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Speck Products is a maker of cell phone, computer and laptop covers. Dramatic growth over the past three to four years had led to a doubling of revenues, according to Rich Morgan, director of operations. Further expansion was in the cards, but the company also needed to cut costs. It was grappling with the short lifecycle of its product line, which is geared toward ever-changing models of consumer electronics.
In keeping with the nature of its product, Speck was putting nearly all shipments onto airplanes. Retail packaging consisted of a lot of "air," further raising the cost of transportation. An initial inquiry to a third-party logistics provider would have resulted in little overall cost savings on freight. So Speck looked to open a packout facility in Mexico. To make the operation work, it needed to go from finished-goods parts numbers to a full bill-of-materials management. A modern-day enterprise resource planning (ERP) system was called for.
Speck turned to NetSuite, a vendor of ERP and financials software, for help. In the end, it implemented NetSuite's advanced manufacturing module. "It gives us true MRP [material requirements planning] functionality, and more detail around our business units," says Morgan. With the ability to do standard costing by division, Speck was able greatly to reduce its freight expense during a period of heavy growth.
Surprisingly, Speck found labor rates in Mexico to be competitive with those of China and Taiwan. Labor rates in China have risen sharply over the past two years, Morgan says, and Mexico offers an efficient and well-educated workforce. "It's underdeveloped from an opportunity standpoint," he says.
Speck next plans to focus on improving its demand planning. "Our challenge is to not miss opportunities," says Morgan, "but not to overbuy."
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