Supply Chain

1
DISCOVER
THE DIFFERENCE
GLOBAL SOURCING Moving from Domestic to Asian
Suppliers
2
STAFF PRESENT
OPERATIONS, TECHNOLOGY LOGISTICS

• Chris Baker Dir. of Business Technology
• Rick Burn Transportation Manager
• Kris Anderson Director of Marketing
• Jon Tanis - Operations

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NATIONAL NAIL CORP.

• Established in 1963 in Grand Rapids, MI
• Building Distribution and Manufacturing Company
• Primary Focus . . . Residential Construction
• Primary Customers - Lumber Dealers/Roofing
  Wholesalers
• Domestic and International sourcing
• 5 Locations (MI, OH, NY, GA, TX)
• 100 employee owned

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PRODUCTS
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PRODUCTS
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SOURCING HISTORY
Domestic 1963 to 1997

• Communication
• English
• Time zones max 3 hours
• Phone, FAX, (No e-mail)
• Product Knowledge
• Long-term relationships
• Know our products
• Lead Times 30 days or less
• Transportation ? 4 to 5 days
• Visit Suppliers at a Moments Notice
• Comfortable/Predictable

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SOURCING HISTORY
In The Beginning
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SOURCING HISTORY
MID TO LATE 90s

• US Steel Industry Becoming Uncompetitive ? Import
  Pricing
• Domestic Sourcing Shrinking
• Domestic Focus Shifted to Low Volume, Specialty
  Products
• Shift to Asia, Specifically China
• Our Core Business Shifting to Other Channels
• We were setting our sights on growth through new
  geographies and new products

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CSCMP DEFINITIONS
CSCMP DEFINITION OF SUPPLY CHAIN MGT.

• Supply Chain Management encompasses the planning
  and management of all activities involved in
  sourcing and procurement, conversion, and all
  Logistics Management activities. Importantly, it
  also includes coordination and collaboration with
  channel partners, which can be suppliers,
  intermediaries, third-party service providers,
  and customers. In essence, Supply Chain
  Management integrates supply and demand
  management within and across companies.

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SUPPLY CHAIN INFLUENCE
Key Points of Influence

• Quality, Process Development
• Packaging
• Capacity Investment
• Technology Investing/Sharing
• Inventory Management VMI Terms
• Cultural Building

• Marketing
• Product Launch
• New Product Development
• Customer Development

• Market Development
• Program Development
• Sales Training
• Marketing
• On-line Order Management
• Sales Kits
• Sales/Builder Calls
• Inventory Management

• Product Training/Awareness
• Market Development
• Product Demonstrations
• Install Training/Problem Solving
• Dealer Pull Through
• On-site Visits
• Home Shows

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SOURCING HISTORY
CHALLENGES

• No Direct Experience with China, Asia
  Specifically
• Cultural/Translation Issues
• Lead Times/Inventory Investment
• Financing/LOC
• Forecasting
• Whos Who?

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SOURCING HISTORY
EARLY LESSONS LEARNED

• Who are You Dealing With?
• Lead Times Inconsistent/Tracking Product
• Inconsistent Quality/Resolution
• Steam Line Increases (PSS/GRI)
• Bazillion Mills
• No Secrets/Great Copiers
• No Doesnt Mean No, Yes Doesnt Mean Yes
• Inventory Pressures/Space Pressures (Bank Liked
  Us!)
• Need to be There, Need to Have Direct
  Relationships

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CHINESE MILLS
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CHINESE MILLS
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SOURCING HISTORY
MID-TERM LESSONS LEARNED

• Cultural Understanding
• Role of Government/Subsidiaries
• Capitalists/Businessmen
• Low Tech, Low Tech, Low Barriers to Entry
• Test Everything and Test Again
• Pallets/Colors/Packaging
• Terms
• Chinese Holiday

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SOURCING TODAY
Our Direction
Culture/Relationship Development
Outcome

• Improved Understanding and Respect for Each Other
• Viewed as Trusted Partner
• Address Issues at Source
• Genuine Interest in Their Success

• Visit Every 6-8 Weeks
• Chinese Employees/Present Daily
• VP of Sourcing Chinese
• US Visits

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SOURCING TODAY
Business Development
Outcome

• Fewer Suppliers
• Capacity Commitments
• Goal Sharing/Strategy Developments

• More Significant Customer/Shared Objectives
• Balance Production
• Lower Delivered Cost
• Improved Understanding of Demand
• More Open to Improvements in Quality/Process
• Market Development Opportunities

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SOURCING TODAY
Information Sharing
Outcome

• Supplier Portal
• Shared Forecasts

• Improved Tracking of Product
• Shorter Lead Times
• Lower Inventory Investment
• Predictability
• Trust/Confidence
• Grow our Business

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T.O.M. SOURCING PORTAL
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SOURCING TODAY
Freight Lessons
Management By

• Volume is the Key
• Who you Know
• Wal-Mart Effect
• Christmas
• PSS/GRIs

• Supplier
• Freight Forwarder/3PL
• Steam Line
• You

Tracking!
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SOURCING SEGMENTS

• Cultural Growth
• Capacity Commitment
• Shared Forecasts
• Shared Objectives
• Quality Expectations
• Vendor Portal

• Negotiate Direct
• Mill Negotiate
• Use Logistics Partner
• Vendor Portal

• Negotiate Direct
• Use Logistics Partner
• Rail/LTL/Ports
• Vendor Portal

• Scheduled Deliveries
• Highest Delivered Value
• Vendor Portal

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ASIAN COLLABORATION
S. KOREA
CHINA
TAIWAN
Distribution
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SUPPLY CHAIN
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RE-CAP

• Consult with Others Doing Business in Asia
• Respect Their Culture/Seek to Understand Their
  Objectives
• Document Product Specifications Including
  Packaging, Labeling, Pallets, Loading, etc.
• Over Communicate
• They are Business People Just Like Us
• Be Present
• Ask The Best Question, What is the Wise Thing to
  do?
• CelebrateSay Thanks
• Go Blue!

25
QUESTIONS
QUESTIONS?