Building effective and agile sheet metal forming supply channels

Strong metal forming supply channels deliver innovative metal parts.

Sharing knowledge in your supply chain is important to maintain quality and efficiency. This is especially true during periods of rapid change.

The automotive industry is pursuing changes in materials, technologies, and processes to meet aggressive fuel efficiency standards. Other industries will begin to incorporate new materials into their products to benefit from greater strength and reduced weight. As a result, manufacturers expect greater precision in measuring metallurgical properties, plan to employ new forming techniques, and require materials that are both stronger and lighter. Advanced metal forming organizations may have resources for continuous learning, but smaller suppliers might struggle to meet new demands for strength, mass reduction, and precision.

Probably the best strategy to ensure a competent and agile supply chain is to build a common understanding of the fundamentals. These include confirming each partner's ability to understand metallurgical properties, interpret test results, design and construct dies and tooling, and be aware of sheet metal forming technologies. Once the fundamentals are established, each partner is better able to learn new processes and technologies and adapt to changes in the industry. Probably the most important component of partner agility is the knowledge gained by the supply channel as it matures.

OEMs and large sheet metal formers often resist the idea of interorganizational sharing. One concern is that sharing proprietary processes, technologies, and information risks loss of their competitive advantage. The fear that suppliers will share information with competitors drives this concern. The other issue is that supplier reliance on information from other organizations reduces their flexibility and leaves them vulnerable to changing client priorities. Despite the fears of negative consequences of sharing, the benefits to the supply chain can exceed the risks.

Is It Really a Trade Secret?

One of the first things companies must ask is whether information considered “proprietary” really is a trade secret. The Uniform Trade Secrets Act defines a trade secret as follows:

“Trade secret" means information, including a formula, pattern, compilation, program, device, method, technique, or process, that: (i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”

The theft of trade secrets is a serious issue. Congress recently passed the Defend Trade Secrets Act of 2016 to address the problem. Companies sometimes can become aggressive about classifying information as proprietary without consideration of its real value to the company, let alone the potential value of sharing that information with channel suppliers. Also, classifying information that is commonly known introduces the risk that employees will either trivialize trade secret policies or create the fear of sharing information that would provide greater value to your supply chain.

Companies should assess the real competitive value of their information and compare it to anticipated supply chain improvements. Whether it's a capability unavailable to competitors or an efficiency, it helps to understand the value your capability adds to product and profit margins.

Other issues to consider include how long you anticipate your advantage to last. New technologies may arise that displace your innovation. Competitors are often able to replicate technologies and processes after research.

The value of a cooperative channel partnership can be enduring. A cooperative relationship can foster efficiency, component quality, and innovation. Measured against proprietary concerns, productive channel partnerships may offer lasting benefits to both the buyer and the seller.

When you adopt newer technologies and processes, like press hardening, shared experiences can greatly benefit both the buyer and the supplier. As press hardening increases in use, some of your questions are best answered by others’ production experience. Furnace temperatures, heat loss during transfer operations, heat loss at different contact pressures, optimal quench times, tooling steels, and steel chemical composition are all questions best answered through experience. When manufacturers understand what is happening across their supply chain, they can more quickly develop solutions and best practices for better components and more efficient operations.

In their paper “Sharing Global Supply Chain Knowledge,” Matthew B. Myers and Mee-Shew Cheung identified three types of knowledge sharing to create value in a supply chain:

1. Information sharing, when companies share information about sales, customer needs, market structures, and demand level
2. Joint sense making, when supply chain partners work closely to solve operational problems, analyze and discuss strategic issues, and facilitate communication about the relationship
3. Knowledge integration, when both sides develop relationship-specific memories, providing each party with a common understanding of idiosyncratic routines and procedures governing the partnership.

The Benefits of Information Sharing

Information sharing does include risk and quite a bit of faith. The benefits, however, can be significant in both your product quality and profit margins. In manufacturing, both your product and your supply chain compete in the market. Your product's quality, price, time to market, safety, and delivery all depend on how well you manage channel partnerships. High-profile recalls for defective components may even risk the reputation of your brand.

Supply chains can be fragile. Their success is held at the mercy of communication efficiency, transportation channels, events of nature, and of human nature. Failures can hurt your product, injure or kill customers, and damage your corporate reputation.

Supply chain management is naturally competitive. Competition serves to keep both the buyer and supplier aware of requirements and expectations, as well as identifying critical issues needing continuing attention. When relationships become contentious, focus can be lost and energy wasted on arguing, rather than meeting each party's business and product needs.

Once a supplier is accepted into the supply channel and has gained the buyer's faith, it is most productive to spend relationship energy on anticipating and resolving issues to strengthen the relationship. When product requirements are understood, parties should focus on ensuring that processes and manufacturing technologies are in place and employees trained to manufacture affordable, quality products.

Effective supply channels can offer manufacturers a strong competitive position. Weak supply channels can waste energy on contention, waste money on inefficiency, and result in quality issues and product recalls. Supplier domain expertise, component specialization, manufacturing efficiency, and timely delivery help define the effectiveness of your supply chain. Both buyers and sellers are best served when channel partners cooperate and share their experiences and knowledge.

Effectiveness starts with a sound and common understanding of forming fundamentals. Building on this allows for agility and flexibility when adopting new technologies and forming materials that are new to your supply channel.