What started out as an agreement to beta-test supply chain management tools turned into a $250,000 savings last year for Badger Technologies Inc.
After examining several options for integrating supply chain software into Badger's Manex MRP system, Rick Cirincione, president of the Penn Yan, N.Y., contract manufacturer, finally settled on a package offered by Supplystream Inc.
"The Supplystream model enables us to capture transaction costs for inventory management and purchases before processing work orders for customers," Cirincione said. "This lets us bid on the bill of materials based on the effort required to produce the product."
Pioneer-Standard Electronics Inc. began using Supplystream's Analyze and Quote/Optimize tools in 1999, and by 2001 owned 85% of the company. Last week the Cleveland-based distributor carried out its plans to integrate the supply chain management software company into Aprisa Inc., a third-party engineering services provider in Westlake Village, Calif.
That integration is the basis for a stand-alone fee-for-services business focused on procurement and engineering. Aprisa will launch its first services within two months. Customers can continue to access Supplystream's tools from an FTP link found on Aprisa's new Web site, www.aprisainc.com.
Supplystream doesn't typically cater to top-tier companies. More than 85% of its customers are EMS providers with revenue between $50 million and $500 million. Cirincione said his company, which has its niche in wire cable harness and printed- circuit-board assembly, has an opportunity to increase sales 50%, from $10 million in 2001, by using Supplystream's tools.
Supplystream Evaluate, Supplystream Discover, Supplystream Analyze, and Supplystream Quote/Optimize are bas-ed on activity-costing methodologies that help companies understand transaction charges and the impact value-added services have on the total cost of their programs, according to Aprisa.
In one instance, customers that use a component reel whose parts are identified through a bar-code feature could lower their costs by automating their check-in and stocking processes, said Cynthia Bova, vice president of marketing services at Aprisa. In fact, a cost savings could be realized even if the components are a little pricier than comparable parts that don't have the bar-code feature, Bova said.
"Companies really need to understand their costs to stay competitive," she said. "We have to reduce costs because there are no more margins left for distributors or contract manufacturers to squeeze out. They can't keep beating up the suppliers to reduce costs when there is nothing more to give."
Badger plans to increase profits and lower materials costs by stepping through Supplystream's analytical pro-cess to avoid certain pitfalls before sourcing parts. "Customers can see exactly what they pay for," Cirincione said.