A variety of quality management methods and statistical analysis are used to better equip employees and identify sources of waste:

• Each process, and the associated ISO documentation, must be reviewed continually to look for process improvement, waste, and cost reduction opportunities.
• Key Process Indicators are reviewed to track and monitor the impact of any process change to ensure targets for cost reduction, increased profitability, and satisfied customers’ goals are met.

Lean systems training requires company culture change. Having a management team committed to building a culture on lean process principles and continuous process improvement is key to success.

At the core of our evolving culture is our company mantra, ‘We Delight Our Customers,’ Continuous process improvement will be an ongoing company-wide focus in order to meet evolving customer demands. We continuously look for opportunities to involve Lean Systems training to ensure we accomplish our goals of:

• Eliminating wasted steps
• Reducing inventory levels
• Finding a better way to accomplish the same task
• Improving our customer service

Our commitment to delighting our customers lead us to the development of a Tier One Parts Purchasing Program which provides the quality and cost savings our customers require.

The Fapco Tier One Parts Purchasing Program is evolving into a cutting edge program. OEM customers are continually revealing more and more specialized requirements, such as:

• OEMs are discovering they no longer wish to keep their purchasing department function in-house as it is becoming too cost prohibitive.
• OEMs are looking to Fapco as a Tier One supplier to take on, not only purchasing of parts, but also the inspection, inventory management, warehousing and order fulfillment operations.

Nothing shouts, “get better” more than having great customers with high expectations and this is what drives the Lean System way of thinking at Fapco. Our management team is dedicated to and employees are embracing the Lean Systems training and concepts. The associated cost reductions have already begun to provide a win-win situation for our employees and customers.

The packaging experts at Fapco can help you with nearly any packaging needs, providing top-quality folding carton packaging, cold seal, custom small hardware parts, along with many other types of packaging. Get Started with Fapco Inc. today!

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Fapco is not only a Tier One parts supplier — they can also help all types and sizes of businesses with their entire parts fulfillment program.

Taking the complexity and cost out of spare parts management is at the core of Fapco’s successful Tier One Parts Purchasing Program. “When we purchase parts, receive them in-house and convert parts and products, we essentially become part of the manufacturing process supply chain,” states JoAnn Pressey, Materials Manager for Fapco. “We don’t actually make the component parts. We just purchase the inventory on behalf of the OEM and provide it when they need it.”

Whether it’s assembly, packaging, small part kitting, warehousing or shipping to the distribution chain — passing parts management cost savings onto OEMs has become a significant part of Fapco’s business growth.

Pressey explains that this growing business segment makes us a value added contract packaging firm, and a Tier One parts supplier to the OEM.

“When it comes to our major automakers and our niche OEMs, they now consider us a Tier One parts supplier because they simply acquire the parts from us. We are purchasing the parts from the tier two suppliers. We believe this customer/service business relationship to be the wave of the future in value added contract packaging, ” says Pressey.

Top Five Best Practice Scenarios for Fapco’s Parts Purchasing Program

1. Limited Warehouse Space

“It is incredibly valuable to partner with an integrated parts flow management supplier who has strategic warehousing services to meet the demands of today’s tight deadlines,” said President and Founder of Fapco, Inc., Larry Gardiner. “At Fapco, we offer completely customizable, one-stop warehousing services to OEM and Tier One suppliers in a wide array of markets. These services are far more affordable and require less labor for an OEM than staffing, equipping and maintaining their own stand-alone internal facility,” said Gardiner.

Parts purchasing is a perfect scenario for many of our clients that lack warehousing space. We can secure the parts and keep them out of the weather in one of its centrally located warehouse facilities. The OEM can then “lean-up” its manufacturing, shipping and receiving space to maximize operations. Parts are then shipped to the supply chain JIT from our facility.

2. Too Many Parts Suppliers in the Mix

Our Tier One Parts Purchasing Program can relieve headaches in receiving, inspection, shipping and accounting by consolidating parts from various sources to one location. Each OEM is assigned a dedicated Fapco Manager to their account. One major industrial compressor OEM has consolidated parts from 245 suppliers into one convenient distribution center at Fapco. This means one contact at Fapco for all parts suppliers, questions and challenges.

“We have the capability of taking customer’s orders through e-mail, fax or integrated online services,” said Fapco’s Materials Manager Troy Taylor. “Every part in our warehouse is stored within our systems in such a way that we can pull parts and fulfill them on an as needed basis. Fapco can pull and ship parts with any shipping supplier a customer prefers, whether it’s FedEx, UPS or airfreight, to meet the tight deadlines of distribution centers or dealerships anywhere in the world. Shipping directly from Fapco eliminates one leg of the freight process and saves our clients money.”

