Truck, Trailer Manufacturers Discuss Increased Supplier Expectations

Twenty-first century truck and trailer builders will expect more from their suppliers.

As part of Dialogue '98, the Heavy Duty Manufacturers Association invited representatives from several truck and trailer manufacturers to speak on what manufacturers will require from their suppliers in years to come.

Manufacturers and suppliers together must reduce waste and improve the quality and performance of products to be offered in the 21st century, according to Bob Juno, vice-president of purchasing at Great Dane trailers.

He said that the way manufacturers and suppliers did business yesterday will not be good enough in the 21st century even if they work harder at it. The trailer industry will evaluate suppliers based on five criteria, according to Juno.

1. Who has the best quality? 2. Who has the best technology? 3. Who has the best delivery? 4. Who has the most dynamic and creative management? 5. Who has the best cost?

Supplier selection in the future will be based on ISO 9000 and 9001 certification. In order to achieve this certification, a supplier must demonstrate to an independent registrar that it practices a quality system that controls and documents design, development, production, installation, and service of products and that the system ensures satisfaction for the end customer.

"All suppliers for Great Dane will be ISO certified because our customers will expect this level of quality," Juno said. "We must align ourselves with suppliers that have similar strengths, and whose thinking and operating philosophies are the same."

Improving Efficiency Trailer manufacturers must increase their efficiency by taking advantage of today's technology. The long downtimes of today are a waste that won't be tolerated in the future.

"Carriers don't make money when their trailers are sitting," Juno said. "The industry needs electronic data exchange to fill orders at the rate of use." The industry must eliminate the non-value-added practice of writing purchase orders. Orders must soon be placed in an electronic operating environment if the industry is to survive, according to Juno.

Another area of waste occurs when suppliers fail to ship the number of units specified. "Too often today the wrong quantity of material is shipped to the OEM, and the result is scrap," Juno said. "The industry must find a way for suppliers to electronically observe OEM records, track their rate of use, and replace product as needed."

Just in time delivery has become an abused practice, according to Juno. "A true JIT delivery program would deliver the products on schedule and not tie up dollars in a warehouse," Juno said. "Better turns equal better returns for both suppliers and manufacturers."

Manufacturers need to know where and when the product is on the road. Communicating with drivers using satellites and radios will become commonplace. EDI advanced shipping notification can be expected at every shipment. Bar coding will help eliminate waste by reducing records. At any point during shipment, OEMs or suppliers will be able to pull vital records on an order. There will be no need for re-orders.

Assembly and disassembly redundancies must also stop. "In too many cases, parts are assembled at the supplier, only to be disassembled before being used by the manufacturer," Juno said. "No one gains in tolerating non-value functions."

A Tractor Builder's Perspective Edward Caudill, vice-president and general manager of Kenworth Truck Company, presented ideas and trends that will influence manufacturer-supplier relationships in the 21st century. Manufacturers will use fewer tier-one suppliers in the future, according to Caudill.

"Tier-one suppliers will need to produce a quality product, and be able to produce savings and efficiency throughout the supply chain," Caudill said. Manufacturers will also expect suppliers to play a bigger role in satisfying customers, according to Caudill. Classroom training courses and customer clinics will become a necessity.

"Suppliers will be required to train dealers before a product launch and then provide refresher courses as necessary," Caudill said. Future Changes

Engineering and design will change in the future as well. Partnering during these phases of product development will result in a better product. Caudill pointed out a Michigan State University study that showed a 15% cost reduction using co-development.

"Engines, clutches, transmissions, drivelines, and axles must be designed as a system because when one changes the whole system changes," Caudill said. "Early collaboration between manufacturers and suppliers reduces costs." Suppliers can help lower costs by moving materials more efficiently through the supply chain.

"Material shortages drive production costs significantly higher," Caudill said. Manufacturers will also want supplier to manage inventory throughout the supply chain. Manufacturing development in the 21st century will require suppliers to execute just-in-time delivery perfectly, according to Caudill. Kenwortth will look at suppliers that will provide continuous product improvement and customer support through timely answers to its customers.

A Global View Jim Thomas, vice-president of purchasing for Freightliner Corporation, discussed how manufacturers' global plans will impact suppliers. "Manufacturers want suppliers to co-locate in foreign markets," Thomas said. "We want to be able to provide full support to customers that are there and serve the aftermarket."

Manufacturers' reliance on suppliers will be more intense in the future and will involve more aspects of the business than it does today. Manufacturers must be supported by suppliers throughout the life of their products, according to Thomas. He defined roles for suppliers and manufacturers as both enter the 21st century.

"OEMs will control the overall vehicle concept--including the cab, chassis, integration of powertrain, and integration of electronics," Thomas said. "Suppliers will be involved with detailed engineering of systems from concept to production."

Manufacturers will retain the responsibility for differentiating their products from the competition, but suppliers will have a critical role in helping achieve that differentiation.

"This is becoming a problem as the industry moves toward system suppliers," Thomas said.

Thomas also dealt with cost control and customer support. The themes of this century regarding cost control will continue, according to Thomas.

Manufacturers' dependence on suppliers to help control costs is unrelenting. "Suppliers must continue to come forward with cost reduction throughout the supply chain for everyone to benefit," Thomas said.

In the long term, dealers are more capable of directly serving customers than suppliers are, according to Thomas.

"The best way to serve customers is through a strong OEM dealer network."

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