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Rea Magnet Wire Co. is working with suppliers to transition from traditional electronic interchange to XML messaging formats, saving money and reducing waste in the process, according to assistant logistics manager David Haught.
Rea is the largest producer of magnet wire products in North America, and the second-largest in the world. Their application is widespread, going into "anything that is electrically driven," says Haught.
Successful as it is, the company saw a need to streamline its supply chain. It has been working closely with trading partners to automate manual processes. Another targeted discipline is logistics, where Rea is scrutinizing freight patterns, supply sourcing and product specifications - "any area where there's an opportunity to simplify and reduce costs."
With freight representing a significant portion of those costs, Rea is deploying classic Lean techniques to revamp its transportation network. The goal, says Haught, is to reduce working capital while improving the turnaround time on orders. One of the economic drivers behind its latest efforts is the escalating price of copper, a key material in Rea's products.
Business-to-business connectivity is yet another area that's ripe for savings. Haught has been overseeing a shift from traditional electronic data interchange (EDI) to internet-based Extensible Markup Language (XML) messaging. In the process, the company has been able to reduce the time between the sending and receipt of documents and messages.
There are a number of challenges involved in the switchover, Haught notes. "With any new technology, there is a curve of adoption." Some customers aren't capable of making the change to XML standard messaging, and Rea has been forced to adapt. "Our basic strategy has been to meet our customers where they are, rather than forcing a standard," he says. "We want to work with them in the best way possible."
The single biggest challenge, Haught says, lies in defining connectivity. Certain trading partners claim they are automated, but all they do is create purchase orders in their enterprise resource planning systems and fax documents to Rea. Others refer the company to their Web portals for all information, telling Rea to extract what it needs. "It's a little bit of a tragedy," says Haught. "We're working to fight through some of those barriers."
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