July 26, 2016 Outsourcing Asset Management

Volume 8 | Issue 5

Assembly Component Systems, a division of Lawson Products, handles all aspects of inventory management, product procurement and engineering

Assembly Components Systems (ACS) is as focused as a beacon and as determined as your shadow. How else would you describe a company that zeros in on ways to streamline its customers’ operations while being as vigilant as a person’s shadow – following companies to the ends of the earth to provide services that allow them to manufacture products with fewer inventory dollars and overhead expenses.

Explains Ken Malik, group president OEM and International Operations, “We’re a customer focused organization. We don’t walk in with a template; we look at customer needs and what works for them and devise solutions. With our experience it’s not unusual for a customer to see six-figure savings.” As an example: ACS redesigned for an air conditioning manufacturer a one-piece metal formed part that replaced several components and saved the company $300,000 in labor and material costs. In another scenario, ACS redesigned proprietary fastener products for a simpler design, which reduced the customer’s unit cost by $170,000.

So what exactly is ACS? It is an international leader in the inventory management industry, specializing in custom designed supply chain management programs for class “C” components: fasteners, elastomers, decals and overlays, fittings, MRO consumables and molded and machined rubber components. The company also provides the skills of a superior engineering team. Since its inception, ACS has been geared toward improving customers’ efficiencies with cost-effective solutions and expert analysis by focusing on the total cost of ownership and devising creative inventory management solutions that enable companies to liquidate existing inventory at program startup, alleviating concerns about ordering too much or too little when procuring and managing inventory.

With QS-9000 and ISO: 9002 certifications, ACS was created from the consolidation of Homan Fasteners, Industrial Bolt and Screw, and Special-T-Metals, which later became SIMCO. Combined, these three companies represent over 90 years of experience in providing creative inventory management solutions, enabling customers to manufacture products with considerably fewer inventory dollars and overhead expenses. In 1999, ACS joined the Lawson family of businesses (NASDAQ: LAWS), a $420 million distributor of MRO products.

Simply SIMCO
Dick Schwind, president and COO, explains that the company employs five different programs for its customers under the banner System Inventory Management Concepts model, or SIMCO. These include:

1. Deposit inventory systems: ACS stores and maintains an agreed upon level of inventory in a company’s facility at min-max levels that are adjusted based on real-time usage data and MRP information. The company removes product from this inventory when required in production and scans the bar code label, transmitting the data to an ACS computer via phone line, which generates the invoice.

2. On-site store: Explains Schwind: “We supply inventories and employees to provide services such as onsite purchasing, inventory components, maintenance and repair.” The customer’s production and consumable/repair components are stored in an on-site warehouse operated by ACS personnel. ACS manages components inside the store until they are required by production and are delivered directly to specified points-of-use out on the plant floor. Consumable/repair components can be issued directly to employees as required.

3. Dedicated branch services: This service entails ACS siting a facility in close proximity to the customer’s. Production components are stored at this facility and are delivered to the customer by an ACS employee directly to the specified points-of-use, i.e., direction line locations at various manufacturing cells, strategically located central dispersal sites and/or the company’s receiving dock. Component levels are adjusted periodically based on real-time usage data and MRP information transmitted to ACS.

4. Engineering services: ACS’ engineering staff is dedicated to assisting customers in all phases of component product evolution. Working in conjunction with ACS’ QS 9000 Quality Lab, these engineers will provide technical assistance in the design phase of new products by helping the customer’s engineers select the most commercially viable, efficient designs possible; assemble a parts catalog of all current components to help utilize those parts that are already in the supply pipeline and provide assistance in part standardization/consolidation. They also will conduct on-site testing and assembly analysis to improve construction technique and product integrity, arrange engineering seminars featuring vendor/manufacturer presentations on new product designs and applications and conduct product teardowns to help determine potential cost-saving redesigns and/or improvements in assets. Says Malik, ACS’ engineers are often ahead of industry trends. “A lot of people think fasteners are an old technology, but our engineering is on the cutting edge of fastener technology utilizing high strength materials and techniques.”

5. Service parts management: In this program the company takes responsibility for purchasing and managing service parts. An ACS service center orders, packages and ships for all customer/distributor service part requests. Orders can be packed and shipped per customer request directly to each discrete location.

In addition, products such as fasteners, specialty fasteners, screw machine components and other fabricated products are supplied by ACS at global pricing structures. To cover unplanned production spikes and/or overseas supply delays that could cause potential line-down problems, the company’s domestic manufacturing partners will maintain duplicate raw material inventories and consumable production tooling, mirroring overseas sources. Seamless inventories are supplied on a just-in-time basis.

A major goal, stresses Malik, “Is to reduce acquisition and carrying costs for customers and free up their capital. By outsourcing to us they can concentrate on their core competency functions, which enhances their supply chain.”

Schwind further defines the company’s direction: “We’re directed at generating positive cash flow and expense reduction; we manage the inventory and reduce their labor expense. We’re not looking at the cost of a part but at all overhead costs. It’s a tremendous opportunity to partner with customers because what we do is not their core competency, and there’s no value to a finished product if you have huge overhead expenses.”

Above all, notes Vice President of Sales Gregory Yemm, the company’s engineering aptitude is a main component of its overall strength. “As manufacturers reduce operations expenses they cut back on engineering and put that responsibility on their suppliers. Our core competency is our engineering and technical support.”

“We end up tackling problems our customers can’t solve with their engineering staff,” adds Vice President of Sales for Deposit Inventory Jim Allen. “There’s a lot of indirect expenses and we can create an awareness of hidden costs based on a specific operation and, in most cases, reduce their supplier base.”

A cut above the rest
Other ways in which ACS sets itself apart from competitors is its choice to establish a base close to a specific customer. “Unlike some companies our locations are established initially for one customer, and if the customer moves we will move,” Schwind says, adding that in the early 1990s the company established cellular distribution – very similar to cellular manufacturing – to better service its growing customer base.

Since, there has been dramatic overall growth in the concept, especially its value to JIT programs. “We are in the process of expanding relationships with major corporations on multiple plant implementation,” Schwind says. ACS, he adds, is not a high-volume services provider, choosing instead to focus on quality rather than racking up numbers of clients. Even so, for a company that has experienced double-digit growth over the last decade, you might say ACS has found strength in numbers.

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