Management + Systems

Here Gary Henderson, managing director at Grampian Fasteners – a specialist supplier of fastening products and supporting services to the global oil and gas industry, discusses how collaboration can help to achieve cost savings and improve business performance overall.

I get quite frustrated by the calls for cost-cutting in the industry, not because I don’t believe they’re needed, but because of how they’re expected to be achieved by many companies. We’ve seen the same process in every downturn – cut jobs and tell companies up the supply chain they have to cut prices. If, like us, you’re a product supplier who is always conscious of having a lean organisation you’ll know that the margins just aren’t there to make price cuts and remain a viable business. Just because product suppliers can’t cut prices it doesn’t mean we can’t help cut costs – we can.

When it comes to the total cost of fasteners approximately 15% can be attributed to the visible cost of the fastener and 85% to design, sourcing, ordering, logistics, stocking and assembly. It doesn’t take a rocket scientist to understand where the biggest savings can be made. For example, one of our major customers asked how we could help them cut costs. We knew it cost the customer over GB£100 in business costs for every purchase order it raised. A quick analysis showed that 63% of the orders they placed with us had a value under GB£50. The customer was able to make savings by adjusting its procurement process and it’s a good example of what can be achieved through collaboration.

Collaboration is the action of working with someone to produce something. We hear it mentioned everywhere but there doesn’t appear to be much of it happening in practice. I believe the thinking of Albert Einstein is crucial: “You cannot solve a problem from the same consciousness that created it. You must learn to see the world anew.” The act of collaboration relies on both parties understanding that their success is reliant on each other and trusting that they’re working for the best interest of both parties. That might be a concept that’s difficult to grasp for some but the successful organisations will be the ones that do just that.

Talk to your suppliers and invite them to see how you work, and go and visit them. The more you understand each other, the better the collaboration will be. Developing a deep and meaningful relationship happens over a long time but you have to get started and take the first step.

What we would like to achieve at Grampian Fasteners is to move from developing cost savings to help improve your business performance. We have amazing opportunities to transform the industry but they won’t be realised unless the matching thinking is in place.

Is your thinking really ready for collaboration?