Reprinted from Portsmouth Herald / Seacoastonline.com – May 09, 2011
It was announced recently that the state of New Hampshire has partnered with an online sourcing marketplace to make it easier for New Hampshire companies to find local suppliers for manufactured parts and manufacturing services. This first-in-the-nation partnership leverages an established Internet-based sourcing facility, MFG.com, and adapts it to enable and encourage New Hampshire buyers and sellers to do business together.
A company that needs any type of manufactured item, whether it’s a machined metal part, a molded plastic item or a complete product, even something made of wood or cloth, can upload the specifications to the Web site. Supplier companies will then bid on the job in a reverse auction (lower price usually wins the business). The site maintains ratings on both buyers and sellers to help each participant in the matching process.
Buyers have found that MFG.com provides an efficient and effective way to find suppliers on a one-time basis and also to test the waters with a new supplier that could become a long-term partner. Some companies, in fact, procure all of their parts and materials through the Web site and others contract out for the entire manufacturing process this way.
Suppliers find a new source of business through the online marketplace. Many start out seeking only enough new business to fill out their schedules, essentially selling any excess capacity they may have on certain machines or in some departments. For others, MFG.com is their entire sales and marketing department and represents nearly all of their business either directly through the exchange or with customers they initially found there.
While MFG.com is inherently an open, international marketplace, most of the buyers and sellers are in North America. Through this new program, however, New Hampshire members are assigned a “default” preference for New Hampshire business.
“Although New Hampshire members have access to the entire MFG.com community,” according to David Landsman, director of strategic alliances at MFG.com, “New Hampshire buyers are connected to New Hampshire sellers first.”
Under this new program, buyers receive premium membership free for six months ($150 per month thereafter) while sellers pay $99 per month with no additional fees or commissions.
Online marketplaces like MFG.com play a key role in the movement toward “reshoring” or moving manufacturing back to the U.S. from overseas vendors. While it was quite fashionable a few years ago to outsource production to China and other areas with low wage rates, companies that pursued that strategy now realize that the cost of doing business with such a long and fragile supply chain far exceeds the simple unit cost and transportation cost. And the cost advantage that may have existed five years ago is not necessarily still valid today.
I have talked to quite a number of companies that have used MFG.com to source parts and products from U.S. suppliers and they are often pleasantly surprised at just how competitive in price, superior in quality and outstanding in responsiveness and flexibility U.S. suppliers can be.
Lean manufacturing and Lean supply chain are all about simplicity and reduced risk. A short supply chain delivers Lean benefits at a very competitive total cost. Showing a preference for New Hampshire suppliers is smart, economical, Lean and environmentally responsible — reducing the amount of fossil fuels needed to ship tons of parts and materials half-way around the world.
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COMMENT from David Landsman, MFG.com to the Portsmouth Herald / Seacoastonline.com
Thanks so much for the great write-up. We are so excited to be enabling the New Hampshire manufacturing community with our technology. Two small corrections though. MFG.com is not a reverse auction platform. In a reverse auction the suppliers can see each others pricing and adjust theirs in a free flowing race to the bottom. In an MFG.com sourcing event suppliers cannot see the pricing of others. Only the buyer can see the quotes as they come in. MFG.com is not a race to the bottom. Price is always going to be important, but 11 years of data tells us that over 80% of the work awarded on MFG.com does not go to the lowest quote.