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When the going gets tough….

February 12th, 2010 admin Leave a comment Go to comments

… the tough get going. And deserve to succeed.

The big boys don’t want to help the kids anymore. Two of the large aircraft manufacturers in France (you’re probably surprised that there is more than one!), probably through a well-intentioned value-stream-mapping (or cost-cutting) exercise, have decided that they will not longer play a part in supplying materials to their own suppliers. It seems that they were buying in bulk, getting a preferentiel price and therefore offering cost advantages to themselves, to their component suppliers, and also probably to the suppliers of the materials. Win-win-win, what a great arrangement, you would think.

Well, all that’s going to stop, and little Mr.Cable Supplier is now faced with negociating individually, and the material supplier now has tens of orders to take, prepare and ship. And we can very well imagine that the large manufacturers are in no way ready to accept this new state of affairs as a reason to increase costs!

Down here in the south-west, the smaller suppliers have taken it on the chin, and rebounded. 10 of them have created a platform to purchase materials in the same way as before. They’ve created a company called SAS Aero Trade, of which each has 10% of the capital. OK, it has taken two years of discussions, and there were 18 companies at the outset, so 8 have fallen off the wagon somewhere along the way, but it is still a very creditable achievement.The local authorities have been closely involved. As outlined by the President of the new platform, Serge Assorin, “we will continue to benefit from the reduced prices, and we have arranged loans from local governement agencies to finance the initial purchases”. This will even stimulate employment, with two logisticiens planned to be recruited. And if this works, there are potentially other areas of collaboration.

Congratulations SAS Aero Trade and may this example inspire many others.

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  1. February 16th, 2010 at 23:22 | #1

    Great piece – supplier associations can really pay dividends – there are an awful lot of company’s that provide their buying power to their supply chain – it does seem a little suicidal to remove that assistance – but setting in setting up a supplier association these businesses cut out the reliance on the dominant customer and facilitate further opportunities perhaps not open to those participants previously.

    Again – great post – I’ve added it to our twitter feed.

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