3. Focus On More Key Competencies in Manufacturing

Our Program can also eliminate the need for packaging equipment and all its associated costs. From equipment capital expenditures, to maintenance, to labor and facility overhead, the cost of our customer in-house packaging when partnering with Fapco can result in significant savings. In addition to cost reduction, many OEMs have improved their lean manufacturing processes and improved product quality by increasing their focus on what they do best.

“There’s not a state we don’t ship to,” continued Taylor. “Under the OEM’s instruction, we also load and ship ground, air or various carriers to meet presubscribed cost parameters. Overnight (OVN) parts are also shipped by the customer’s designated carrier overnight for delivery the next day. All of this expertise in shipping and transportation leads to cost savings for our clients. The more legs of the distribution network that we can eliminate for our customers, the less money they will spend unnecessarily.”

4. Better Expediting Emergency Orders

Completely versatile to its customer’s needs, Fapco also does emergency or backorder items. Hot orders that come into the facility are packaged in an expedited fashion and shipped — many times within 24 hours. For one large automaker, Fapco ships Emergency Back Orders (EBOs) for repairs directly to dealerships within one day.

Whatever the emergency, be it a “machine down” in the field or a missed JIT shipment that threatens to shut down an assembly line, having a full range of repair and production parts ready to ship at Fapco provides a simple solution. By direct shipment to a dealership and bypassing the distribution center, or using overnight air freight to expedite a pallet for the assembly line, partnering with Fapco provides OEMs a competitive edge.

Fapco also ships less than truckload (LTL) shipments from its warehouse facilities to regional distribution facilities located nationwide. “We’ve designed our warehousing facilities so that there is no size limit to the part kitting we can handle,” said Taylor.

5. Value Added Packaging Engineering

With the Fapco Parts Purchasing Program in place OEMs benefit from experienced professionals ready to engineer and provide packaging solutions at the lowest price based on high volume purchasing.

Wrap It Up

Customer Service Manager, Jim Page, is a 19-year veteran at Fapco with 30 plus years in the packaging business. Page heads up the Fapco Tier One Parts Customer Care Program for Fapco’s largest OEMs.

“From the major automakers we serve, to international construction equipment and industrial compressor OEMs, our customers are very pleased with our Tier One parts program,” says Page. “They like the streamlined, day-to-day parts consolidation and fulfillment we provide, the warehousing, packaging design, as well as the economies of scale resulting from our volume purchasing. But most of all I think the manufacturer enjoys the efficiencies of the program — such as dealing with just Fapco instead of multiple different parts suppliers. Customers also like having a partner watching their back with inventory ready to ship when working with normal schedules and emergency situations,” he concludes.

Let’s get started today with one of our solutions such as our spare parts management, auto parts fulfillment, or cold seal packaging. We have the capabilities to meet all of your needs, regardless of the application. We’ll help you design the perfect packaging solution for your products.

The post Streamline Your Parts Fulfillment Program To Save Money And Gain A Competitive Edge appeared first on Fapco.

“From companies suffering from business contractions due to the tough economy, to new acquisitions that are being reorganized and streamlined by their new holding companies, we have identified five company profiles that are perfect candidates for our Tier One Parts Consolidation programs.”

1) Companies Hurt by the Tough Economy or with Labor Issues

During the recent tough economy many OEM companies had to lay off workers. From staffing shortages in the packaging, shipping and warehousing departments, to less staff in accounting and purchasing, these companies are prime candidates for Fapco’s Tier One Parts programs. These companies benefit from keeping staffing costs low through partnering with Fapco.

2) Mid-sized Companies Short of Manufacturing Space

Many mid-sized OEM manufacturing firms captured additional work from downsized plants in their systems, influx of additional models to build, or new acquisitions and consolidations. Manufacturing space is at a premium in these facilities. Sacrificing and relocating packaging, warehousing, product staging and freight consolidation space increases the manufacturing footprint. Fapco’s Tier One Parts Consolidation program helps its OEM customers concentrate on what they do best—building great products.

3) Manufacturing Firms Leasing Facilities

Fapco can help cut costs with its Tier One Parts Consolidation program for OEM manufacturers that have outgrown their leased facilities far before their lease is up by freeing up space in the existing facility for more manufacturing. For those looking to lease more space for warehousing, small parts quality inspection and packaging and distribution, Fapco can transfer these leasing and equipment costs to its facilities and can reduce the OEM’s overhead.

4) Labor Problems or Lack of a Qualified Workforce

The lack of qualified people, high turnover rates, and high retraining costs to staff a packaging, warehousing or distribution facility has driven many OEM manufacturers to consider consolidating and outsourcing these services to Fapco, contributing to a healthier bottom line.

