WINTER 2021

10 THE DISTRIBUTOR’S

10 THE DISTRIBUTOR’S LINK Laurence Claus Laurence Claus is the President of NNi Training and Consulting, Inc. He has 25 years of experience with a medium sized automotive fastener manufacturer, holding positions including Vice President of Engineering, General Manager, Director of Quality, Director of New Business Development and Applications Engineer. In 2012 he formed NNi offering technical and business training courses as well as technical consulting, expert witness and consultation work. He can be reached at 847-867-7363 or by email: Lclaus@NNiTraining.com. You can learn more about NNi at www.NNiTraining.com. WHY DO FASTENER SUPPLIERS USUALLY FOCUS THEIR ATTENTION ON A SINGLE MARKET SEGMENT? Have you ever considered why most fastener suppliers, whether a distributor or manufacturer, tend to predominantly supply customers in a single market segment? In other words, consider for a moment, aerospace and automotive customers, it is extremely rare for a fastener supplier to support both industries. Although rare, it is not unheard of for a company to supply different market segments. In fact, I can cite several examples of manufacturers that have operations focused on different market segments, including several companies which have construction and automotive focused operations and one that has both aerospace and automotive focus. However, without exception, these operations are supported separately from different sites or as completely separate and independent operating divisions. Given this tendency, one might become inquisitive as to why this is the case? At first blush, when comparing fasteners from one market segment against another, the untrained eye may not see a lot of differences. So let’s dig a little deeper and see if we can ferret out some of the differences that separate parts and suppliers to help explain why there is little or no overlap between companies simultaneously supporting different market segments. Order (Lot) Size Perhaps the biggest differentiator of fastener market segments is order size. This idea applies whether we are TECHNICAL ARTICLE referring to a manufacturer or a distributor. Manufacturing lot sizes and customer order quantities, perhaps more than any other factor differentiates the activities, structure, and way that a supplier conducts business. Consider for a moment the range of order sizes associated with aerospace customers. Order quantities can go as low as 1 piece and on the other end, in very rare instances, into the hundreds of thousands or even a million or more pieces. Typical order size, however, probably ranges from several hundred to about ten thousand. A significant number of aerospace fasteners are standards, which can be potentially purchased by many unrelated and separate sources. Therefore, even though purchase quantity may be quite small from an individual customer, manufacturers are able to benefit from consolidation so that manufacturing lot sizes can be larger. However, even with this fact, manufacturing lot sizes are generally small, with 20,000 to 25,000 constituting a large order. On the other hand, consider order quantities related to automotive. In automotive, normally every part number is unique to a specific customer or small group of related customers and purchased in annual quantities. Annual quantities range on the low side from about 25,000 pieces all the way on the high side to multiple millions. In fact, most automotive fastener manufacturers have several part numbers that likely exceed ten or twenty million pieces a year and maybe one or two that exceed that by another two or three times. CONTINUED ON PAGE 100