IOWA LASER'S PURCHASING POWER  top

A Value in Outsourced Product Manufacturing

By Jim Mattson, Purchasing Manager

As we enter the ninth month of hearing about the recession, the news is plastered with talks of GM and their recently announced Chapter 11 filing. Company leaders are saying they will emerge as a much leaner and better automobile maker. While that remains to be seen, what is known is GM is going to be producing significantly less automobiles per year, forecasted somewhere in the range of 6 million units less than 2008 levels. 

If you are not manufacturing for the auto industry then you may be asking how this affects your business.  The direct impact is the cost of raw material.  Less autos produced will mean significantly less steel purchased, and as a result, significantly less bundled scrap.  Many of the steel mills rely heavily on this type of scrap in their steel making process and since less scrap = higher value, we’re anticipating the market will drive the cost of raw material up. 

At this point, though, raw material pricing is still softening (even though every week we hear it cannot possibly drop further).  One has to think we will soon approach a bottom.  An indicator of this is AK Steel, one of the main steel producers in the U.S., recently announcing a $20 per ton increase for July.  It remains to be seen if the demand will succumb to the supply, but either way my bigger concern is availability.

Typically when the market reaches the low point and manufacturing ramps, steel shortages begin to occur.  I believe this is very likely, followed by steel pricing escalating just as quickly as it dropped.  And instead of being on a roller coaster, we’ll once again be on a high-speed elevator to the supply side pocketbook. 

I tell you this to reiterate one point.  In the world of Outsourced Product Manufacturing, numerous strategic advantages are available when the door of communication is open.  Averting or minimizing the materials market fluctuations is a strategy we can develop with your company to proactively offset the losses endured every time the market drives prices beyond contractual customer agreements.  We’re always open for discussions.     

AN ACTIVE SELLING POINT    top

By Joe Barber, Sales & Marketing Manager  

If you have the opportunity to interact with others in the manufacturing field, outside of your own company, I’m sure you’ve been asked more times than you want to admit, “How are things going?  Are you keeping busy?”  Everyone is hoping to gauge their own situation off the results of these “mini-polls.”  There is little hope of knowing what is on the horizon for manufacturing, and each of us would like whatever reassurance we can find.

Iowa Laser has been very fortunate throughout the early stages of this economic downturn.  Having a solid reputation, and the ability to meet demands (this includes capacity, access to capital, and not having employees furloughed) is a great advantage for us.  While the market continues to shrink, Iowa Laser has so far avoided any decline in sales.  A large part of our success comes from a particular philosophy adopted by some of our customers that I want to recognize and applaud.

As the market began to decline, we saw our customers begin to have concerns about their supply base (I have previously written about the number of requests I had seen concerning Supplier Financial Risk.)  Emerging from the numerous surveys and requests, a different business philosophy surfaced.  We have been approached by some of our customers concerning vendor consolidation and the desire to ensure that key suppliers are kept as healthy and viable as possible.

Historically, a down-turn in the economy sends customers scrambling to find vendors who are willing to slash prices to maintain some level of cash flow.  The philosophy we are seeing today is one of true “partnership.”  While the word partnership has become somewhat cliché, this is one of the times that I have seen the word exemplified.  Companies are recognizing the key role that solid suppliers play in their overall success, and are rewarding them with increased workloads during these trying times.

Our past successes and our overall operating philosophy have made Iowa Laser a company that others want to work with.  We recognize that it is important to remain very competitive within the market, and to continue to perform at the level that others need to have successes in their businesses.  Iowa Laser wants to be the type of business that others look forward to dealing with, and that can be relied upon to be there well past this bump in the road.

We always welcome your feedback and recommendations for improvement.  Never hesitate to contact myself or any member of our management if there is an area of concern.  We truly look forward to continuing to work with each of you.

