Industrial distribution, Staying competitive globally

Industrial Distribution, Oct 1, 2008 v97 i10 p43
Staying competitive globally.

Phil Samuels

Full Text: COPYRIGHT 2008 Reed Business Information, Inc. (US)
By Phil Samuels

How can American manufacturers stay competitive in today’s global environment? Working closely with your American distributor is just the first step

You are the supply chain manager for your industrial distributorship and you are faced with the question every day: Should I source this product from overseas? Will my customers pay the “premium” for a domestically made tool in today’s global environment? How do I obtain the relevant facts to make that decision?

I do not believe that NAFTA was the end of the world or that the United States should move toward isolationism. You and I are the direct benefactors of foreign goods that were made for lower costs and allow us to consume more goods and still keep more of our hard-earned dollars in our pocket.

But the choice should be made on a case-by-case basis. It is not universally true that products sourced in Asia or Europe cost less than domestically manufactured products. As the price of raw materials continues to increase, as energy costs skyrocket and transportation costs escalate to keep up with technology and inflation, it is sometimes prudent to seek domestic solutions. This is particularly true with engineered products.

Our company has experienced what it is like to order a product from overseas, pay in advance, receive a different product than we ordered–and get it three months late. Anyone in our industry who has ever had a customer waiting for product while their equipment sits idle understands the cost of such miscommunication and misfortune.

Take a moment to evaluate your suppliers based on their situations. Are cheaper competitors providing a product you are willing to stock in larger quantities in order to reduce your acquisition cost? Do you calculate the time value of money to increase your inventory and factor how that impacts your business?

And how much can you save sourcing from 6,000 miles away? Higher transportation costs, higher carrying costs and the risk of your customer not being satisfied are decisions that require considerable thought. Then if you have to source from another distributor to get the product the customer wants, the thoughtful idea of “saving” begins costing you business.

Domestic manufacturers and distributors should work together to develop international business. Many markets are becoming more attractive. Canada and Mexico have thriving manufacturing activity and need reliable suppliers of the goods typical industrial distributors here already have on their shelves.

With the disconnect between the dollar and the Euro, now is the time to make inroads into Europe. Wages are competitive in most instances and since the dollar is about a 40 percent discount, U.S.-made products are very attractive.

Even Asia needs American-made products, which are held in high regard there. Everyone seems to see China as a threat (and it is), but it is also a rapidly growing market that cannot service its own needs for the immediate future.

U.S. workers are more automated and universally recognized as the most creative employees in the world. Let’s export our distribution capabilities and support manufacturing all over the planet and use domestic suppliers when it makes sense.

Domestic manufacturing and distribution is very competitive on its own merit. We can keep jobs at home if we follow intelligent business practices.

Phil Samuels is vice president of sales and marketing for KEO Cutters of Warren, Mich. Contact him at  psamuels at keocutters.com or (888) 390-2050 x 233.

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