A Small Auto Supplier
Company
- Tier 2 supplier of stamped and machined metal parts.
- Around $10 million in sales; and less than 100 employees.
Situation
- Part of traditional Big 3 supply chain; few sales to Japanese transplants - highly dependent on the success of Ford, GM and Chrysler.
- Big 3 losing market share, and their Tier 1 relocating overseas;
- Plus firm was losing established accounts to low-cost Chinese imports.
Approach
- Because experience and expertise concentrated in auto, firm decided to continue serving this market, but to focus on providing higher-value (higher margin) components - first to its existing customers, then to new accounts (the Japanese transplants, or "New Domestics").
- This required improving quality, controlling costs, increasing design capabilities and new market development.
Actions
- A purchasing improvement project was done first to reduce costs and minimize raw material inventories.
- The company undertook a quality projec to prepare it for ISO 14001 & TS 16949 certifications (now certified).
- Soon after, completed its first new product engineering initiative.
- The company began to actively reposition itself in order to win business at the New Domestics. That year it used the TAAF program to research market opportunities, to reorganize its internal systems and sales process to better aligh with the requirements of the Japanese OEMs.
- The company then used TAAF co-funding for CAD support, which enabled it to quote more highly engineered parts to its new customers.
Results
- Revenues had doubled before the auto industry collapse. Though they have now fallen back, the firm is now profitable.
- Sales to non-Big 3 accounts are growing; and margins are much improved.
- The company is poised for significant growth when the car market ultimately recovers.