5) Manufacturing Regulations or Specification Changes

Many companies that build parts in their own facilities must change processes to meet new, tighter regulations or quality specification changes. This can include product standards, packaging standards and inspection specifications. Current suppliers can no longer meet these quality standards so they come to Fapco to take specific processes off site by utilizing Fapco’s Tier One Parts Consolidation processes and use it for Tier One automotive parts for an example.

Gardiner summed up the similarity he has found after Fapco’s Tier One Parts Consolidation systems are employed.

“We’ve found their customers are usually happier,” concludes Gardiner. “They’re getting their parts on time. How do you quantify that? All we know is that customers are telling us pretty frequently, ‘Our customers are a lot happier than they used to be.’ That’s big on their end. Customer satisfaction – that usually pays offs for our OEM customers.”

The packaging experts at Fapco can help you with nearly any packaging needs, providing top-quality cold seal technology, clamshell packaging, along with many other types of part kitting packaging. Get Started with Fapco Inc. today!

The post Tier One Spare Parts Consolidation: 5 OEM Profiles that Benefit Most appeared first on Fapco.

1. Reclaim Space

Having Fapco house all of your parts, such as small parts kitting, will open up space in your warehouse or on the factory floor as you transition your parts inventory over. This freed up space can then be used for increased production capacities or other purposes to help generate more income for your company. This additional space could also be sold or leased to reduce overhead costs or generate additional revenue.

2. Stop Worrying About Inventory

You’ll no longer need to have employees spend time on spare parts inventory, packaging, warehousing, product staging, or freight consolidation. With Fapco providing vendor inventory management, inventory overhead cost and volume issues will be a thing of the past. Whether your company has 30 SKU’s or 3,000 SKU’s, Fapco can provide a customized solution to manage your inventory needs and take away your inventory control management headaches.

3. Save on Labor Costs

Fapco handling your inventory, complex part kitting, and parts supply management and fulfillment will reduce staffing in your packaging, shipping, or warehousing departments. Other areas where staff costs could be lowered include purchasing, receiving and accounting. This staff can be reallocated to other departments within your organization to help improve your bottom line or make your company more productive and profitable.

4. Lower Transportation Costs

Transporting parts to and from a single location like Fapco is much more cost efficient than transporting freight to and from multiple locations. Managing rising freight cost is often overlooked but can have a significant impact on your profitability. Having a larger volume of inventory shipped to and from Fapco provides an opportunity for lower per unit freight costs on parts. To put it simply, we help you save money.

5. Improve Quality Control

By using a Tier One Parts Supplier like Fapco, OEMs can improve on parts quality. Fapco’s in-house parts inspection team can improve quality assurance for clients with even the toughest of expectations. Our critical OEM parts replacement and inspection process reduces the cost of receiving, inspection and inventory of bad parts for the OEM. And because we are acting as the Tier One Supplier in the process, Fapco has ownership of the parts, giving us a high stake in making sure the parts are right.

Why Fapco?
“Our Tier One Parts Consolidation program takes a lot of the burden and overhead off the customer. We really free up the customer to do what they do best. We do all of the work of purchasing, receiving, processing, and product distribution,” said Fapco’s General Manager Scott Sloniker.

The packaging experts at Fapco can help you with nearly any packaging needs, providing top-quality contract packaging, trapped blister packaging, along with many other types of packaging. Get Started with Fapco Inc. today!

The post Immediate Benefits of Spare Parts Tier One Supplier Consolidation appeared first on Fapco.

Operations Manager for Fapco, Scott Sloniker, explained that Fapco has made small parts kitting and packaging its bread and butter since the company was founded.

“This is the fast turn business we started with. With automated parts sorting and kitting assembly machines in-house, such as our Kit-Veyors, small parts kitting and packaging that can overwhelm an in-house packaging department are standard procedure here at Fapco.”

THREE SECTIONS TO SMALL PARTS KITTING AND PACKAGING

Sloniker broke down the small parts kitting and packaging business into three segments. “The first is low volume kits – less than 50,000 units per year. Many times these jobs are hand packed in-house at the OEM parts supplier. At the other end of the spectrum are the high volume kits of over one million pieces a year, where it makes sense to invest in the automated equipment to package as the product comes off the production assembly line. The mid-tier segment with runs of 50,000 to one million kits per year is a perfect match for us.”

These markets in the middle, niche markets, are where Fapco shines. These markets usually include replacement part kits, short runs of specialty products produced in the states, and flow-through consolidation of parts from multiple suppliers that are too cumbersome for the manufacturing company to handle.

