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Sup­pli­er inte­gra­tion in the rub­ber and plas­tics sec­tor — work­ing togeth­er is key

05.01.2022  |  Ralf Aumann

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A secure sup­ply of raw mate­ri­als and inter­me­di­ates is an impor­tant suc­cess fac­tor for any man­u­fac­tur­ing com­pa­ny. Whether this is suc­cess­ful depends above all on how well the orga­ni­za­tion coop­er­ates with its sup­pli­ers. The clos­er both sides are net­worked, the more effec­tive the coop­er­a­tion. Espe­cial­ly in the cur­rent pan­dem­ic sit­u­a­tion, sup­pli­er inte­gra­tion is there­fore a major issue.

Sup­pli­er inte­gra­tion in prod­uct development

Involv­ing sup­pli­ers in research and devel­op­ment has sev­er­al advan­tages. For exam­ple, the com­pa­ny can ensure that all com­po­nents of its prod­ucts are designed for pro­duc­tion. This is par­tic­u­lar­ly rel­e­vant for rub­ber and plas­tic parts, as only a few design­ers have expe­ri­ence in this area. 

In prac­tice, there are var­i­ous approach­es to inte­gra­tion, depend­ing on the plan­ning hori­zon of prod­uct development:

  • Some com­pa­nies turn to rub­ber and plas­tic sup­pli­ers as short-term prob­lem solvers. They have encoun­tered a chal­lenge in the design process (for exam­ple, a seal that can­not with­stand the vibra­tions that occur) and are now look­ing for support.
  • In oth­er cas­es, pro­duc­tion com­pa­nies con­tact their sup­pli­ers at an ear­ly stage for a joint devel­op­ment project in order to ben­e­fit from their exper­tise (for exam­ple in Mate­ri­alauswahl or geome­tries) and real­ize syn­er­gy effects. This either takes the form of joint project teams, or the cus­tomer pro­vides the sup­pli­er with design plans at an ear­ly stage of the project to obtain input for elas­tomer or plas­tic mold­ed parts.

Tip 

Ear­ly con­tact is usu­al­ly prefer­able for both sides, as cri­sis sit­u­a­tions with tight dead­lines can thus be avoid­ed. Unfor­tu­nate­ly, some man­u­fac­tur­ing com­pa­nies still  under­es­ti­mate the com­plex­i­ty of rub­ber and plas­tic parts and con­tact their sup­pli­ers too late.

Tech­ni­cal integration

The days when com­pa­nies placed orders by fax are large­ly over. Today, almost all orders are received elec­tron­i­cal­ly by sup­pli­ers. How­ev­er, there are dif­fer­ences in terms of the depth of integration. 
  • Espe­cial­ly for small com­pa­nies, e‑mail is still the pri­ma­ry com­mu­ni­ca­tion chan­nel for exchang­ing infor­ma­tion with sup­pli­ers. How­ev­er, it has to be sent man­u­al­ly, which always involves a risk of error. In addi­tion, the work­load is rel­a­tive­ly high.
  • For larg­er com­pa­nies, an EDI con­nec­tion to their sup­pli­ers is com­mon. This enables both sides to exchange pur­chase orders, deliv­ery bills and invoic­es dig­i­tal­ly. For exam­ple, the cus­tomer can pro­vide a dynam­ic pre­view of its goods require­ments for the next six months (cal­cu­lat­ed on a rolling basis from pro­duc­tion plan­ning data in the ERP sys­tem), which allows the sup­pli­er to pre­pare pro­duc­tion orders and deliv­er­ies at an ear­ly stage.
  • An alter­na­tive is to net­work the ERP sys­tems of the cus­tomer and sup­pli­er so that a demand for goods or low inven­to­ry on the cus­tomer side auto­mat­i­cal­ly trig­gers an order in the sup­pli­er’s ERP sys­tem. This is func­tion­al­ly equiv­a­lent to an EDI con­nec­tion, but with­out an EDI serv­er. This option is par­tic­u­lar­ly attrac­tive for price-sen­si­tive customers.

