16. Interview with Mr. Yadi Kamelian of Lincoln Industries
Introduction
This chapter consists of a series of questions and answers from an interview with a leading supply chain executive. The objective of this chapter is to provide a practitioner’s perspective on the subject of life cycle issues in supply chain management. Other related subjects are also discussed in the interview.
About the Interviewee
Mr. Yadi Kamelian is the Vice President of Materials and Customer Service for Lincoln Industries. In his 23 years with Lincoln Industries, Kamelian has been instrumental in the development of the company’s first quality department; the management of the company’s technical services department, including the environmental and waste management programs; and the development of a business model that allowed the company to move from a traditional finishing role to the supplier of complex parts that required complex finishing. In his current role, Kamelian is responsible for the company’s supply management, including the qualification and selection of suppliers on a global level, supplier performance, production planning and inventory control, and the development and integration of new products into the organization. Kamelian holds a Bachelor’s degree in Industrial Engineering, a Master’s degree in mathematics and statistics and a Master’s degree in Manufacturing Engineering—all from the University of Nebraska.
“We select suppliers for the long term. We call this a partners-for-life relationship. Selecting suppliers for the long term involves a process that ensures that we and the supplier have shared values. This means our values for fairness, honesty, growth, profitability, people, and a passion for serving customers must be matched by our suppliers. This win-win situation has created an environment that is very collaborative. At the outset of a project, we know that no one knows everything. Yet with strong supplier relationships, we have found that great things are possible by coming together and combining our resources. This has allowed us to differentiate ourselves in the marketplace and strengthened our relationship with customers, ultimately creating customers for life for Lincoln Industries.”
—Yadi Kamelian, 2011
About Lincoln Industries
Celebrating its sixtieth year in business, Lincoln Industries, located in Lincoln, Nebraska, is a national leader as supplier of products requiring high-performance metal finishing. We are the largest finishing company in North America. Lincoln Industries sells its products to original equipment manufacturers, distributors, and other customers throughout the nation, including the power sports, heavy duty truck, automotive, gaming, and agricultural industries. Selected five times as one of the best companies to work for in America, Lincoln Industries has also been nationally recognized for its workplace wellness program.
Interview Questions and Answers
How would you characterize your organizational role in supply chain management?
We manage the entire supply chain. Part of the area of my responsibility is leading and managing what we call our supply management organization; others call it purchasing and or materials management. Our strategy involves the development of a supply base at global level that will provide a competitive advantage to Lincoln Industries and support our growth and profitability strategies. I also am responsible for the architecture of a supply chain for each product. The objective is to provide best cost while meeting the critical criteria for quality, delivery, and flexibility. In our firm, this entails three primary functions:
• Global sourcing: Identifying and qualifying potential suppliers, writing supplier agreements, sourcing jobs to suppliers, and monitoring supplier viability and capacity.
• Supplier performance: Performance is based on quality, delivery, and costs. We develop and suggest new engineered ways of improving supplier performance and reducing costs.
• Production planning and customer service: We take the demand from customers and convert to a schedule for the supply base, prepare a production schedule, and determine what needs to be processed to fulfill customer needs.
Another responsibility I have is the development and integration of new products into our organization. Our integration team is a group of engineers who have responsibility for developing processes and documentation necessary to move a project from concept to production.
How do you deal with the Introduction Stage of a product or product line requiring a supply chain?
The Introduction Stage begins when we work with our customer on a potential new project. At Lincoln Industries, we begin by identifying the best supply chain for the project. We also work with our customers’ engineers to ensure that the product has been designed with consideration for optimal manufacturability, including finishing. Internally, the integration team develops the finishing process. This, at times, might require a significant capital investment. We will not undertake this investment unless we have a commitment from the customer.
Are the contracts open ended or do they set very definable limits?
The contracts are open ended. Before we begin the work on the project, we determine the volume and longevity. We will not make a capital investment unless there is payback for the capital investment.
How do you determine which new product projects you will consider? What strategy do you use to select product projects?
We have a unique strategy that differentiates us from other competitors. First, we look for products that are complex in nature from a manufacturing and finishing standpoint. Second, we look for projects that will require a significant capital investment upfront. Third, our strategy is to work on projects that are high volume and where finishing is a significant portion of the overall part cost and performance.
How do you deal with the Growth Stage of a product or product line requiring a supply chain?