“This business is what our automated Kit-Veyor machines drive. We take bolts, washers, and nuts, items that will not nest together in the equipment, and package them into ready- to-assemble kits. Those are the types of hardware kits you see in anything from ready-to-assemble furniture to carburetor rebuild kits to retail parts packages. We can package the kit into bags, blister packs, a cold seal, clamshells, skin packs, chipboard or corrugated packaging – whatever the customer needs.”

“One of our greatest strengths in kit packaging is our partnership with fastener manufacturers. The combination of Fapco’s experience and equipment designed to efficiently package at competitive pricing for fastener manufacturers provides a lower total cost for them than kitting in-house,” stated Business Analyst, Mark Tumbleson of Fapco.

PARTNER WITH FAPCO FOR YOUR PARTS PURCHASING, CONSOLIDATING, INTEGRATED PACKAGING AND FULFILLMENT NEEDS

When it comes to volumes of kits under one million per year, Fapco can process these volume packaging system jobs without an OEM dealing directly with all the outside suppliers. Packaging of wide range small parts like overhaul or replacement kits where multiple outside suppliers of gaskets, seals and fasteners all ship to the OEM for sorting, consolidation, kitting, packaging and fulfillment, can be completely taken over by Fapco’s packaging system.

“We’re finding many customers don’t want to manage five to ten items, all coming in from different sources, with a small parts packaging operation in-house. Instead, they would prefer us to purchase, consolidate, kit, package, warehouse and fulfill orders for each kit. Instead of dealing with millions of parts they can just purchase the complete kitting system needed from Fapco,” said Sloniker.

More Than Small Parts Packaging and Kitting

Fapco has expanded its capabilities towards also purchasing and owning the materials, managing parts and inventory management and selling finished packaged goods to the distribution chain for OEMs. The benefit of partnering with Fapco is the customer no longer has to manage hundreds of thousands of individual component part numbers, but rather just a few thousand pre-packaged kits fulfilled when needed in the distribution chain. Fapco becomes the focal point for various OEM small parts packaging and distribution companies, thus reducing overhead, lowering labor, accounting and stocking cost.

MANUFACTURING COMPANIES BENEFIT FROM FAPCO’S PARTNERSHIPS WITH FASTENER COMPANIES

Fasteners are usually the key element inside any small parts package. Fapco’s close relationships with its fastener company partners increase the efficiency of small parts packaging services.

“Instead of us handing all the fastener inventory in-house, the fastener company manages the inventory management, then we order and pack it for our customer as needed. On the small parts kitting side, we manage the inventory based on the end customer needs,” said Sloniker. He explained this could include the OEM designating where to buy the fasteners and how many to have on hand. He said in this economy many manufacturers are going to smaller and smaller lot sizes. “They leverage having just enough inventory available with fastener companies and Fapco.”

THE GROWING TREND FOR SMALL PARTS KITTING, PACKAGING AND FULFILLMENT

Purchase and supplier agreements with Fapco for a small parts packaging kitting system are true partnerships with risk assumed by both parties. These include agreements for minimum buy quantities, order quantities, the numbers of kits per year and the quantities of materials to produce the kits. Labor and material costs are also a factor. Questions like, “How many times a year is Fapco going to that bin to pick and package? Does one component go into 15 other components and is there enough to handle both components? If one kit gets hotter than the others, how will the allocation change?” These are all questions that Fapco and its partner customers are used to working out to make each kitting assembly program efficient and profitable.

“Today we are seeing a trend in companies that would rather pay an outside supplier, even if its more expensive in the short run, so they don’t have the administrative overhead built into their costs. Labor, inventory management, overhead and transportation costs are all included when they do the numbers. They want to just call Fapco and say ‘we need 250 kits and we all do what we do best,” he said.

Sloniker concluded that this packaging system trend continues to build. “For the past five years Fapco has done business with many companies. Some that are terrified of packaging components correctly and consistently in-house, and to those companies that are not afraid of packaging in-house but can’t handle the financial burden of the inventory, labor and equipment that it takes to package products correctly on what they consider to be a large scale. We have the packaging machinery and solutions for both.”

GET TOP-TIER SMALL PARTS PACKAGING AND KITTING SERVICE WITH FAPCO

When you work with Fapco, you’ll be able to see a clear improvement in your business’s small parts kitting and packaging operations. Our packaging and kitting for small parts can help maintain efficiency while providing you with top-quality products. You don’t need to remain concerned about inadequate service and products when you work with Fapco.

In addition to small parts kitting and packaging, we offer many other contract packaging services for a wide range of industries and products. We can provide packaging solutions using kits, bags, blisters, clamshells, custom folding cartons, and other types of reliable packaging systems.

Get Started with Small Parts Packaging and Kitting Today

To start with the design and development of a custom small parts kitting and packaging, or one of our other wide range packaging solutions, such as bag packaging, contact Fapco today.

