Copyright © 2008 Myland USA LLC. All Rights Reserved
Case Study 1:
What was the problem faced?
A major U.S.-based battery manufacturer purchased finished batteries (and battery components) from around the world, but particularly needed to reduce the costs of batteries manufactured in the U.S. As costs were escalating, profits were shrinking and ultimately the manufacturing operation was in jeopardy. Outsourcing of the supply of finished batteries and also manufacturing materials (metals, chemicals, etc.) appeared to be an increasing imperative.
What was the solution needed?
The battery manufacturer’s plant Marketing Rep began seriously exploring outsourcing options. To complicate the task of finding potential suppliers, the batteries being manufactured in the U.S. manufacturer’s operation found applications in technical products, and had unique chemical requirements for the components. Nonetheless, alternative sources of supply needed to be secured to reduce costs, and supply from Low-Cost-Country Suppliers was viewed as a significant potential cost savings opportunity.
What did Myland USA do?
The battery manufacturer’s Marketing Rep met Heidi Ames of Myland through an existing domestic supplier. The Marketing Rep had been working in the area of Lithium Batteries, and wanted to outsource procurement for those batteries. He identified a domestic company that made the batteries he needed in Rochester, NY. Once he began dealing with that company, the company introduced Myland USA to him.
Myland USA was brought in to find and broker connections to reliable sources of supply for the battery manufacturer. Doing the “spade work” of identifying and qualifying potential suppliers, Myland was able to locate a competent supplier in China. Heidi introduced a handful of companies, and particularly their technical engineers, to the Marketing Rep and his team at the battery manufacturer. Through a series of high-level meetings, in-depth technical discussions ensued. Heidi had brought technical, capable people to the evaluation meetings, and the Marketing Rep concluded that there was definitely substance on the other side of the table. Additionally, the pricing being offered by the prospective suppliers was quite attractive.
On chemicals, Myland surveyed several chemical manufacturers, and brought forward the best manufacturers to be found. On solid materials, Myland also brought in three manufacturers, and the battery manufacturer tested each and selected a single supplier. Product trials were successful, and the due diligence conducted on the potential supplier(s) checked out properly, and the initiative was ready to move forward.
What were the results?
Unfortunately, the outsourcing initiative ran into a major stumbling block—the decision-makers did not engage. Upper management at the battery manufacturer became increasingly risk averse, and put the brakes on the exploration of foreign outsourcing. In 1995, the battery manufacturer was acquired by a consumer products company that was not knowledgeable about batteries, and continued a culture of risk aversion. At that time, sourcing technical products from China was considered risky.
To make matters worse, the plant had internal issues—the American factory did not trust the supply coming from China, even after purchasing had tested and validated that supply. The factory used their power to stop progress on the outsourcing initiative altogether. Purchasing above the Marketing Rep blocked the effort, and production was also risk averse.
A multinational consumer products giant purchased the consumer products firm that owned the battery manufacturer in 1997, bringing with it a different culture, particularly a strong purchasing culture and strong purchasing organization, with a can-do attitude. By this time, however, the lithium battery plant had already been forced to close as a matter of excessive costs. The entire portfolio of battery production was outsourced, and now other companies make the batteries (in Taiwan, Malaysia, Germany, and the U.S.) with the U.S. battery manufacturer’s nameplate on them.
Overall, the project was a success until the decision to move forward got stymied.
Are the skills Myland has hard to find elsewhere?
The Marketing Rep revealed he has only been exposed to two or three other companies doing similar activities; these firms wanted to do business from China, but they weren’t Chinese. They saw opportunity, had some connections, but they just weren’t convincing about their capabilities. In contrast, Heidi Ames was convincing that she could deliver. She had a confidence that she could deliver what she promised, and she knew what she was talking about.
Myland has access to quality and inspection people on the ground in China. Myland can provide the services of inspection before the products have shipped, reducing risk for customers. This approach offers buyers the consolation that work has been done to make a product that meets their specifications.
Client Testimonials: Ray K
“I felt Heidi was trustworthy, and felt she was an extremely hard worker who was thorough, dedicated to the task, understood the nuances of business and who had good business acumen. I can discern fluff from substance, and Heidi didn’t have fluff.”
“Heidi is a great communicator—I didn’t have to chase her. You have to chase most salespeople after the deal closes.”
“Heidi is willing to work on things that take a long time to materialize. She is very patient, and understands that things take time.”
“Heidi can say, ‘Tell me what you want, and I’ll get it for you’ and it is true.”
Case Study 2:
Situation:
For several years, a local high-tech electronics firm had been a subcontractor to a prime supplier of military electronics products. This local firm had been looking to identify new sources of supply for components used in the subassemblies provided to the prime supplier. The specifications for the components needed were very strict, and the subcontractor had sent out approximately half a dozen requests for quotation as a means of identifying new suppliers, including suppliers in the U.S., China and elsewhere.
Tasks:
The electronics firm sought to find a new supplier who could deliver an optimal combination of price, quality, consistency and delivery. Every prospective supplier was asked to validate their capabilities in each of these key areas, and ultimately proposals from a variety of suppliers were carefully evaluated.
Through the RFQ process, some Chinese manufacturers had quoted exceptionally low prices, but these suppliers had omitted some very key elements in their quote that would prevent their products from passing the stringent quality requirements. The U.S. companies had quoted higher prices than the foreign suppliers, though one of the U.S. companies still had to import some materials. Coincidentally, the prime contractor knew of Myland USA, and suggested the subcontractor work with Myland.
