FAIRLAWN, Ohio—Philip Sears spent a career looking at the rubber industry from a supply chain point of view.
But as he was working on ensuring the needs of three metal plants, three hose plants, two assembly plants, a couple of engineering teams and operational teams within Parker Hannifin Corp., he knew it was vital that technical and supply staffs need to work closely together.
He also knew that his position as a divisional procurement manager meant looking at the industry from a global strategic point of view and to have advance contingency plans in place to assure continuous supply flow.
"We cannot work in vacuums or in silos," said Sears, who capped his 27-year industry career with a talk at the Hose Manufacturers Conference, held Aug. 27-28 in Fairlawn, Ohio. "If we're working in the supply chain without knowing what's going on in the technical world, it isn't going to work, and vice versa."
He was quick to point out that having an awareness is one thing, but incorporating that into the company's business process was vital. "You need to gain an understanding of how both groups have critical roles and how we can work together."
Functions of both
Sears feels the technical expertise lies with hose designers. They have to figure out fit, form and function, and work with rubber compounds and reinforcements. The technical side also has to design mixers, extruders and ovens.
Compounders, he added, have to worry about abrasion resistance, ozone resistance, flammability and cold freeze, four attributes that often are at odds with each other.
Then there are process engineers who have to account for the flow of material in plants, line flows and scrap.
From the supply chain perspective, Sears said while he often is viewed as the guy down the hall who cuts a purchase order, the job also must bring a strategic focus.
"You plan, place, expedite and resolve problems to get material," he said. "That's the tactical function, which is very needed and very basic."
But a true supply chain view looks across the whole horizon: "Who supplies what. What's going on in the world. Who's building new plants. Which plants blew up. What products are obsolete. It's the strategic side and the tactical side together."
His side of the business also has responsibility for market awareness, Sears said. "We need to know what's going on. We need market awareness of new products, new technologies and new demands for products."
As he prepared to step away from the rubber industry, he said he thought about the younger generation, who need to understand what the company will be selling in five years. Chief among the business drivers will be such needs of humanity as food, water, energy and the environment.
"The rubber hose field will be focused on the needs of humanity, and they have to have that strategic focus of what we need," Sears said.
Need for communication
The Parker Hannifin official sees a need for a paradigm shift where supply chain, technical and marketing teams talk to one another with a purpose—not out of necessity or as an afterthought.
He told of a recent project where first an operations person told him a certain line was going to be outsourced. Then the technical side submitted a request for a machine so the firm could make it inhouse. Then a research and development engineer said he was working on a material that would make the whole program obsolete.
"What's missing is internal communication," he said.
It is also important to work with suppliers and to ensure that intellectual property is protected.
"One company quit making something and sent all the work to another company and left nothing in the way of non-disclosure agreements and non-compete clauses," Sears said. "What did we do? We put in business our competitor."
Another joint responsibility between vendors and their customers is to ensure product profitability. "Isn't that the core of what we're all about?" he asked. "Profit is not a dirty word. It's the sustaining force that keeps us all employed."
So his job is about a lot more than just pricing. It's the assurance of supply and the continuation of production. "Our job is to look at supplier capacity, both short and long term vs. our demand and growth patterns," Sears said. "Right now I've got all the capacity I'll ever need. But where are we going? It's our responsibility to understand that and it's our responsibility to understand the supplier's financial health."
Eye on the big picture
As much of rubber feedstocks are derived from crude oil or natural gas, the supply chain staff also must track those pricing trends. He said crude oil has ranged from $80 to $110 a barrel over the past year, but he has no idea where it is headed.
Most of the feedstocks, such as styrene and butadiene, aren't even deliberately made for the rubber industry—they're a byproduct of oil production. And there has been much price fluctuation over the past year, with styrene production fluctuating more than 30 percent and butadiene in excess of 66 percent over the past year.
"When considering from a chemical compounder's perspective, what do you do?" he said. "You need to think about these things and talk with your supply chain people—not just on the rubber side but with the reinforcements as well."
He said that having a joint technical and commercial team can produce goods that meet performance and economic requirements while providing for continuous production of goods without interruption.
In closing, Sears used a quip he has repeated many times in his career.
"The bottom line is this: Our suppliers make stuff, and we make things. We cannot make our things without their stuff. Their stuff is no good without our things. And if they don't make stuff and we don't make things, neither one of us makes money."