Back toward the end of January, we authored a post whose title we ask every prospective metal sourcing client, does-your-firm-meet-or-beat-the-market?” Based on some recent prospect meetings, I’m starting to wonder if firms even care. On the one hand, one firm had gone through a lay-off, reduced hours in exchange for salary cuts and will be making some plant closures. And on the other hand, because of morale they felt as though cost reduction in the area of direct materials (this company cuts, machines and fabricates parts mostly made of carbon rod for major OEM’s) may threaten the purchasing manager.
We’ve heard that all before, at least 100 times. But I just can’t understand why a company would have less of a problem laying someone off than saying to one person, Look, we’re going to take a new approach to sourcing metals, one that does not involve going out to three bidders on a monthly basis and awarding the requirement to the lowest of those three bidders ” TO SAVE YOUR JOB ALONG WITH A FEW OTHERS. And yet I see small to middle market manufacturers stuck in this paradigm ” while the heads are rolling!
It would seem to me that if a $30m revenue job shop or value-add component/assembly supplier could save $350-500k annually, that would make an enormous impact on the bottom line. And yet, so few companies at this level are strategically sourcing. It’s as if we are still back in the 1960’s. So forget about does your firm meet or beat the market. Try this one: Are you going to survive by doing what you are currently doing?
P.S. Am I missing something? Drop me a line at lreisman (at) aptiumglobal (dot) com.