As valve manufacturers are still feeling the effects of supply chain disruptions from the global pandemic, reshoring, and international political unrest, the industry has been forced to undergo a massive renovation that is expected to continue for at least a few more years.
During this turbulent time, valve manufacturers who want to reinforce and solidify their supply chains should lean on the suppliers they care about the most. Companies need to take a serious look at their supply base and consider the suppliers they trust. The solution requires encouraging joint ventures and collaboration opportunities. Close partnerships with trusted suppliers—particularly casting suppliers—will keep valve manufacturers in quality parts while their competitors continue to scramble.
By Andrew Johnson – ShelfAware
Historically, the industrial landscape carries some animosity and adversarial relationships with suppliers because of buying groups that were dictatorial with their supply base. With less stability, there is no longer the luxury of pitting suppliers against each other until the cheapest option surfaces. Moving for- ward, the focus will be on reliable partnerships and quality rather than price.
Automation Provides a Supply Chain Solution
Many valve manufacturers are implementing a digital vendor-managed inventory (VMI) solution to address ongoing supply chain challenges. With automation, companies can picture a world where realtime consumption data flows through a customizable, secure, cloud-based, easy- to-install, and deploy, platform which makes valuable information visible to both the suppliers and the consumers. As a bonus, this solution ensures a lean inventory pipeline with no stockouts.
Automation does not have to be complex. A digital VMI solution is powerful, but simple to use. Consumption data is used to automatically generate the required supply chain documents, auto- mating sales order entry for the suppliers, and eliminating the purchase order entry and receipt entry for the consumer. For the entire supply chain, this type of inventory automation is a big win. Valve manufacturers who use the right technology will know exactly what is on their shelves and have complete visibility of the massive amounts of data to track.
Another significant advantage is the potential collaboration among suppliers through data-driven CloudSourcing™, which allows independent suppliers to work together with a consumer on a single RFID-powered supply chain platform to manage complex industrial supply chains.
The traditional approach to industrial distribution growth has been a business model in which various product verticals are added to an existing distribution network to grow revenue and add economies of scale. It has worked that way for many large distributors for decades.
However, as markets have grown and matured, that traditional way has be- come less of an option for independent distributors as a long-term growth strategy. The biggest pushback to the idea of collaborative CloudSourcing™ has been reassuring companies that their customer bases will not be poached by potential competitors. The upside outweighs the downside exponentially.
The fear of sharing information about customers is common. However, when industrial valve manufacturers begin adding suppliers to a digital VMI platform, collectively the suppliers become very efficient and intrinsically valuable to the manufacturing consumer. By acting as one, the suppliers become much more of a partner to the consumer and less likely to lose market share to their competitors. The business is predictable, and the long- term stability builds momentum.
As the collaboration business model offers a built-in referral system for suppliers, they can also approach other suppliers whom they have relationships with and invite them to join their digital VMI network to bring the best and brightest of industrial suppliers to a single consumer.
Collaboration Powers Suply Chain Management
If an industrial valve manufacturer is working with four different parts suppliers to build a particular product, a digital VMI allows all those suppliers to be on the same platform without disclosing proprietary information. Within the digital platform, the suppliers can only see their data and not the data of the other collaborating suppliers. The manufacturer can also quickly see which components are available from which suppliers because all the collective data is visible to them. The consumer collaborates with their partners, but the partners do not have to do the same.
The platform provides the partners with the flexibility to filter the data in several ways. For example, it can be filtered to look at a single product or one category supplier, to look at items that are close to stocking out, or to look at items that cost more than $100, for instance. All these filters are designed to provide visibility and useful data across all the product category suppliers. For proprietary reasons, that visibility is only given to the consumer. There has never been visibility or accountability with a traditional VMI—the supplier hoards the data and does not provide the actual data to the consumer.
Before digital VMI technology existed, suppliers were forced to have multiple branch locations to physically deliver components to manufacturers, as needed. Now, even small-town, remotely located valve manufacturers can get parts quickly, efficiently, and without the risk of stockouts that can halt production indefinitely.
Another understated benefit of automation occurs during the onboarding of a particular product vertical onto the digital VMI platform, such as O-rings—an inexpensive but frequently used component. The MRO crib is populated with several bins of different sizes of O-rings that are always kept in stock. Historically, manufacturers ran out of them frequently. With automation, industrial valve manufacturers can simply set the system to reorder the inventory automatically. A digital platform removes daily clutter like multiple purchase orders and the physical counting of shelf inventory. Facility managers can eliminate all the busy work and paperwork and focus on manufacturing their products with minimal downtime.
In a traditional VMI scenario, when parts are not available for a manufacturing line, the operator must stop the machine, run to the warehouse, find the components, and then return to the operating line. If the bin of O-rings, for example, is empty, production is halted until parts can be obtained. It is a time-consuming, manual process. The operator must call the O-ring supplier, order the parts, write a purchase order, do the paperwork, and then wait. Perhaps the supplier is located nearby and can drive the parts to the factory. But if the parts must be shipped, then there is a much longer delay. Meanwhile, the line is down; production is stopped.
With a sophisticated digital VMI platform, that scenario becomes obsolete. The manufacturer never runs out of the needed parts because once the inventory reaches a pre-determined level, parts are automatically reordered and replaced on the shelf.
RFID Technology Enhances Inventory Management
Traditional VMI systems use barcodes to track products, but that system is outdated. It is not practical for a consumer to scan hundreds of barcodes per day, and the data collected is limited. With RFID technology, the user can collect a bag of 500 pieces along with 100 other various pieces in a tub. When placed on the scanning table, one RFID swipe calculates the entire inventory of all the pieces in the tub in seconds and with extremely accurate data.
Why Vale Manufacturers Should Embrace Automation
Valve manufacturers need to consider ways to incrementally adopt technology. By creating more automated and robust supply chains that work more closely with independent, specialized suppliers, a focus is placed on the product verticals that are needed to keep a manufacturing facility running. A web-based supply chain platform illuminates the entire supply chain from start to finish, empowering those suppliers with visual access to daily consumption data of all products flowing through the facility.
Even in uncertain times, valve manufacturers are armed with better supply chain data than they have ever had before, which allows them to make crucial data-based decisions. The data and visibility provide trust among suppliers, even though the manufacturer maintains oversight. The partnership becomes less dictatorial and more collaborative. The result is a win-win scenario for both the supplier and the valve manufacturer.
