This is when people, departments, and operating systems must be matched up – when two ways of doing business must be brought into sync.
When Hydro Aluminum was chosen as the new supplier of fabricated aluminum extrusions for Allsteel’s Terrace office system, both companies committed themselves to establishing a long-term relationship.
Hydro had pursued Allsteel’s business persistently for two years with sales calls, keeping in contact, asking for a challenge. Once they got the business, the real work would begin. Hydro and Allsteel – one of North America’s premier suppliers of contract office furniture and systems – would both have to collaborate closely to make the marriage work.
The rigorous ramp-up
Over an intense six months, both companies worked tirelessly to build their partnership. Each assigned a project manager to the transition. Hydro’s was Scott Condreay, Operations Manager of the company’s Cassville, Missouri, facility. Cassville would fabricate the extrusions produced at Hydro’s nearby Monett, Missouri, plant, and ship them to Allsteel’s assembly facility.
“We had to deal with design review, tooling up, logistics, and the coordination of two of our own plants with Allsteel’s facility,” said Condreay. “So we brought a team from Cassville and Monett to numerous meetings with Allsteel to go over details and plan our transition strategy.”
Hydro reviewed all designs with Allsteel product development engineers to determine where any improvements might be made to extrusion shapes. Then, new extrusion dies had to be made. Fabrication tooling equipment, such as punches, drills and milling machines, had to be transferred from the previous supplier to Hydro’s Cassville facility. And additional fabrication equipment had to be specified and ordered.
“The challenge was to do all this and still maintain Allsteel’s production schedule!” Condreay said.
Extensive timetables, targets, deadlines and areas of responsibilities were all laid out. And everyone adhered to the schedule. Allsteel now uses the transfer process that was developed as a model for other transitions to new suppliers.
Putting Hydro’s resources to work
Changing suppliers was a major investment for Allsteel. The resources that Hydro brought to the table were important factors in Allsteel’s deciding to make the switch.
“Hydro’s resources are significant,” said Jim Klotz, Allsteel Vice President, Strategic Procurement. “Its engineering capabilities, tooling and design, its contacts in the industry, metal sourcing capabilities, and its expertise are all important to us.”
During both the review and ramp-up periods Hydro’s senior management was involved.
“The active involvement of Hydro senior management on a continuing basis showed us that the organization was going to be engaged,” said Klotz. “It showed that the commitment is there.”
The extent of Hydro’s financial resources is also important to Allsteel.
“Hydro is a large organization. It is a major factor in the aluminum world,” Klotz said. “We know it’s stable. We know it’s going to be around for a long time, and it has resources we can tap into.”
Partners in sync
Allsteel produces quality products with advanced functionality and lifetime durability, supported by best-in-industry service. It works with its suppliers to make sure that the end-user/customer gets the best value from their investment. This calls for suppliers who have the expertise and capabilities to go beyond simply manufacturing parts. Hydro provides the value added services needed to form a true partnership.
One area where the two companies are working closely together is Allsteel’s Margin Improvement Process. In this program, Allsteel works with the top 25% of their suppliers to remove waste from the production process and reduce costs.
“We don’t want our suppliers just to cut their margins,” said Klotz. “We want them to cut true costs and waste so we’re both improving our margins. We set a goal each year and Hydro is an active participant in this process.”
The inventory management program that Hydro runs for Allsteel is another program to control costs. Hydro stocks the parts internally and delivers them daily to Allsteel’s Muscatine, Iowa, assembly plant. Allsteel places an order, and Hydro ships it out the same day.
The fact that Hydro operates the largest remelt network in North America and has global metal sourcing capabilities has contributed additional value to the relationship.
In the area of communication, Hydro engineers maintain ongoing contact with Allsteel engineers on a daily basis and are always available.
“If our product development people have any questions, they can pick up the phone and get help anytime,” Klotz said.
Critical on-time delivery
As a supplier of contract office systems and furniture, Allsteel has to make sure that its large office systems are installed on time. On major projects, its on-time performance consistently comes in at 99.8%. But Allsteel’s performance is only as good as the on-time record of its suppliers.
“If one of our customers is building a new office building, shutting the old one down and moving people over,” explained Klotz, “it’s critical that we can assure them that they’re going to have their furniture in place. We even guarantee our on-time delivery. If we don’t make it, we pay for the installation. Hydro gives us the confidence to go out in the marketplace and do this.”
Moving forward together
Today, Hydro provides approximately 400 part numbers to Allsteel. About 110 of these are dedicated to the Terrace line, including top cap trim, cosmetic trim, vertical trim, “Ts” and “Ls”. As the relationship between Allsteel and Hydro expands, they are leveraging their respective strengths on additional products. Hydro is currently cutting dies for new extrusion profiles that will be used in several new Allsteel product lines under development.
“Allsteel is a progressive company,” said Condreay. “It seeks continuous improvement, and so do we. We’re both moving in the same direction. It’s a good match.”