Actions:
Myland USA was chosen as one of two key suppliers to the electronics firm, acting as the China supplier along with a local supplier for domestic needs. Myland met all the technical requirements of the RFQ, and exceeded the subcontractor’s expectations in two key areas. One was that the functionality to be delivered would exceed the performance of the original parts. The second was the ability to provide innovative packaging that better protected the product during shipping.
Results:
Myland was able to offer the strength and confidence of enabling direct technical communications between the China supplier and the U.S. subcontractor, adding value by monitoring this direct communications chain to assure mutual understanding of the critical technical requirements. Myland secured a consistent source of supply for the subcontractor, bringing significant cost savings and eliminating the previous issues around on-time delivery on short notice. All in all, Myland was able to create a seamless process and flow of supply from China to the U.S. subcontractor. Additionally, Myland was able to save the client subcontractor approximately 45% while meeting every one of the client’s delivery requirements by being creative in shipping products from China to the U.S.
Case Study 3:
Situation:
A U.S. company manufacturing heavy industrial capital equipment had already ventured into China for about three years, having set up a wholly-owned foreign enterprise (WOFE) in the Shanghai region. The company had two expatriates from the U.S. in charge of the operation, one who was entirely American, charged with the technical aspects of the firm, and the other who was Chinese-American, charged with the administrative aspects of the operation.
This team had entered into two major manufacturing contracts, one of which was nearing completion. The promised delivery of the second contract was growing increasingly near, however a suitable supplier / fabricator had not yet been selected even after two-thirds of the term of the contract had already elapsed. The company now needed to go from supplier selection to delivery of finished products in a short timeframe of only three months.
Task:
The U.S. headquarters knew something was amiss with the first contract that led to a decision to change the leadership for the second contract, however it was not clear where exactly the problem lay. In fact, there were suspicions of criminal activity and inappropriate financial transactions. An outside resource and expert was needed to carefully ascertain the source and depth of the problems that were being experienced. Even more importantly, the outside resource was needed to quickly identify and secure a third party in China to take over the importation of U.S. components as well as coordinate the logistics and filing of VAT rebates.
Action:
Within 24 hours of the client meeting to identify needs, Myland secured a highly experienced importer and also researched the implications of VAT refunds for this particular, unique transaction. Additionally, within 48 hours Myland identified the true nature and depth of the problems related to the first executive, including ascertaining just how much money was pocketed by the first executive.
In the following two months, Heidi Ames made many calls to China, including the fabricator, the third party who had been engaged, as well as the company’s subsidiary in China. Myland also spoke with the company’s technical VP to further qualify and validate their choice of fabricator, made detailed plans of how the financial transaction would be able to ensure the fine details of how U.S. funds would be transferred. These details included assuring minimum tax consequences to the client and to the Third Party, as well as when then the Third Party would exchange the U.S. funds into Chinese currency and pay the fabricator. Equally importantly, Myland determined how the funds should be transferred from China back to the U.S. client after the entire project concluded, again with maximum benefit to the client.
Results:
Myland USA was able to assess the situation, engage a third party to act on behalf of the U.S. client, and research the tax laws and regulations, validate the fabricator, coordinating relationships among all these interests and parties. Ultimately, the result was a smooth flow of goods from the U.S. to the China port to the China factory. Then, the finished product flowed smoothly from the factory to the Port, to a tax-free zone and ultimate delivery to the clients. Myland also secured the transfer of money from the U.S. to the third-party to the factory, then from the factory to the materials suppliers, and then the proceeds from the third-party back to the U.S. client. Myland also assured that all the terms and conditions of sale were met through final delivery to ensure that the U.S. client received full payment for sold product. Myland additionally became the watchdog for future concerns or problems that may arise in the China operation. The client has also developed a full appreciation for the ins and outs of the dealings between the U.S. and China, and reached a higher level of customer satisfaction on the part of their client base. Not only did the client begin receiving the money they should have in the first place (through VAT rebates especially), but the improved process added approximately $50,000 in annual cost savings to the client.
About six months into the working relationship, Myland offered to do an assessment to identify potential fabricators as well as potential acquisition targets as their business volume grows, in addition to possible changes in structure based on the evolving China relationship. This course of research was conducted over approximately two months, and involved identifying and especially qualifying nearly two dozen companies through telephone calls, site visits, and consultation with industry insiders and other authorities. After presenting the facts and the results of the analysis, Myland presented the top two choices for fabricator, and for potential acquisition targets, enabling the client to make a quick decision to move the business forward. From that point forward, the client has received two major contracts, assuring strong growth of the business that has been measured in robust increases in the value of the company’s stock.
Finally, after two-thirds of the contract’s duration had already elapsed, Myland’s client now had a solid plan in-hand on who they would use as their fabricator, how the logistics would be carried out, who would take which responsibilities, and the details of how to protect their financial interest, ending the previous funny business and backroom dealings that happened at the client’s expense!
Through the entire process, TRUST was the key ingredient. The client was taken advantage of previously by another party, so we were all on high alert. The biggest dilemma my client had to face was to wire finds to the Third Party in order for the Third Party to handle all transactions on behalf of my client. With the relationship being brand new and no collateral from Third Party to my client, the trust and belief our client had in Myland became the only reason for them to make the corporate decision to wire $500,000 into a “stranger’s” account in China.