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Some U.S.-based manufacturers are beginning to question their decision to outsource production to China and other low-cost countries. The extended distance between plant and customer has led to broken communications with suppliers, lower product quality, poor customer responsiveness and higher logistics costs. At the same time, certain companies that never left the states are winning contracts due to their supply-chain efficiencies and proximity to markets.
Cleveland-based Proforma IdeaPress faces stiff competition from overseas suppliers. Yet it relies heavily on a pair of manufacturing facilities based in the U.S. The company is a provider of promotional products, printing services, business documents and electronic-commerce services to medium- and large-scale customers. Recently, it won a lucrative contract despite challenges from nominally cheaper overseas rivals.
With offices throughout the U.S., Proforma has been in business for some 30 years, according to vice president and co-owner Pratt Pande. During that time, it has worked hard to demonstrate the value of domestic sourcing. A large and stable network of vendors has helped the company to stay competitive in pricing. And it retains a definite edge in the areas of customer service and order lead times.
Still, getting the word out hasn't always been easy. Sometimes it takes a bit of technology to close a gap that might not seem very big in geographic terms, but proves a chasm in the cutthroat world of global business.
A couple of years ago, a customer of Proforma introduced the company to an online supplier-buyer matching service operated by Ariba, Inc. While needing to get on the network to please that particular account, Proforma ended up reaping big results down the line. More recently, another potential customer, in search of a new supplier of iron-on transfers, placed a request for proposal on the Ariba Discovery service. Proforma responded and won the contract, worth more than $500,000.
In the Neighborhood
Ironically, it took an international matching network to hook Proforma up with a customer that was physically located just two blocks away. As Pande points out, however, his company holds several advantages over its more distant competition. Proforma's product line is anything but mass-produced. It features items that are highly customized and reordered in small quantities, characteristics that favor suppliers who are closer to the customer.
"It's not like buying a pen," says Rob Mihalko, vice president of seller marketing and Ariba Discovery. "The availability of a vendor who has both capacity and capability is often not obvious. And pricing is also kind of complex."
The key concern for buyers of printed items, says Pande, is "reliability and predictability. You may get a great product [from an overseas vendor] the first time. That doesn't mean it will remain that way."
Still, says Mihalko, getting access to leads in Proforma's target market can be a challenge. For a mid-sized supplier, traditional methods such as direct mail, trade shows and advertising on TV and radio can be expensive, without guarantees that the company is reaching its desired audience. A network like Discovery creates "a window into buying opportunities," he says.
Prior to signing up with Ariba Discovery, Proforma relied mostly on old-style networking and a presence at industry trade shows to generate customer leads. It was a lengthy process that required substantial time and resources on the sales and marketing side. In the case of the order for iron-on transfers, the company went from responding to the buyer's RFP to nailing the contract in just two weeks. "A lead like that would have taken us a good two months to secure before," Pande says.
There were few issues involved in augmenting its marketing strategy with a high-tech approach. No integration with back-end systems was required. One big change, says Pande, was a welcome one: the need to add resources in order to keep up with the increased number of RFPs.
Up and Running
The process of getting fully approved and under way on the system spanned approximately a month. All it took was setting up a profile highlighting the company's product line, then entering keywords that would help to match up with searches from buyers. Proforma created a dedicated inbox for all relevant e-mail responses, assigning then into various buckets depending on the item that was being requested.
Winning a contract today calls for the same bidding and selling routines on which Proforma has relied for years, but they're augmented by a platform that speeds up communications between the prospective buyer and seller. Ariba Discovery serves as a message board for posting and answering followup questions, as well as the means for awarding the project.
While Ariba Discovery wasn't itself responsible for Proforma winning the iron-on transfer contract, the network has become a powerful tool for advertising the company's capabilities. "We've indirectly become more competitive," says Pande. "Now that we have it, we're able to handle more proposals with the capability already in place."
For the moment, Proforma is only relying on the network to advertise itself to potential buyers. Pande says the company hopes to draw on the tool to identify its own community of suppliers in the near future. "That's definitely something we have on our radar to start doing," he says. "We see the value."
Pande would also like to implement a more effective system of ratings, based on its own performance as a supplier. Customers would be able to see at a glance how it functioned in the past, in such areas as lead time, product quality and pricing.
Proforma has no plans to alter its manufacturing strategy. While it does source some items from overseas vendors, it continues to believe in maintaining a strong local manufacturing presence for its customer base. Says Pande: "We have always been a big believer in that."
Keywords: Sourcing & Procurement Solutions, Supplier Relationship Management, Technology, Business Intelligence & Analytics, Business Process Management, Collaboration & Integration, Customer Relationship Mgmt., Forecasting & Demand Planning , Network Design, Order Fulfillment & P.O. Mgmt., Sales & Operations Planning, SC Planning & Optimization, Supply Chain Visibility, Outsourcing, Domestic Production, Printing Services, Sourcing and Procurement, Ariba, Ariba Discovery, Proforma
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