BOSTON - Smaller plastics molders will have to adopt sophisticated communication links with customers, such as electronic data interchange, to survive, panelists said in a Processors' Issues forum May 8 at ANTEC '95, held May 8-11 in Boston. Paul Rothschild, president of Fremont Plastic Products Inc., a custom injection molder in Fremont, Ohio, said EDI will be the next statistical process control - a feature customers will expect as a given.
``There's no question that information technology will drive down the number of suppliers,'' Rothschild said.
EDI provides two-way communication between a molder and customer, giving both unprecedented information about the other's business. A basic EDI package costs less than $5,000, panelists said, but that cost goes up when a firm integrates the system into its existing data management systems, such as accounting.
Rothschild recommended setting up a dedicated telephone line for EDI. He also stressed finding detail-oriented, reliable employees to run the system.
Fremont set up an EDI system with Ford Motor Co. Benefits have included reduced inventory and improved planning. Ford electronically communicates with Fremont, giving updates on future needs for parts.
``We have a six-month planning horizon that's updated every week,'' Rothschild said.
Daily updates say what parts Ford needs at specific plants.
He said Fremont has used EDI with other customers. The end result is that the molder, not the customer, takes on responsibility for inventory management.
Officials of two other companies told about supplying products to - and ``partnering'' with - giant retailers Wal-Mart Stores Inc. and Kmart Corp.
Linking with the mass merchants is a survival tactic that also can make a company stronger, said Jeff Marble, president of Frabill Inc., a small maker of fishing tackle and equipment in Allentown, Wis.
Marble said that 10 years ago, Wal-Mart, Kmart and Sears accounted for about 30 percent of sales of fishing equipment. Today, Wal-Mart and Kmart sell more than 50 percent of the market, and they are growing.
To win Kmart business, Frabill was required to have EDI, Marble said. Frabill initially shipped to Kmart warehouses, then to individual stores - more than 2,000 of them.
The information exchange provides unprecedented levels of data for a small supplier. For example, Frabill can access sales information and know exactly how many of its fishing products are sold at Wal-Mart stores across the United States.
Marble thinks the next step, a few years in the future, will see retailers paying suppliers for a product only if it is sold off the store shelves.
``The dynamics are changing almost daily in retailing,'' he said.
Engineered Plastics Corp., a custom molder in Menomonee Falls, Wis., supplies plastics parts to Frabill. President Deb Radder said the greater responsibility for inventory can be disruptive to a small molder. She advised balancing customers that serve markets with big demand swings - such as Frabill, which can see demand explode during a weekend of good fishing weather - with customers in more stable markets.
Douglas Gray, sales manager at Southern Tier Plastics Inc., a Binghamton, N.Y., custom molder, discussed bar coding.
``More of our customers are asking us to go into bar coding and EDI,'' he said.
Rothschild at Fremont said partnering and EDI ``are tough, but they make you better.''
``If we didn't have Ford forcing us to do those things, we wouldn't be the company we are today,'' he said.