Lincoln Electric guarantees cost savings or money back
By Staff -- Purchasing, 11/18/1999
Sometimes solutions to problems don't require finding a new supplier, but simply communicating clearly with current suppliers. And sometimes solutions offered by current suppliers can exceed original goals of customers.Such was the case when The Holland Binkley Co., a major manufacturer of tractor-trailer components, was in a tight financial bind. The company had begun shopping around for a lower-priced supplier of welding wire.
The company's' welding wire supplier at the time, The Lincoln Electric Company, was unaware of this problem when it approached Holland Binkley with its guaranteed cost-reduction (GCR) program.
After learning of the program, Holland Binkley decided to hold off on switching suppliers until it could see if the Lincoln Electric could really deliver what it promised: Reduced costs and added value.
"Our timing was perfect. When we met with (Holland Binkley) and presented our overall package of reduced costs and improved technical services, they found value in our offering and decided to give GCR a try," says Deanna Carter, a technical representative in Lincoln Electric's St. Louis office.
Under the GCR program, Lincoln Electric engineers perform a site audit of a buyer's facility, evaluating the entire welding process to determine areas of improvement and ways to cut costs. If the buyer follows these cost-cutting recommendations, Lincoln will guarantee a forecasted amount of savings over a specified period of time. When that period is over, if the buyer does not reap the predicted savings, Lincoln Electric will write a check for the difference.
The Holland Binkley Company chose to initiate a number of Lincoln Electric's suggestions. The company redesigned one troublesome part to make it quicker and easier to weld. The company also changed to a different type of welding for some parts to reduce spatter ad undercut problems, it switched from coils of wire to bulk packaging to reduce changeover time, and it managed to reduce inventory through the use of a purchasing plan.
The original GCR proposal to Holland Binkley called for $10,000 in savings, but the company says actual implemented savings have exceeded $100,000!
The success of the program at Holland Binkley's Warrenton, Mont., plant opened the door for opportunities at a company plant in Dumas, Ariz. Previously, the Dumas plant had worked with another robotic welding supplier. But after evaluating the overall package, the plant switched suppliers and bought three robotic welding systems from Lincoln Electric.
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