Supplier communication is key at Humphrey Products
By John Day -- Purchasing, 3/12/2009 2:00:00 AM
• Humphrey Products Company
Location: Kalamazoo, Mich. • Size: 300 employees • Business: Fluid/mechanical/electrical control modules for material handling, healthcare, transportation, and microelectronics applications
Humphrey Products Company still makes commodity valves, but prefers to develop engineered solutions that leverage its expertise in fluid, mechanical, and electrical control. Its modules often integrate all three technologies. "We like to identify lighthouse customers and attach to their coattails, because they challenge us to be innovative," says Dave Maurer, the firm's director of manufacturing and materials.
The firm's annual spend is approximately $15 million for about 1,000 parts. "We do everything in an assemble-to-order environment on our shop floor, and we keep inventory as low in the value stream as we can and still be able to react to customer needs in five to seven days, which is our target delivery window," he says.
Like others, Humphrey Products has seen rising commodity prices for the past two years. "Commodity prices killed us last year," Maurer says. "We couldn't possibly raise prices the extent to which our suppliers raised prices to us. You have to get productivity improvement. We try to work with suppliers closely, but we have not mandated cost reductions from our suppliers."
Maurer says the biggest challenge is maintaining a balance between promoting Lean culture techniques in the company's supply chain and the need for exceptional process and part change control management.
"Our Lean culture and that of many of our suppliers encourages people to make suggestions for improvements," Maurer says.
Maurer heads a seven-person supply chain team that includes two buyers, two buyer planners, a planner, a purchasing specialist, and a material-handling team leader.
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The Lean culture makes supplier communication all the more critical, according to Maurer. Humphrey Products uses Infor's KBM (Knowledge Based Manufacturing) ERP system to give suppliers a window into parts-requirements projections for the next 12 months. He also uses IBS America's QSi System for Quality Management.
Customers' pull schedules are sometimes erratic. Maurer says his team has to be ready for a pull that could be twice the size or one-third that of the previous month. It needs some buffer inventory to compensate for variances in customers' pull schedules, but has to keep that buffer to a minimum. Humphrey Products uses a color-coded kanban card system for most of its part pulls.
One supplier, Zatkoff Seals and Packing, has a kanban inventory management system called Zap>It for next day fulfillment. Another key supplier, Alro Steel Corporation, effects next-day delivery of material directly to the machine that needs it, labeled with the work center, machine number, and work order number.
Humphrey Products tracks its spend per- supplier over time.
Supplier performance metrics include quality, pricing, and on-time delivery. "We waive inspection of suppliers' parts if the part's quality has been proven over time," Maurer notes, estimating that eight of 10 receipts are inspection-waived.
The firm continually looks for new suppliers and has made effective use of the First Index web site. "We post drawings and requirements, subscribers look at them and bid. We've put parts out there and received 20 quotes the next day," Maurer says.
"We've recently moved work into a 100-mile radius of Kalamazoo, just because we want to have an on-site type of relationship with that supplier where we can get there in a couple of hours," Maurer says.
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