Hardinge Inc

The global supply chainHardinge Inc, a global supplier of metal cutting solutions, believes a tightly run global supply chain can be a powerful competitive weapon. Keith Regan learns how itÔÇÖs using its worldwide footprint to make that idea a reality. More than six years ago, Hardinge Inc. began an internal lean journey . . . . . . seeking ways to simplify, speed up and shorten the manufacturing and assembly process used to produce its family of turning, grinding, milling machines and workholding products sold to manufacturers around the world. As improvements began to materialize, it became clear that in order to maximize those gains, the supply chain would need to be improved as well. ÔÇ£We realized we had to optimize the supply end so the assembly team could realize the gains that the lean efforts have given it over the years,ÔÇØ said David Bassett, the global sourcing manager for the Elmira, New York machine tool division of Hardinge.At the same time, Hardinge came to believe that having a finely tuned and efficient global supply chain could become a powerful competitive weapon, particularly when combined with the improvements in both labor efficiency and the continuous improvements achieved through its lean manufacturing operation. And the company believes it is especially well positioned to take advantage of the globalization trend. In addition to its domestic plant, HardingeÔÇöwhich traces its history back to 1890 when it first began producing turning machinesÔÇöoperates manufacturing facilities in the UK, Switzerland, Taiwan and China to produce its family of turning, milling, grinding machines and workholding product. Hardinge customers include machine shops and manufacturers who use the tools to shape metal, composites and plastics into automotive parts, medical equipment and agricultural products out of metals, composites and plastics. While each plant specializes in making different productsÔÇöthe China plant services the China market only, for instance and most of the companyÔÇÖs high-end machines are built in North AmericaÔÇöthe overlap in supply chains creates abundant opportunities, says Bassett. Because each plant has a supply chain point person, Bassett can quickly get price quotes from around the world. At the same time, when the company can bundle together purchasing for several plants, it can often get more favorable pricing. ÔÇ£ThereÔÇÖs a lot of savings to be made by optimizing the supply chain,ÔÇØ he adds. ÔÇ£You can chase the almighty labor dollar all you want but the real bang for your buck comes when you can leverage your supply chain against the competition.ÔÇØA host of factors go into determining where to source supplies from and many of those considerations are a moving target, creating a dynamic supply chain situation. For instance, recent spikes in fuel costs mean how far an item must be transported can have a major impact on the true final cost of that component. Likewise, the recent weakness of the US dollar has made it more costly to source supplies from domestic vendors; even tax and duty opportunities are taken into account. ÔÇ£For years, Brazil was one of most economical places to source castings, but because of the declining value of the dollar combined with transportation costs, itÔÇÖs not as attractive today,ÔÇØ Bassett says. ÔÇ£Now weÔÇÖve got a foundry that supplies castings to us from Wisconsin. When you consider the total landed cost, theyÔÇÖre the cheapest in the world and theyÔÇÖre made in the United States. When you consider actual material costs, shipping costs, inventory carrying costs based on total lead-time, and the many soft costs associated with managing a supplier and factor all that in, the best vendor is right here in the US, only a 16-hour drive away.ÔÇØ Hardinge considers all those factors and others as part of a constant review of its vendor base. ÔÇ£WeÔÇÖre not necessarily setting out to pit suppliers against one another, but they are constantly being reviewed and evaluated,ÔÇØ Bassett declares. Another factor is where in the value chain a supplier rests. For instance, Hardinge has long sourced the CNC components for its more complex machines from GE Fanuc. ÔÇ£If you chose to, you could go down the path of spending tens of millions to build your own facility or you could go with the best in the industry, and theyÔÇÖre considered the best. ThatÔÇÖs what the market drives us toward,ÔÇØ says Bassett. Fanuc also works with Hardinge on inventory control. Where the company used to buy all the components it might need based on forecasts, Fanuc now stores components at HardingeÔÇÖs facility but releases the inventory as it is needed. ÔÇ£They ship based on our forecasts but we donÔÇÖt own it until we take it out of their cage.ÔÇØ Other key suppliers have also worked with Hardinge to deliver more components, as they are needed, enabling the company to reduce inventory and the footprint needed to assemble its products. For instance, JapanÔÇÖs NSK, which supplies what Bassett calls ÔÇ£extremely high qualityÔÇØ spindle bearings used in the machine tools, has consistently worked on just-in-time deliveries and has developed a kanban system for some of the most heavily used parts, keeping them in stock domestically. NSK is also an example of a supplier that is available to work with the company on new product developments and customer-driven improvements. ÔÇ£TheyÔÇÖve got a strong engineering team that is very responsive,ÔÇØ he adds. A key part of the more efficient supply chain is the Hardinge Asian Sourcing Center, which serves as a focal point for sourcing parts from Asia, whether for plants based there or those outside the region. ÔÇ£If I have a requirement for a part in North America, I can call one person and have them search Taiwan and China for prices and lead time while I also have my team doing the same thing in North America. I may end up with three or four quotes from around the world that donÔÇÖt take me any longer to get or research.ÔÇØ The approach also lowers hurdles such as cultural and language barriers by building a dedicated, on-the-ground resource. Bassett believes that over time, the sourcing operations will become a high-level corporate function, a reflection of the importance the company places on the supply chain. Technology helps make the process work, with the company using the Internet-based integrated communications tool Skype to communicate from the US to Europe and Asia. ÔÇ£I can hold up a print to point out a part IÔÇÖm talking about and the folks in Asia can go back to the vendor and know exactly what theyÔÇÖre talking about; it cuts right through any language barriers,ÔÇØ Bassett says. While the savings and other improvements have been coming already, Hardinge appreciates that its supply chain efforts are a long-term proposition. ÔÇ£ThereÔÇÖs definitely a lot of opportunities,ÔÇØ Bassett says. ÔÇ£We feel weÔÇÖre going down the right track. WeÔÇÖve been fighting the battle of lean the last seven years and making improvements and we know thereÔÇÖs no end in sight.ÔÇØ Normal 0 false false false EN-US X-NONE X-NONE MicrosoftInternetExplorer4 /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin;} *┬á┬á┬á┬á┬á┬á┬á┬á┬á *┬á┬á┬á┬á┬á┬á┬á┬á┬á *   ┬áFirst published January 2008