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When OEMs implement vendor consolidation practices with a full service contract packager such as Fapco they utilize one of the most progressive vendor management models available in logistics today. OEMs consolidate parts purchasing from multiple suppliers into one supplier and streamline their supply chain to better control quality and improve parts flow during peak demand periods.

Four Key Benefits of Consolidating Parts Purchasing to One Full Service Contract Packaging Firm

1. Consolidation with a Tier One contract packager lowers transportation costs.

Transporting parts to and from one location is more cost efficient than transporting freight from multiple locations. Freight is a key aspect of inventory. More volumes shipped to and from Fapco translate to lower per unit freight cost on parts.

2. OEMs improve quality and lower costs through parts inspection with a tier-one parts suppler/contract packager.

Fapco’s in-house parts inspection team (see article page five) assures that OEMs with tough expectations benefit by improving quality assurance. Fapco’s quality assurance managers follow the same procedures and guidelines as your in-house quality assurance department. Receiving all vendor parts at one location and inspecting and rejecting parts with Fapco’s team, assures that parts sent to the OEM for distribution, aftermarket or even production are virtually flawless. Fapco’s parts inspection process reduces cost of receiving, inspection and inventory of bad parts for the OEM. It’s important to remember this is not a parts consignment and fulfillment program. As the Tier One supplier, Fapco owns the parts and has a high stake in making sure the parts are right.

3. Consolidating vendors to Fapco’s Tier One program results in reduced soft costs of management, administrative and accounting functions.

Take the burden of dealing with multiple parts suppliers off the books. Fewer bill payments and fewer vendors to pay reduce cost associated with cutting checks. At an estimated cost of $100 just to open a P.O. number in-house, OEMs save a bundle with Fapco purchasing the parts. Fewer vendors also translate to fewer mistakes in accounts payable to improve the OEM’s credit rating. There are also soft cost savings in terms of procurement–not having to handle and track so many different vendor orders pays off.

4. Control capital management and the cost of parts ownership until parts ship using Fapco as your Tier One parts supplier.

With Fapco as a Tier One parts supplier, OEMs control the cost of ownership until the part is actually distributed. OEMs eliminate parts staging and warehousing. OEMs save additional revenue related to the incidence of returns and delays at the manufacturing facility or distribution centers. The result is lower overall inventory and cost of ownership. With Fapco having Tier One contract packaging services in place, manufacturers benefit from virtual JIT parts ownership. Fapco owns the inventory from the vendor until fulfillment time.

Wrap it Up

• This consolidation model allows for immediate soft and hard cost reductions across the supply spectrum for the OEM.
• Over time, this model may even move vendors to improve pricing because of increased volumes, more predictable production schedules and regular shipping to one Tier-One supplier–Fapco.

Whether it’s cold seal,  contract packaging or blister packaging, Fapco Inc. will work to help your business grow. Get Started with Fapco Inc. today!

The post From Contract Packager to Tier One Supplier appeared first on Fapco.

Investing in Clients

“There’s a sizable investment we make with our Tier One clients,” said Fapco President and Founder Larry Gardiner. “With this particular client we’re currently running at about $550,000 in inventory that we’re turning about 10 times in a year. Our inventory turns play heavily into what our costs are. We also have a carrying cost to cover overhead and to maintain the inventory.”

“Typically when a new business starts with us, they have never thought before about all of the idiosyncrasies associated with parts inventory that they have to deal with. Initially with this equipment manufacturing client, we had over ¾ of a million dollars in inventory. And they had another two or three hundred thousand dollars. We had to work together to determine the appropriate levels and inventory turns. It’s a real partnership.”

Providing Leadership

“Our role in the partnership is to be the project leader. This requires a lot of meetings where everybody involved sits down around a table and we determine what is going well and what isn’t going so well, and what we can do to fix it.”

“During the process with this particular equipment manufacturing client, we worked out the bugs for several months, and I am sure the general manager of this partner company today would say that now we’ve got things working pretty smoothly. Once the process startup bugs start to smooth out—you’ve got about six months of negotiations and working through the detailed logistics—then you start running the real and whole program. This is when they started to see real savings in costs.”

Saving Money

“This project wouldn’t have made sense if there wasn’t a cost savings to the client. They simply wouldn’t have done it. There are several factors to consider. For instance, you will always have price increases on components and the client will have to approve the price increases before we can buy. You’ll also have suppliers that won’t perform and we’ll have to go back to them and negotiate a lower price or suggest an alternate supplier.”

Dealing with Change

Other ways Fapco partners with clients is by recognizing when their business changes and making the proper adjustments. “When we first took on this client, they gave us lead times that were significantly different than what we had initially set up in our business model for them. They also laid off some staff, so they lost some of their knowledge base. Even so, we were able to work through these issues and resolve them.”

