches between our customers’ purchasing departments and the shop floor.  How much time could you and your company save using a company like this?

Through routine review or systems integration (MRP, Internet, etc), Iowa Laser can offer multiple options to develop trust within the supply chain, allowing you to focus on what truly matters, your customers.  Define what you need to be able to trust a supplier.  Then call us. 

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