Chapter Corner

Vertical Supply Chains Increase Tool Quality

Posted in: Features, April 2015

American manufacturing has become a bit like a jigsaw puzzle, with many companies using both domestic and international sources to create a finished product. This situation makes it very difficult for contractors to track down where different tools are made and by whom.

tool_quality.gifContractors depend on the right tools for the right job, and often, the quality of the tool is more important than just its cost. While there are many ways to make and sell a product, some manufacturers are staying true (or going back) to their American roots by maintaining or developing vertically integrated supply chains in order to design, produce, and market tools that are innovative, durable, and safe.

One of the most efficient ways for a company to achieve this trifecta of performance, durability, and safety is to manage a vertical supply chain from beginning to end. Companies don’t want to put their name on a product without being able to guarantee its quality. Having quality control throughout the entire process is crucial to ensuring high product standards. This allows manufacturers the ability to develop and produce new, innovative products with the design, engineering, and manufacturing built in to optimize specific applications of the product. In addition, relying on third- party manufacturing that competitors use lends itself to having “me too” products that “fit the mold” from a manufacturing plant that may be the jack of all trades, but master of none.

All contractors have had the struggle of trying to find a creative way to use the wrong or broken tool for a given job. As frustrating as that can be, contractors also know the time and actual costs of losing or breaking a tool because it was made incorrectly. The costs of time hit the bottom line when someone has to leave a jobsite to replace a cheaply made product. Other indirect costs include project delays and the contractor’s reputation. Purchasing a quality tool from a trusted supplier the first time is an easy way to avoid these hassles versus constantly having to replace low-quality tools. Experienced contractors have learned that it’s better in the long run to buy a tool from a vertical supply chain manufacturer because every step in the production process of a tool is a potential chance for a mistake. Maintaining full control and accountability by one organization throughout the entire process helps reduce mistakes because quality incentives are 100 percent aligned. The manufacturer of the product also has the most to lose from making low-quality products, which is not the case for companies that outsource all or part of the production.

How does the vertical supply chain process benefit contractors? It’s simple. A product is more durable, reliable, and longer-lasting when all steps of the tool-making process are adhered to including using quality materials and ensuring innovative procedures and practices meet the high standards that are set. Other benefits include more streamlined supply chains, which can keep product costs down. Because vertically integrated manufacturers don’t have to ship the part to multiple factories, paying for production time, transportation, etc., those costs aren’t included in the final product cost. Each additional company that contributes to the product needs to make a profit, which can increase the overall cost. In addition to manufacturers’ and contractors’ unique benefits received by purchasing products from a vertically integrated company, everyone also shares the benefits of reduced carbon footprints from non-value-added transportation and packaging.

Contractors should research and understand a company’s business structure and supply chain before purchasing tools. It’s important to know whether the tools being purchased have been well produced and are safe. The truth is that vertically integrated manufacturing results in better made American products for contractors, and ultimately, more American jobs.

Thomas R. Klein, Jr. is co-president at Klein Tools. Previously, he was the general manager of Klein Tools, Heavy Infrastructure Strategic Business Unit. He holds a B.A. from Babson College, and received his MBA from the Kellogg Graduate School of Management. Klein Tools, an IEC Platinum level Industry Partner, is a 158-year-old, US-based manufacturing company that produces the best performing and longest-lasting hand tools on the market.