The Payoff

“Once everybody is finally on the same page, it all begins to work. Then as you fine tune the process, the costs go down and down and down. And what we’ve found is their end customers are usually happier, too, because they’re consistently getting their parts on time. How do you quantify that? The client we’re talking about in this case was getting new orders and word of mouth advertising to buy more of their new equipment. That’s true customer satisfaction.”

Whether its reverse logistics, kitting and packaging, or blister packaging, Fapco Inc. will work to help your business grow. Get Started with Fapco Inc. today!

The post Tier One Parts Consolidation and Partnership appeared first on Fapco.

“Believe me, this is a daunting process for the management teams of many OEMs to wrap their heads around. But our experienced staff and unique customer service systems—from initial startup, to continuous improvement once the system is up and running—make this custom full service solution something for every OEM to consider. This first segment of a three part series of Outside The Box, is dedicated to answering the questions OEMs have when starting this process with Fapco in three distinct steps.”

OEM QUESTION #1: “How do I begin the process of turning my existing integrated parts management supplier process over to a single-source, Tier One parts supplier? I have hundreds of suppliers and I don’t know where I should begin.”

ANSWER: The Fapco team has a Tier One consolidation “Starter Kit” to help guide the process for the OEM.

“We prefer to start the process with a statement of work which includes everything that an OEM customer is going to expect Fapco to do and what key elements they are going to bring to the table,” states Fapco President, Larry Gardiner. “We call this our ‘Starter Kit.’ It lays out the scope of work to be done and enables everyone at the table to understand the needs and demands of both the customer and Fapco.”

Fapco has an organized approach to establishing OEM Tier One consolidation needs:

• Does the OEM want Fapco to purchase all the components from the supplier?
• Do they want Fapco to perform inspections of the incoming components?
• How many suppliers will Fapco be consolidating for the OEM?
• What are the negotiated prices the OEM is currently paying?
• What is the negotiated supplier lead time?
• Who is going to pay the freight costs of the parts coming in?

“Everything that’s going to be expected of us here at Fapco needs to addressed in our ‘Starter Kit,’” answers Gardiner. “Next we would typically ask for a representative group of parts with the release quantities to prepare a quote. From the Starter Kit Q&A process the OEM customer begins to understand our structure, pricing and processes, and can start looking for savings opportunities involved in doing business with our Tier One program.”

Our quoting process at Fapco provides a breakdown of the price into component costs, labor, packaging materials, receiving, warehousing, shipping and any other associated components.

“This way our customer can tell what each component entails as well as what the associated burden costs will be” explains Gardiner.

“Our new customer can then take a look at the detailed cost analysis and see some aspects that fall in line with their own cost estimates,” states Gardiner. “They also see others where we may need to help them lower costs a bit. It’s a productive partnering negotiation. When we complete that process, we are ready to work out a contract.”

The President of Fapco went on to explain that the contract negotiations will include the following:

• The length of time the contract will be in effect
• How obsolescence will be handled
• How the customer sales forecast will work
• Any other business issues including quality and performance issues

“The bigger the supplier base you are consolidating, the more time it takes to negotiate the details,” states Gardiner. “The consolidation takes time. These negotiations include establishing credit, terms, and minimum buy quantities with all the suppliers to be consolidated. This can include three or four hundred suppliers; and all of the required communications exchange.”

Gardiner stressed the importance of acquiring honest and realistic forecasting from both the OEM customer and its suppliers.

“Sales forecasts will tell Fapco what to buy and when to ship it to the customer. We prefer a weekly sales forecast. And typically our customers also have emergency orders. If a part is needed today that has a four week lead time from the supplier, we must be honest and tell them we can’t do it, unless we’ve got a safety stock policy in place. This is why accurate forecasting information from the OEM customer is such a key component to helping them cut cost with our consolidation services,” states Gardiner.

OEM QUESTION #2: “How are we going to cost out this program? Will you provide a structure for my financial group to follow?”

ANSWER: The Fapco team has over 36 years experience in cost analysis and estimating Tier One consolidation for OEMs.

Fapco’s Controller Ken Douglas is as deeply involved in the cost analysis process as its president. A graduate with a degree in accounting, Douglas has been providing detailed cost accounting since 1977. He was with Clark Equipment before joining Fapco in 1980. His cost analysis and estimating team is involved in all aspects of the financial details for Fapco Tier One programs.

Douglas explained the customer requirements for on-time delivery, product quality, agreement on payment terms, definition of order process, inventory turns and shipping methods are the prerequisites to begin the cost analysis and estimating process.

He said he usually works with specialty buyers for large OEMs, and purchasing and engineering teams with smaller companies.

