When Jeff Taylor wants to collaborate with his partner in the machine building industry – Lindquist Machine Corp. – there’s not much physical space to cover. Taylor’s company, Associated Machine Design, is located right on the second floor of Lindquist’s Green Bay location.
In another sense, Taylor, president and CEO of AMD, must cover a lot of ground with his counterpart, Lindquist President Mark Kaiser. The executives regularly discuss their respective sales pipelines and impacts on capacity, or who is best suited to take the lead on a project. Under the alliance, AMD does the design work and project management for the machines – products such large winders and roll handling equipment used in paper mills and converting plants – while Lindquist makes the machines.
“The key is communication,” says Taylor. “The entire agreement we have with Lindquist is on one side of one piece of paper. It’s not a complicated agreement. It’s a philosophy. We want to present a unified organization.”
The collaboration between the two companies shows how partner collaboration in manufacturing is evolving. While supplier relationships have tightened to include methods like just-in-time materials replenishment, manufacturing alliances can go well beyond whether you sent your customer the right parts on time. Companies are collaborating on the front end with customers or external designers to jointly develop products, or – in the case of AMD and Lindquist – melding engineering and manufacturing expertise to win business. the ties that bind can be as much about aligning resources or achieving a deep understanding of customer needs as they are about supply chain communications.
AMD has no plant assets like industrial equipment or factory workers. Its core competency, says Taylor, is the 200-plus years of experience resident within the minds of designers. Lindquist excels at the assembly, wiring and other manufacturing involved in making large, complex industrial equipment.
“We each do what we are good at,” says Taylor. The arrangement allows for independence and flexibility, says Taylor. Lindquist has extensive business outside of AMD’s projects, and while Lindquist is AMD’s first choice for manufacturing services, there are times when outside contractors need to fill in.
“We are two separate businesses, and that’s nice,” says taylor. “they don’t have to keep 15 engineers on staff, and worry about how to keep those guys busy, while conversely, I don’t have to worry about how to keep all those machine tools running.”
As the economy expands, innovative alliances could be a safer way to grow sales, observes Michael Burkett, a vice president and expert on product innovation with analyst firm Gartner. “Consumer demand remains fickle and businesses continue to hoard cash in fear of buying up excess plant capacity, human resources, and inventory,” he says. “Partnering allows companies to spread that risk out – not just in terms of capacity – but also intellectual resources. It allows them to be flexible in ramping up and then down depending on demand.”
The alliance between AMD and Lindquist takes near daily work. For one thing, the two companies share information on upcoming projects to keep a gauge on how much plant capacity is needed. “The key to making this work is what we call hyper communication,” says Kaiser. “We make sure we understand what the expectations are for both companies, and then deliver to those expectations. Or – if something comes up – we communicate in a timely manner so there are no surprises.”
There are no rigid rules on which company takes the lead on projects. If a customer needs machinery engineered from the ground up, it’s usually AMD that takes the lead, says Taylor, but if the value added is in manufacturing components or upgrading a machine, AMD can function as an engineering resource under Lindquist. The two companies also sometimes come across projects that aren’t quite right for one company, but are well suited to the other, so they share those leads. “It is a give-and-take relationship,” says Taylor. “It’s been very good for us, and I believe it’s also been good for Lindquist. I’m happy to be part of it, because it allows us to do more with less capital investment.”
Demand and capacity management are two key areas of collaboration. “Typically, when we get a project, there is a lot of engineering on the front end, so we have the ability to give them pretty good notice,” says Taylor. “Likewise, they will tell us, we just got a big influx of work, so for the next three or four months we are not going to be able to do any fast turnaround work.”
This type of alliance – with partners sharing a location and management concerns, as well as hashing out technical issues – might not be right for all companies. “I think it works well for companies that understand the benefits of collaboration and are willing to have an open mind about it,” says Kaiser.
“It’s not easy, because sometimes, when things don’t go right, each company gets to see the other’s warts, and that can be uncomfortable. But if you are committed to the relationship, and committed to collaborating, you get past that.”
For Taylor, making the alliance work comes back to constant, honest communication. “Sometimes, the communication is joyful – ‘hey, I got this big order’ – and sometimes, it is tougher, like ‘we lost this bid, or this was over-priced.’ It really all comes down to communication.”