TUBE LASER UPDATE...   top

Iowa Laser's new rocket-fast Trumpf tube laser is up and running.  Aside from a few pre-programmed software glitches our programmers have been working through, everyone is extremely satisfied with the machine's performance. 

Capabilities on the new laser are to 6" round and 5" square with max wall thickness for carbon steel at 3/8".  We can cut stainless steel and aluminum as well.  Nitrogen-cutting is available to remove scale and part number etching is an option.  Don't forget...we've kept our custom lasers so capabilities for tube cutting extend to 14" round or square. 

Outsourced Product Management requires your supplier effectively deliver to your expectations.  We provide numerous contact points for feedback.  If you are an existing customer, let us know how we're doing with a phone call, an email or a response on a customer survey.   

If you're looking at Iowa Laser as a new supplier to your organization, let's discuss why you're looking for a new supplier.  Are you dealing with performance metrics that don't meet your expectations?  What frustrations can we alleviate or avoid repeating?  In the short amount of time it takes to quote a part, you could have one less task to worry about. 

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

THE ANALYTICS OF QUALITY     top

Meeting vs. Exceeding Expectations

By John Lamos, Quality Manager

Once a year our management staff sits down to discuss several Company and ISO related issues.  One of the objectives is to come up with meaningful and measurable company quality objectives or goals.  One of the most obvious measurements is “Customer Satisfaction” because without satisfied customers, everything else is irrelevant. 

On the surface I think our first instinct was to want to exceed every expectation our customers have.  That's just good customer service, right?  Yet looking objectively at our data, our performance on quality and delivery metrics indicate we exceed the vast majority of your expectations.  So why is my first instinct pushing to give you more?  What should we offer?

A very well informed customer told me a short story that provided some insight.  He said “if I go in to buy myself a car to drive back in forth to work in, I have two major requirements - one that the car is safe and the other that it gets good mileage.  That is my criteria and I do not want to spend a penny more for anything extra.  If the dealer wants to throw in leather seats and a cd player, that’s fine, but I do not want to pay for it”. 

Only after several company audits and survey reviews did we begin to see that the running mentality in the manufacturing world - exceeding customer expectations – was beneficial for the perception of customer service but added costs that you weren’t asking for.  Our customer base stipulates what their expectations are and even though sometimes it seems complex, the bottom line is you want parts delivered on time, correct and packaged in such a way no damage occurs, all at a fair price.

Anything above meeting expectations is viewed as wasted effort and therefore additional cost, something none of us need or want.  This is even more critical in today’s economic times. 

Iowa Laser uses several tools to ensure we are meeting your expectations.  Value stream mapping vividly shows waste across not only our production areas but our entire business.  Another tool we utilize is “quality planning.”  This includes regimented processes that ensure all required manufacturing questions are answered prior to any product being released to production.

When possible it also is a great benefit to actually witness the product being used or assembled.  Removing a daily inconvenience to your operator on the production floor can sometimes be resolved with a simple change in our standard processes.  For instance, recently a customer requested that his parts be put into a box pallet rather than a skid because the next step entailed batch processing.  Communicating on this level as a product/product line develops is critical to meeting expectations. 

We make a concerted effort at keeping the lines of communication open.  Please contact myself or our sales staff to discuss any concerns your production staff may have.  

PRESIDENT'S STATE OF LASER   top

By Sean Abbas, President

It looks like I might be trying to take the easy way out with this short tidbit, but looks can be deceiving (I’ll tell you more later).  

About two weeks ago, I read an article in The New Yorker magazine entitled “How David Beats Goliath, When Underdogs Break the Rules” by Malcolm Gladwell.  I’m not a big fan of The New Yorker, but this article grabbed my perpetual attention two weeks ago and continues to offer ideas daily.  It’s a longer piece at eight pages but I’ve read it five times since, which is pretty unusual for me.  I read a lot of books and articles, but every once in a few years something hits you, and hits you hard. 

See the article for yourself here.  Highly recommended. 