“Once the scope of the customer needs has been completed, then the detail work begins,” answers Douglas.

“The new customer needs to provide some representative part numbers of the various types of products to be processed. The customer also provides us volumes by product type to give a good representation of the overall business. The representative part numbers should have a bill of material, supplier source and location, supplier cost of the component parts, minimum buy quantities of each component part, supplier lead times by component part, supplier payment terms and packaging specifications. Our team is here to help guide the customer through this process using our expertise and templates from proven, successful programs that are already up and running.”

He explained that most of the time, the potential customer has already established the suppliers of the component parts. They have already negotiated the cost of the components. Their engineering and quality departments have approved the supplier. This makes the process more about documentation than discovery.

The Fapco team then begins their work to analyze the in-house processes and procedures, equipment, floor space, manpower and administration required to provide the service levels to meet the Fapco quality policy “We Delight Our Customers.”

“The packaging process is engineered and work flow determined from receipt to shipment,” explains Douglas. “Fapco’s costs are then applied to the various aspects of each element to produce and deliver the finished product.”

Our experience and expertise in this process makes it a far less burdensome task than most OEMs expect. Many of our OEMs are enlightened by the many efficiency gains and begin to understand as they streamline their former in-house systems.

Gardiner explains how these first two steps to Tier One consolidation are expertly controlled and orchestrated by the dedicated Fapco team.

“These experienced Fapco team members are assigned just to them. We understand the OEM is taking a risk by doing something they’ve never done before. They also begin to understand that we are very much partnering in that risk. We’re going to be investing a good amount of money in their inventory as their new, single Tier One supplier. Our goal is that new OEM customers are delighted with the service they are receiving and begin to join forces with the Fapco team to cut their costs even further, improve service to their customers and become more competitive in their industry,” Gardiner concludes.

OEM QUESTION #3: “What about the information exchange? Do you have the IT experience to handle all of our suppliers? Are you compatible with our current systems? Is your IT department robust enough to handle us?”

ANSWER: Fapco’s IT department has been working with the Big Three automakers for over 30 years and they can handle whatever the OEM needs.

Director of IT for Fapco, Dennis Cooper, has been with the company for over 18 years. Since the 1970s, Fapco has continuously served some of the most demanding clients in the world—the Big Three automakers of Detroit.

“This exchange of data has become second nature to us,” states Cooper. “We are required to do it to do business in the automotive industry. We’ve been doing EDI (Electronic Data Interchange) with major automakers since 2000—because we have to.”

Cooper explains that many companies who don’t do business with major automakers simply don’t have Fapco’s capabilities in EDI. “We can do anything the client needs us to do when it comes to IT. We can do what the large companies want or what the smaller companies need. That’s the big difference between Fapco and other strategic parts integration firms. Many are very rigid and can only do it one way—not here at Fapco. We specialize in customizing solutions for our Tier One parts customers.”

Connectivity and network security are also a non-issue when doing business with Fapco. With redundant high speed access to the Internet, Fapco has stable and ample bandwidth for doing daily business. For security in the automotive industry, Fapco was one of the first 200 companies in North America to have access to the ANX (Automotive Network Exchange) network. This specialized Extra-Net provides secure data exchange in the auto and medical industry—a private worldwide Internet highway providing access only to its members. This adds a higher level of security for Fapco and its automotive customers. Fapco accesses the mainframes of the major automakers and exchanges EDI within this secure network. Fapco runs nine servers—three Unix-based and six Windows-based.

After meeting directly with the new customer’s IT department, Fapco’s IT team sets up a test environment to start the data exchange process.

“Both IT departments sit down and determine how we are going to work together and who the key players are,” Cooper states. “The exchange of data between two companies is always on a unique, case-by-case basis. We can customize it to suit the needs of any customer.”

Many smaller customers provide their forecast and requirements with Excel spread sheets. Others have web portals to download info. Depending on the size of the company, there may even be a specialized EDI department.

The start-up process will be different depending on the customer and how we will exchange data. We always do testing of the data exchange to and from our customers to verify that the format and content will upload into our systems correctly. For Standard EDI data transfer, the format of the data is an industry standard format that feeds the data into Fapco’s and the customer’s system without human interaction. We test every data format that will be exchanged between Fapco’s and the customer’s systems. Testing of the data exchange can take from a week to a few months depending on how simple or complex the data is. Once we are done testing and sure that the data exchange formats are correct, we can then start exchanging real time data between our two companies.

Common data we exchange is planning and forecasts, scheduling with releases, ship schedules, inventory, advance ship notices and invoicing. There are many more types of data we can exchange depending on customer specific needs. We can also help you with nearly any packaging needs, providing top-quality carton packaging, automated packaging technology, cold seal packaging, along with many other types of part kitting packaging. Get Started with Fapco Inc. today!

