Parts is Parts is Parts... Almost

More and more, buyers are driven to the Internet to source because the traditional routes are simply bogging them down or leaving them with no acceptable suppliers.


SupplierOne.com finds its suppliers through advertising campaigns and through its existing base of buyers. When buyers sign on with SupplierOne they can list their suppliers, use SupplierOne's database or a little of both. When a buyer provides new supplier names, SupplierOne works with the suppliers to get them listed on its database. In the registration process, buyer and supplier information is verified through sources such as Dun & Bradstreet and Thomas Register; suppliers also provide information on their quality certifications and procedures.

To get listed with SupplierOne's database, suppliers complete a detailed capabilities profile and receive notification when buyers list RFQs that meet the suppliers' capabilities. Suppliers respond to RFQs online and provide quotes and then, if chosen, receive online order notifications from the buyer. Suppliers pay SupplierOne a 2 percent to 4 percent commission depending on the size and complexity of the order.

"Many of the suppliers have participated in reverse auctions, and they don't like their price focus," says Sourabh Niyogi, president of SupplierOne. "Our process matches suppliers' core competencies to buyers' needs, and the suppliers appreciate it."

Bidders can post questions to a message board, and the buyer can respond individually or to the group. For example, updates or modifications to the RFQ would usually be broadcast to everyone, but a response to a supplier's question that included proprietary information could be sent privately to that supplier. In the future, SupplierOne plans to add a function in which the buyer and supplier can both view and modify drawings online at the same time. SupplierOne's other current options include reverse auctions and open competition.

SupplierOne leadership decided to focus on made-to-order parts at startup because that's relatively new ground. "ThereĀ¹s any number of people fighting for commodity and catalog areas," says SupplierOne Vice President of Marketing Charles Formica. "Made-to-order parts, with drawings and specifications, are a lot more sophisticated in regards to programming and site functionality. We thought that if we could establish our niche here, it would be easier to move toward commodities too as our customers need it."

SupplierOne currently focuses on the North American market, but they plan to go global over time. The company is also expanding its offerings to include online order status information available to both supplier and buyer, as well as entering partnerships with other e-marketplaces, including a machining tools marketplace and a metals marketplace, that can provide more products to buyers who use SupplierOne.

Ready to Go Again
After his initial, successful experience, Slegel was eager to use SupplierOne again. "They're my first stop now," Slegel says. "I head for the computer, fill out my RFQ, upload my print order and that's it. Then, I just wait for e-mails." As of early July, Dynacut had two more orders pending through SupplierOne.

Slegel also likes the support he receives from SupplierOne. On a different RFQ, Slegel started receiving bids for $6 for a part he knew had material costs of $21 each - Dynacut used to make the part in-house for $85 each.

Slegel e-mailed SupplierOne who contacted the bidders to see what was going on. This revealed that suppliers misunderstood the online form and were putting information in the wrong space. Within an hour, the problem was solved, followed up with an e-mail and an explanation phone call. "SupplierOne took care of it. It's terrific," Slegel says.

While Dynacut usually makes the parts it needs, when times get busier, the company turns to outside suppliers for help. Slegel soon expects to outsource about 50 percent of Dynacut's needed parts - and to do so through SupplierOne. "I don't have to spend time searching for suppliers. This frees me up to address and tend to my other duties," Slegel says. "I can reach out to all the shops, including ones that are more competitive." The online system enables Slegel to cast a wider net and send RFPs to suppliers around the country, including areas that are less expensive than the East Coast.

Dynacut has also used SupplierOne to determine whether certain procedures are cost-effective. For example, Dynacut makes a part in aluminum but wanted to investigate the costs of making it in plastic. They used an online RFP, informing suppliers that they were considering changing this procedure. This helped Dynacut gauge the expense of this procedure. "We won't be making the part in plastic," Slegel says. "We would need new patterns, and it would cost us about $11,000."

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