Gary Henderson, Managing Director – Grampian Fasteners, discusses how collaboration can help to achieve cost savings and improve your business performance overall.
I get quite frustrated by the calls for cost-cutting in the industry. Not because I don't believe they're needed, they definitely are, but because of how they're expected to be achieved by many companies. We've seen the same process in every downturn - cut jobs and tell companies up the supply chain they have to cut prices. If, like us, you're a product supplier who is always conscious of having a lean organisation you'll know that the margins just aren't there to make price cuts and remain a viable business.
Just because product suppliers can't cut prices it doesn't mean we can't help cut costs. We can!
When it comes to the total cost of fasteners around 15% can attributed to the visible cost of the fastener and 85% to design, sourcing, ordering, logistics, stocking and assembly. It doesn't take a rocket scientist to understand where the biggest savings can be made. For example, one of our major customers asked how we could help them cut costs. Through previous discussions, we knew it cost them over £100 in business costs for every purchase order they raised. A quick analysis showed that 63% of the orders they placed with us had a value under £50. They were able to make savings by adjusting their procurement process and it's a good example of what can be achieved through collaboration.
Collaboration: the action of working with someone to produce something. We hear the 'C' word mentioned everywhere but there doesn't appear to be much of it happening in practice. I believe the thinking of Albert Einstein is crucial - "You cannot solve a problem from the same consciousness that created it. You must learn to see the world anew." The act of collaboration relies on both parties understanding that their success is reliant on each other and trusting that they're working for the best interest of both parties. That might be a concept that's difficult to grasp for some but the successful organisations will be the ones that do just that.
Talk to your suppliers. Invite them in to see how you work. Likewise, go and visit them and see how they work. The more you understand each other, the better the collaboration will be. Developing a deep and meaningful relationship happens over a long time but you have to get started and take the first step. What we'd like to be able to achieve at Grampian Fasteners is to move from developing cost savings to help improve your business performance. We have experience of working with over 1,200 companies in the industry and we may be able to share some of the knowledge we've built up. If a new solution is required for your business, we have the flexibility to work with you on developing it.
We have more technologies than ever available to us that utilise the power of networks in order to communicate and collaborate with people all over the world. The use of technology has been key to the development of Grampian Fasteners and we're continuing that theme in order to aid collaboration. We're in the process of building a new Internet platform that's designed to improve efficiency and accuracy by integrating with our customers' systems.
We have amazing opportunities to transform the industry but they won't be realised unless the matching thinking is in place. Is your thinking really ready for collaboration?