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Our third and final installment in this series describes the long-term results of using Fapco for Tier One Parts Supplier Consolidation. Fapco President Larry Gardiner explained these results in a brief Q&A session:

Result #1: Keeping Pace with the Industries We Serve

“We don’t stop working with our clients once the system is in place and running smoothly,” said Gardiner. “We are very aware of the constantly evolving needs of our customers and continue to adapt our services to match the changing marketplace and business practices of our clients. We do this by adding new software, new systems, new procedures, new equipment and new knowledge through training and certification, like Materials Management Operations Guideline Logistics Evaluation (MMOG/LE), ISO9001:2008, Lean System thinking, and Servant Leadership principles.

Result #2: Investing in Our Clients Long-Term

“Teaming up with our integrated parts flow management team will prove our serious commitment to manage and warehouse bulk inventory and special parts that may not be shipped until years later,” said Gardiner. “The bulk of a client’s inventory will be managed to minimum quantities for each specific part number but a quantity of parts is also kept ready in anticipation of future sales. To put it simply, we continue to be there for our clients days, months, and even years after we enter into a contract with them. Part of our Fapco/client partnership involves a financial investment on our part to keep their parts on hand. This is made possible by building a relationship of trust with our clients that is unmatched in this industry.”

Result #3: A One-Stop Solution For All Of Our Clients’ Growing Needs

“A real long-term benefit of Fapco is that we are a ‘Full Service Provider’ or ‘One-Stop Shop’” explained Gardiner. “We can handle just about any need that our clients develop in relation to Tier One Parts Supplier Consolidation and Spare Parts Management as their business grows or changes. We offer completely customizable Vendor and Warehouse Inventory Management in a wide array of markets. Fapco can handle complete online integration, ordering and fulfillment processes, and replenishment systems—with fast turnarounds. Besides innovative packaging solutions, vendor and spare parts packaging, and part kitting, we also handle other niche services like end of life parts warehousing and fulfillment, or private labeling. Fapco simply does it all.”

The packaging experts at Fapco can help you with nearly any skin packaging needs, providing top-quality cold seal blister packaging, along with many other types of packaging. Get Started with Fapco Inc. today!

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From spark plugs to grill accessories, to ATV equipment add-ons or marine outboard motor oil, savvy OEM manufactures know that supporting the brand of their equipment with accessories and parts after the sale increases customer loyalty and increases profits. But many OEMs don’t understand that using a contract packager to warehouse, package and fulfill a wide variety of parts to loyal OEM end users can reduce internal packaging and fulfillment costs.

Scott Sloniker, Operations Manager for Fapco, a major, full-service contract packager based in the Midwest, uses the lowly spark plug as the perfect example for branding and customer loyalty. Fapco warehouses, packages and ships millions of spark plugs each year.

“We’re still doing a lot of spark plugs for OEM manufacturers.  Very few companies actually make spark plugs,” says Sloniker. “There’s probably only two or three spark plug manufacturers in North America. Yet everyone wants to have the brand of plug in his or her car, ATV or outboard that is specified in the service manual. But whether it’s a Smith Brothers plug or big box store maintenance plug, it’s the same manufacturer’s plug inside that box. The OEM was just smart enough to capitalize on this opportunity to brand themselves with loyal customers and take advantage of the profits that come along with this sale.”

Sloniker illuminated the wide range of OEM manufacturers that Fapco can help with full-service contract packaging.

“There’s an incredible array of manufacturer accessories we can help with warehousing, packaging and parts fulfillment services,” he says. “We’re talking about bikes, lawn tractors, boats, recreational vehicles, outdoor grills, hot tubs, motorcycles, chain saws, any type of OEM product maker that builds a loyal customer base can make the decision to take this accessory business from under their roof to under ours.”

Fapco cut its teeth on the parts branding business with decades of consolidation, packaging, kitting and warehousing distribution of parts and accessories for some of the largest names in the automotive business.  The high standards, information technology and quality systems are all in place to handle almost any OEM equipment operation.

“Our automotive work over the years has made us a better supplier of contract packaging,” says Sloniker. “We are now exploring new avenues of OEM packaging and branding for other industries. We can put your brand on it here. The customer is buying the component anyway, why not have us shrink wrap it, box it or card it into a marketing tool–a wrapper or a box that tells people you have branded parts. So it really is about branding with specific parts and service. And again, the parts and service business tends to be pretty profitable.  It’s an arena in which the more market share you can capture from knock-off parts manufacturers, means an avenue for new profits for many manufacturers.”

Let’s get started today with one of our packaging solutions such as our cold seal packaging or contract packaging.

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