Rethinking Profitability — A Business Accelerator Model

April 5, 2014

Joe Woods

Fluid power component manufacturers can be empowered through vendor-managed inventory and supply chain solutions, such as value-added packaging and handling services.

Trelleborg has developed a strategic perspective on people, processes, and products using a total value assessment to more accurately quantify and achieve long-term business benefits. Off-highway original equipment manufacturers (OEMs), end users, and all stakeholders involved need suppliers that are forward thinking and help them to reach their goals. Increasing productivity, reducing costs, delivering new innovations, improving quality, and responding faster to customer needs, are all key objectives of a business accelerator model. Its aim is about achieving real results that translate into tangible business benefits.

Joe Woods, Fluid Power Segment Manager, Trelleborg Sealing Solutions

The business accelerator model comprises everything from the selection of materials to the design process to manufacturing. Purchasing and supply management that have traditionally focused on price are starting to take heed of a bigger value proposition and a more overall holistic view of their materials purchasing and supplier selection criteria.

This model fills the gap that traditional suppliers have yet to offer—rethinking profitability and how to achieve it. It has been developed to bring an over-arching deeper understanding of the value a supplier can bring to impact the entire supply chain, and has "revenue-enhancing" effects on its customers’ business.

Creating a collaborative environment creates more agility, adaptability, and alignment, which is really only possible when partners promote knowledge flow between the highest areas of impact within the supply chain. The flow of knowledge is what enables a supply chain to come together in a way that creates a true value chain for all the stakeholders.

Knowledge flow creates value by making the supply chain more transparent and by giving involved parties a 360° view on OEM needs and value propositions. Increased demand visibility can provide such benefits as a better understanding of market trends and better product design, planning, and development.

All lean improvements result in increased throughput of goods. The greatest culprit in reducing throughput is waste, which can translate to machine downtime, lost time waiting for materials, out of stock supplies, operator errors, and poorly designed processes.

For OEMs serving the off-highway industry, the model supports a leaner environment because of its unique design, which decreases the need for product variations in inventory, simplifies logistics (less SKUs to manage), and delivers on quality, flexibility, and, just as important, modularity. As described, the model has been architected to reduce overall cost to bring finished products to market and reach objective outcomes such as:

Incorporating “base level” design,
Product coverage for all application conditions,
Reducing overall number of SKUs,
Reducing number of vendors,
Increasing throughput via lean manufacturing,
Supply chain advantages and savings, and
“Shoulder-to-shoulder” design and testing.

Suppliers that support their customers’ success will help win new business. Ultimately, solutions and services should improve their product development cycle and reduce their cost to design, develop, and deliver, while bringing greater value to the end product, attracting prospects and increasing the sales of the component manufacturer.

Joe Woods, Fluid Power Segment Manager, Trelleborg Sealing Solutions, wrote this article for SAE Off-Highway Engineering.