2007: Canada-Asia Stacking Tray Co-production
AUTOMOTIVE VEHICLE COMPONENT ASSEMBLY STACKING TRAY
Executive on Demand Position:
President, Vice President Sales, Vice President Logistics, Vice President Procurement
Project Outline:
Anyone familiar with the automotive vehicle assembly industry is aware that it is common practice for the car manufacturers to request and receive a commitment to a price reduction year over year for products supplied to them. It is up to the suppliers to figure out how to deliver the lower expected costs. Examples of practices used to deliver savings and meet the year over year cost reduction are through enhancing shop floor productivity, operational efficiencies and volume purchase negotiations.
A manufacturer of disposable plastic trays used to store and transport component parts for a vehicle assembly line had met the commitment for two years running but for the third year they were having a challenge in meeting the next cost reduction target. An option that they had not entertained was to source the tray offshore. The company is family owned and the senior management team was made up of experienced well educated family members. Outsourcing to an offshore company to have this low cost no margin tray manufactured was not an option considered until the President and I had a chance meeting at a plastics industry conference.
Project Outcome:
A search was conducted for a potential partner to manufacture the tray in China. Several candidates were identified and they were visited by TartanFrog Inc. to validate the existence of the company, their capability and the quality of product they were capable of making. A company was selected and a prototype mould was made to manufacture the tray for quality control evaluation and testing before finalizing a co-production agreement. The products passed all of the company’s quality requirements and most important the cost of the tray was reduced by more than 45% landed in Brampton, Ontario. At this point the President took over the initiative to determine how they could incorporate the offshore manufacturing program into their processes. The end result was that the local company was uncomfortable in working with an offshore company and decided to continue manufacturing the tray locally and absorb the loss as a cost of doing business.