Capacity and consumption is monitored on a regular basis. When capacity reaches 85%, investments are made to increase capacity where needed. We also monitor our suppliers’ capacity on a regular basis to ensure our supply needs are not in jeopardy. It is important to note that we communicate strongly with our suppliers regarding future needs. This ensures our suppliers are well prepared in advance of an increase in volume. Contingency plans are also developed for situations when a supplier may not be able to meet our growth requirements. I have had several instances where I have had to call the owner or a president of a company and ask them to put on an extra shift over the weekend to meet our growth in demand needs. And almost without exception, our suppliers have stepped forward to solve the problem. This demonstrates the value of our strategic initiatives that emphasizes strong relationships with our supply base.
What happens if your outside supplier reaches their capacity limitation?
Having several qualified and approved suppliers to choose from for each of the products we produce allows us to redistribute and shift work among them as needed to meet growth demands.
What forward planning efforts do you use to anticipate growth in demand and then deal with?
There is no way to better predict future growth than through constant communication with the customer. Understanding our customers’ business and working with them to receive extended forecasts, sometimes as long as 52 weeks, allows us to best predict the future growth of our business. Based on this information, the necessary plans are put into place to ensure performance.
How do you communicate this type of information to your suppliers?
We provide our suppliers extended purchase orders. In addition, if needed, we hold daily and weekly calls with suppliers to keep them informed with current and future demand needs.
How is your supply chain advisory council established?
Our Supplier Advisory Council was formed after we identified a need to better communicate and solicit feedback from the strategic supply base on new initiatives within our company, especially those issues that impact the supply base. This council is composed of high-level individuals from our strategic supply base. Membership is based on two criteria: first, the dollar value of the products they provide; and second, the strategic nature of product the supplier provides.
How do you manage the Supplier Advisory Council?
The advisory council meets twice a year. Meetings are held at our facility, or in certain cases a supplier may host a meeting. These meetings are preceded with a dinner the night before where suppliers have an opportunity to network with one another and representatives of our company. The following day, a business meeting is held. Agenda items are published in advance, and most topics are strategic in nature. We also include members from within our company, including our CEO, president, vice president of materials, director of supplier performance and global sourcing and director of production planning and customer service, and various members of the teams led by these people. Their role is to provide our strategic suppliers with an update on our business (present and future) long-term strategic plans and new initiatives, especially those that impact our strategic suppliers. In addition, we, including our suppliers, share best practices on a variety of topics. We also get an update from every supplier on their status of their business and their views on what they see in the future for their respective industries.
How do you deal with the Maturity Stage of a product or product line requiring a supply chain?
As the products mature, we seek to maximize our efficiency. This is accomplished by continually working with the entire supply chain to eliminate waste and scrap and minimize inventory. For example, we have a product we have been providing one of our customers for the past 20 years. Our plating price today is less than when the project began. This has been accomplished while most of the costs associated with plating a part have increased. Throughout the life of the product, we have worked with our suppliers to identify innovative ways to reduce all costs associated with producing a part, including a significant investment in automation. This is an example of how we have been able to fine-tune the process to make a project more efficient for the entire supply chain without compromising on the performance of a part and any increase in price to our customer.
As you continually improve, how do you deal with production problems that may be costly or problem solving in general?
In cases like this, we form a cross-functional team. Members of this team are selected based on their background and expertise. They are fully trained to use quality tools that include fishbone diagrams and problem-solving techniques. This team meets on a regular basis and continues to work until the problem is solved. There are times when we will ask suppliers to participate in this process. We believe that problem solving is a core competency of our organization.
Do you put a manager on the problem or do you use a team approach?
If the problem gets to the point where the person experiencing the problem is not capable of solving it alone, a team is formed to solve the problem. The important thing when solving a problem is to make sure that the changes are communicated correctly and the people responsible for implementing the changes understand that a change has taken place. This follow-through is critical for the successfully solving the problem and maintaining the solution.
How do you deal with the Decline Stage of a product or product line requiring a supply chain?
We usually have at least three months notice from the customer when a product is being phased out. When this occurs, we notify the entire supply chain and plans are put into place to ensure that we do not produce more parts than what is needed.
Do you have any additional comments you might like to share about your experiences in supply chain management?
• You need suppliers who are partners and have the same values as you do and can meet your needs.
• What works for others may not work for you. You cannot just go out and copy another firm’s business model. You have to be able to develop unique approaches to your unique problems.
• We do our best to be our suppliers’ best customer and our customers’ best supplier.
• To grow you must perform. To perform, you must have a reliable supply base. Do not select a supplier based only on their price.