Made Here: Adding an inventory service to the product mix
Manufacturing in America is alive and well. In our new series “Made Here,” we talk to some of our manufacturing business clients and learn how they’ve flourished in spite of tough odds in recent years.
Jerry Kwok’s guidance for someone getting into manufacturing in America is “do the homework.” And he has. His company, Spectrum Label Corporation in Hayward, California, manufactures the labels used on packages in the food, pharmaceutical, and nutritional products industries, among others. He has used data and forecasting skills to manage inventory and make his business a vital link in the supply chain for his clients.
In this Q&A with Jerry, I was impressed at how a company in a competitive field, where there is a lot of excess manufacturing capacity, is flourishing by offering value-added service.Q: How do you compete manufacturing in the U.S.? A: For us to stay competitive, we have to be able to provide a product that is not just a commodity — one that can’t be outsourced where customers can deal with long lead times. We’re in printing, but the customers we support typically have a very short lead time or no lead time. We are delivering labels in a day or two.
We would be in trouble if our customers say, “You know what? I can deal with a 10-week lead time.” The fact is everyone wants to cut down on inventory, and we’ve been able to design programs to help our customers minimize their inventory level, and be a very valuable component of their supply chain.Can you talk about being a partner in the supply chain?
We don’t have a standard program that the customer has to adhere to. We listen to what’s important and what helps them run their business, and we design an inventory program around that.
We have customers who have the infrastructure in place to provide a lot of their historical usage data as well as their projected usage that we can use to plan our production and have a run-and-hold inventory program for them. We try to design a program to make sure they have exactly what they need when they need it. We do work with a lot of customers where our component is the absolute last piece they need to finish the packaging and put the product in the box and ship it out.
Another thing that is very important is our flexibility to turn on a dime. No matter how careful we are or thorough we are in planning an inventory program, we have to be flexible to meet their urgent needs. It has to be a partnership.What’s your biggest obstacle?
Probably just excess capacity — even before 2008 and immediately after, when the economy took the wrong turn. There’s still a lot of capacity. So you have to work smarter, because if you don’t produce more efficiently and aren’t very conscious of driving down manufacturing costs, then the margins are going to decline.How have you increased efficiency?
What we do is reach out to the customer and try to work collectively to plan production in a fashion that makes us more efficient. We plan better, combine jobs to increase efficiency, and enter into purchase agreements for raw materials components. We’re getting assurances from our customers so we can have commitments with our vendors and minimize any price increases that are being passed along. We just have to be creative to stay competitive.What guidance would you offer someone hoping to start manufacturing here?
You have to do the homework and be able to provide something that is special or proprietary. You can make a great widget, but if it is not different from anyone else’s, that’s a tough way to do business. You better bring something different and unique, then listen to your customers, be flexible, and have a great marketing and sales team, too, to help sell your unique product.What’s your outlook for 2015?
We’re probably going to have flat to modest growth again. We’ve been very frugal when we’ve added capital equipment. We probably will invest this year. We only do it for two reasons: 1) to add capabilities to our manufacturing, or 2) to invest in equipment so we are more efficient. And we will most likely invest for one or both reasons this year.