The article references eras and subjects that I am familiar with.  The key thing that Gladwell does is connect some things that have not been connected before (at least not for me).  You might connect with David, or Goliath, or even the girls basketball team.  Iowa Laser and your business are role players in his story.  No matter who or what you find interesting, you will inevitably identify with the strategy required to win.   

We all face incredible odds in our businesses.  When you add a struggling economy to the equation, you can lose hope.  You can begin to buy in to the attitude of surrender because it feels like the deck is stacked against you.  Gladwell shows us a re-thinking of the rules - a counter-intuitive approach that can win against staggering odds.   

Now, here is where you might think I’m taking the easy way out.  That’s all I have for you.  It’s been a busy month and I’m leaving for a Canadian fishing trip with my Dad and son in two hours.  I’m still at the office.  My bags are not packed.  I have to stop at the local sport shop for more tackle and a bigger tackle box (you fisherman know exactly what I am talking about).  I have to get gas and clean up the truck.  There is six hours worth of stuff to get done and only two hours left.   

And I wonder…if I look at my current situation, can I use some ideas mentioned in the article to make my departure deadline?  You bet I can.  Will I use guerilla tactics?  A full court press?  The power of real time?  I’m going to use them all because in a few seconds I’ll be calling my wife Kim and begging for her help.  She’ll come through for me today and two weeks from now I’ll be doing some touch-up painting around the house.   

How do I know this before I even ask her?  She read Gladwell’s article on Monday

ON THE ROAD AGAIN  top

Think Twice About The Quote That Makes You Say This

By Matt Miller, Outside Sales   

Since the last economic downturn (9/11), Iowa Laser has pushed through struggles and developed a strategic position in the Midwest that provides the greatest asset we can offer our customers - consistency.  Yes, there is a price for this.  But the benefits far outweigh the circumstances your company may endure by taking the lowest price, especially in today’s market.  In the last few months, as the East and West coast problems converge further upon us, we’re beginning to hear and see some of the same short-term strategies that directed our focus to what it is today.    

After 9/11, Iowa Laser lost a major contract from our largest customer to a smaller shop that undercut our pricing to the lowest levels of the valley, barely paying for material to keep their doors open.   While our customer didn’t want to take the business away, their justification sounded eerily similar to what we’re hearing today, “The pricing is so low I have to move the business.”   Heard that lately?  Said it?

At the time, Iowa Laser was a $15 million dollar company and getting kicked to the curb took our breath away.  We buckled slightly (see transformation), shifted quietly and continued on towards what we do best, providing world-class Outsourced Product Manufacturing.   About a year later the company that undercut us folded, leaving our customer scrambling for product and peace of mind.  They have since returned and become a major contributor to our success in these more turbulent times.   

While Iowa Laser’s position this time around – financially, productively, psychologically – remains at the top of our game, we’re hearing and seeing this same statement about pricing again.  We know business is about being in the right place at the right time, so more power to these companies for winning the contracts.  But as feedback trickles in, examples of a low bidder at 50% of median range for all received bids are becoming more frequent, with some winning bids barely above material cost.  The daily barrage of spam filling my inbox titled “Equipment Auction” is a strong indicator of what is to come when we start seeing quotes fluctuate to this degree.  The company with ridiculously low bids may be near a breaking point that could hurt your business in the long run. 

Simply put, more companies are dropping prices to keep their machines running, their workers busy and their doors from closing.  While the strategy may work short term, the low bid in today’s market requires a more in-depth study of the supplier for long-term security.  What is their financial position?  Do they have adequate equipment and workforce to handle your needs, now and in the future?  Can they account for their pricing position with processes, equipment or other that justify the low cost?  Do they have new technology, better workers, lower maintenance costs?  Ask yourself how and why a company could make a part so much cheaper than the competition.  Finding out why “the pricing is so low” can protect your company from losing any gains made by accepting the low price.     

top