Discussions With a Potential Foundry
Being a casting buyer, there are times when a representative from a foundry will call you to set up a time when they can come in to your office and discuss their capabilities and desire to begin doing business with your company. Every casting buyer I know has limited time available to meet with prospective suppliers, but they also know that it is vital for them to be aware of new sources of castings and what these companies may have to offer.
To help you obtain the most value from these types of meetings, I have developed the following list of questions and topics to help you facilitate a discussion with a potential new supplier. While there are several categories of topics to discuss, such as quality, cost, technical capabilities, etc., let’s start with the topic of management.
You generally begin these conversations asking questions about the overall management structure and direction of the company. What is the ownership structure of the company? Are they privately held or are they part of a larger organization? What you’re looking for with these types of questions is an idea of who you may be dealing with if you choose to do business with them. Based on my years of experience, you’ll most likely get to know the owner of a private company, but if the foundry is part of a larger organization, the foundry manager may be your highest-level contact.
Closely associated with company ownership questions, ask how long the foundry has been in business and what does their succession plan look like. It’s always good to know that there is a strong succession plan in place that goes down through several levels of the organization. This should give you some idea of the potential risk level associated with this company. You should also ask if the foundry is a union shop, what the union affiliation is (AFL/CIO, etc.), and what is their contract expiration date?
You’ll be interested to find out who their major customers are, so you should ask who their top five customers are and what percentage of the overall company sales they hold. An important piece of information along these lines is to discover if they sell a large amount of their capacity to one customer. For example, if one customer accounts for 30% to 40% of the foundry’s capacity, what happens to the foundry if that particular customer encounters a severe downturn in their casting demand? Ideally, you want the foundry to be diversified well enough to be able to withstand any loss of demand. One customer that accounts for a large percentage of sales could be a warning sign.
Additionally, what markets does the foundry serve? Are they cyclical or is their demand steady, and what (if any) impact would they have on your business?
The next key area you should be concerned with is their overall safety record. The most important asset a foundry has is the people they employ. Everyone needs to be safe in the working environment, and foundries have an environment that can be dangerous if safety rules and processes are not in place and adhered to. When was their last Lost Time Injury? What is the foundry’s Total Recordable Incident Rate (TRIR)? The average TRIR is around 1, so a number less than that would indicate that the foundry is performing better than average. Keep in mind that the type of work being done plays into these ratings, but what you are looking for is an overall idea of how safely the foundry is operating.
One of the points I continuously urge casting buyers to develop is the need for an open and active channel of communication with your casting supplier. How does the management structure of this potential foundry operate? Will you have a single point of contact or will you be working with several people in various positions throughout the company? What will be the availability of the foundry contacts in cases of urgent need? Will anyone be available late in the day or on weekends?
This isn’t a complete list of topics related to foundry management, but rather several ideas to help you start and facilitate the discussion. There are many more topics that you will need to review to get a better feel for the fit of the potential foundry as a supplier of castings to your facility. In my next column, I’ll cover quality and technical questions.