Ohio-based MES Inc. was founded in 2000 and provides manufacturing and supply-chain services to OEMs around the world. Specializing in agriculture, automotive, lighting, and other industries, the company supplies a range of components and commodities for use in finished goods. Global Purchasing recently asked Hiten Shah, owner and president of MES Inc., about some of the greatest supply-chain challenges his customers face. The headaches North American companies face in sourcing from Asia Pacific and the explosive growth in Mexico recently are two of those top challenges, according to Shah. Here are excerpts from our conversation:
MES—Marketing & Engineering Solutions—is a global sourcing and supply-chain management company serving manufacturers around the world. Tell us a bit about what you do—specifically the kinds of products and services you provide.
Hiten Shah: MES helps companies with supply-chain and global sourcing solutions. It has its customers in lighting, agriculture, automotive, electrical and other industrial industries. It sells a variety of components and commodities, including aluminum and zinc die castings, iron castings, forgings, plastic and rubber components, and copper components.
What are some of the greatest supply-chain challenges your manufacturing customers are dealing with today?
Shah: Inventory tends to be at the heart of any discussions we have with our customers. This is followed closely by difficulties in managing suppliers in China and other countries due to lack of resources, dearth of language understanding, and lack of depth of quality engineering.
Additionally, as all OEMs have to offer more varieties in very competitive markets (think of more automotive powertrains, more electronic options, more colors, more varieties), there is an increase in the amount of models and customized components customers look for. Domestic suppliers are always interested in high-volume applications. However, they are not competitive in low to mid-volumes due to high setup costs, tooling amortization costs, changeover costs, etc. We work with our customers to develop competitive solutions in this low- to mid-volume range.
Specifically looking at buyers and the purchasing community, what are some of their greatest “pain points”?
Shah: Due to competitiveness, especially for low to mid volume, they are forced to source in Asia Pacific. However, managing the fluctuations in demands, especially in sourcing from Asia, tends to be a very painful experience for all buyers.
Additional pain points involve lack of information from Asia Pacific suppliers. This is despite most customers having their purchasing offices abroad. However, those offices tend to focus on highest-volume dollar projects. Commodities, divisions, and plants with high-low mix tend to gain very little support from purchasing offices.
Quality is an important issue. How do you address this with customers?
Shah: There are a variety of safeguards we have in place to guarantee quality:
- All suppliers must sign rigorous and comprehensive non-disclosure agreements.
- All suppliers go through a rigorous quality audit before they are chosen for supply.
- All suppliers must demonstrate quality process and resources before they are chosen for supply.
- MES quality engineers are located within a four- to six-hour drive of all suppliers, allowing them to visit suppliers on a regular basis.
- We also have a quality app developed, in which all of our engineers take pictures of the factory floor and report on a daily basis. If they detect a problem on the factory floor in India, China, or Vietnam, they can post the annotated picture as a “problem.” This generates an immediate email to all quality staff and managers to address short-term fixes and long-term solutions.
Many supply-chain companies point to Mexico as one of the fastest-growing business regions today. Do you agree? How is your business in that part of the world changing?
Shah: Mexico has grown from 10% of our business three years back to over 50%. We are experiencing major growth in Mexico. Our customers are setting up factories at an astronomical pace in Mexico. Normally, we are viewed as competition to local Mexico suppliers. But Mexico’s components and Tier II capabilities have not kept pace with the growth in assembly operations. As a result, most of the commodities we have suppliers for are in huge demand in Mexico. We have focused on developing our supply-chain capabilities with our own IMMEX certification (which allows companies to import goods into Mexico for production without import duties) so we can import under our own name and store in our own warehouse. Customers get milk runs and daily shipments and can run with low inventory, similar to our U.S. customers.
Hiten Shah is owner and president of MES, Inc., a global manufacturing and supply chain services company based in Columbus, Ohio. A member of the Inc. 500, MES has offices in India, China, and Mexico.