Customer Crafting Gartner’s Burkett says there has been a steady evolution of supply chain partnering. “Years ago, procurement organizations primarily chose suppliers based on price and reliability, but they’ve evolved to become more advanced in their supplier relationship management,” he says. “A goal is to develop suppliers as trusted partners. This means they will be innovative not only in terms of products, but also with process improvements.”
Some regional manufacturers follow this sort of customer-focused approach that elevates the importance of the way materials will perform as part of another company’s products. In the food sector, Curwood, part of Neenah-based Bemis Company, gained recognition from Ocean spray in 2006 for developing packaging for its Craisins products.
Materials that can’t be easily seen on a store shelf also might be the result of close collaboration with customers. take the malted barley products from Briess Malt & Ingredient Company, which recently won a Wisconsin Manufacturer of the Year grand Award.
The Chilton-based company makes malt for the micro-breweries, as well as products for the food industry. Gordon Lane, president and chief operating officer, says that focus goes back to the early 1970s, when the company’s then leader – the late Roger Briess – bet that the domestic craft beer industry would take off. One of the first steps the company took to meet the nascent sector’s need was to offer malts in 50-pound bags. In 1980, the company added a mill to be able to offer pre-ground malts to micro-brewers.
Over the years, that level of partnering with customers has continued at Briess. several of the key technical people at the company have a brewing background, and the company runs a pilot brew-house, says Lane. “It’s a different sort of business than making base malts in huge batches for the major breweries,” he says. “Our model is very much about customer intimacy.”
Besides regularly talking to micro brewers about what they need from malts, the company also has advised breweries on their milling and mashing operations. And whereas the big “maltsters” might only sell four malts, Briess sells 50 kinds, most of which are targeted to meet the need of a particular style of beer, but some of which had their genesis in customer collaboration. One example of the latter is Briess’s Victory malt, which Lane says imparts the bread-like, “biscuity” flavor that a particular brewer was after.
For Central Waters Brewing Company, a micro-brewery located in Amherst, Briess worked with a local barley grower to roast the malt for a beer called shine On. Paul Graham, president of the brewery, says that a big malt company probably wouldn’t be interested in doing a small batch with a local grain. But using a local grain was important for this beer because it commemorated the installation of the brewery’s solar hot water system so the brewers wanted local ingredients to carry through the sustainability theme.
“They are more like friends than anything else,” says Graham. “Anytime we have questions about a malt, we can call them. They understand our needs. they have their own pilot system, so they know exactly what they are making, and how it will affect the beer.”
While many effective partnerships are actually close knit customer or supplier relationships, alliances of more formal nature also are being used by some manufacturers in the region to address an unmet need.
Under the alliance, Miller, which makes welding equipment, purchased the assets of the Panasonic Factory Solutions Company of America (PFSA) welding automation business, and set up a new unit – Miller Welding Automation – to handle the delivery and support of the automated welding products through Miller’s distributor channel.
According to Kevin Summers, product and training manager with the new unit, the alliance made sense because it pairs Panasonic’s unique welding robotics with Miller’s distribution reach in North America.
The alliance especially targets first-time buyers of automated welding cells such as smaller manufacturers or fabrication shops, says summers. these types of customers and the distributors that serve them at looking for “complete automation package” rather than separate welding and robotics technology that needs to be integrated. Another important aspect of the alliance, says Summers, was that Miller acquired the North American operations of Panasonic’s welding division, including personnel, so that the new unit holds complete responsibility for the solutions. The core robotics technology, however, continues to be developed by Panasonic in Japan. A joint venture was considered at one point, says Summers, but acquiring the North American assets better met the need to maintain one face to the market. As Summers puts it: “One of the main things our distribution network and our customer base told us was, ‘We need a single source of responsibility. If we have problems, we want to be able to call one number.
”The logic behind the alliance goes back to focusing on what you do best, says Summers, rather than trying to do things like own all technology internally, or organize a market-leading distributor channel. “Neither one of us would have been able to achieve the same thing ourselves,” he says. “Sometimes, it does take the teamwork of two organizations.”