Process inte­gra­tion in purchasing

Prob­a­bly the most com­mon pro­ce­dur­al inte­gra­tion in the pur­chas­ing of rub­ber and plas­tic com­po­nents is the use of frame­work agree­ments. Here, the sup­pli­er agrees to pro­vide the cus­tomer with an agreed quan­ti­ty of goods at the agreed con­di­tions over a cer­tain peri­od of time. In prac­tice, there are two options for imple­ment­ing frame­work agreements:

  • First­ly, the cus­tomer and sup­pli­er can agree fixed deliv­ery dates for quo­tas of goods, for exam­ple once a quar­ter. This option is pri­mar­i­ly suit­able for com­pa­nies that can plan their require­ments for rub­ber and plas­tic com­po­nents rel­a­tive­ly precisely.
  • Sec­ond­ly, both sides can nego­ti­ate deliv­ery lots . These are fixed quo­tas of goods that the sup­pli­er holds ready for call-off over a spe­cif­ic peri­od (for exam­ple, quar­ter­ly). The cus­tomer can make flex­i­ble use of these quan­ti­ties, which makes this option attrac­tive for com­pa­nies with less plan­ning certainty.

Col­lab­o­ra­tion in logistics

In logis­tics, sup­pli­er inte­gra­tion is pri­mar­i­ly aimed at reduc­ing fric­tion­al loss­es so that mate­ri­als and com­po­nents arrive more quick­ly where they are need­ed. One impor­tant start­ing point is order pick­ing. If the sup­pli­er deliv­ers goods in pack­ag­ing units that cor­re­spond to the cus­tomer’s planned con­sump­tion over a cer­tain peri­od of time, there is no need for the cus­tomer to decant and sort. This not only reduces the time spent by ware­house per­son­nel, but also the amount of pack­ag­ing waste. 

For exam­ple, if the sup­pli­er knows how much mate­r­i­al the cus­tomer will con­sume for an aver­age pro­duc­tion order, he can pre-pack the cor­re­spond­ing quan­ti­ties of items and fill them into small load car­ri­ers, such as those used on the cus­tomer’s fac­to­ry floor. The lat­ter can take the box­es direct­ly from the deliv­ered pal­let and process them fur­ther. The inter­me­di­ate steps of decant­i­ng and sort­ing are eliminated.

Spe­cial fea­tures for rub­ber and plastic

As far as elas­tomer com­po­nents are con­cerned, pro­duc­tion com­pa­nies should be aware that rub­ber com­pounds have a lim­it­ed shelf life. After about four weeks, the mate­r­i­al starts to over­age and los­es some of its prop­er­ties. In addi­tion, there is a risk of pre-vul­can­iza­tion if tem­per­a­ture spec­i­fi­ca­tions are not met dur­ing trans­port. 

As a result, rub­ber sup­ply chains are some­what more frag­ile than is the case with oth­er mate­ri­als. On-time deliv­er­ies are all the more impor­tant in these indus­tries because they can­not keep a buffer in stock for the long term. If there are deliv­ery prob­lems with indi­vid­ual com­po­nents of a rub­ber com­pound, the deliv­ery dates of the fin­ished com­po­nent are quick­ly put in jeop­ardy. This can even affect sev­er­al sup­pli­ers if the com­po­nent is rare and only a few sup­pli­ers have it in their range. It there­fore makes sense for pro­duc­tion com­pa­nies to main­tain redun­dan­cies in their sup­ply chain and, in case of doubt, to release sev­er­al rub­ber com­pounds so that they can react more flex­i­bly to disruptions.

Con­clu­sion

There are many ways to achieve clos­er inte­gra­tion with sup­pli­ers, from tech­ni­cal inter­faces to frame­work agree­ments in pur­chas­ing to joint devel­op­ment projects. How­ev­er, man­u­fac­tur­ing com­pa­nies only achieve syn­er­gy effects when they com­bine these approach­es and work hand in hand with sup­pli­ers. This type of sup­pli­er man­age­ment is some­what more cost­ly, but the ben­e­fits are worth it — espe­cial­ly in times of crisis. 
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Whitepa­per:
Secure the Start of Production

Learn which fac­tors influ­ence your SOP!

to the Whitepaper
Ralf Aumann /blog/supplier-integration-in-the-rubber-and-plastics-sector-working-together-is-key/

Author: Ralf Aumann

Ralf Aumann heads the Sup­ply Chain Man­age­ment divi­sion at Jäger. As a grad­u­ate in pro­duc­tion engi­neer­ing and mechan­i­cal engi­neer­ing, he joined the com­pa­ny in 2010 after hold­ing sev­er­al posi­tions in the auto­mo­tive industry. 
r.aumann@jaeger-gk.de | +49 511 5358 131 

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