Its experience with vendors and Just-in-Time manufacturing convinced Xaloy Inc. that JIT had much to offer both parties. Considering its role as a cylinder vendor to OEM companies, Xaloy decided to take the process one step further -- to market the JIT advantage aggressively to its own customers.
Xaloy had been an on-and-off supplier to Husky Injection Molding Systems Ltd., a Bolton, Ont., manufacturer of injection-molding equipment. But, because of the strength of the dollar, Xaloy had lost the business to T.I. Brooks Ltd., an English company. "Xaloy came back this year at quotation time," notes Richard J. Munro, manager of materials for Husky, "and was able to match the U.K. situation. . . . If you took inflation into account, they had actually managed to lower their prices." The new, more competitive prices were largely the result of Xaloy's own JIT savings. But Husky was concerned with more than cost.
"Husky is very interested in JIT," explains Munro. "We wouldn't be able to survive without it ourselves." Just as with Xaloy and its own vendors, information began to flow both ways. Husky provides Xaloy with an eight-week schedule of its production needs. "We want to make this a close, long-term relationship," says Walter G. Cox, Xaloy's new general manager, "so we'll be increasing our prices only as our costs go up." Xaloy now makes Just-in-Time deliveries to Husky, and has also agreed to hold certain stock cylinders in inventory for the company so that Husky can obtain them more quickly in the event of an emergency.
"Our president, Robert Schad, is very service oriented," explains Munro. "If one of our customers needs a part, we'll take that part off of our own production line, and, if they're in serious trouble, Schad will fly it to them in his private jet." If a customer needs a replacement part, such as a barrel, one of Husky's $300,000 injection-molding machines could be held up until a replacement arrived. In the past, when Husky dealt with Brooks, that might have meant 16 weeks; with Xaloy, it would ordinarily take half that time. But, now that there are stock units waiting, it should require as little as two weeks. "We have to keep our machines moving," notes Munro, "so we need vendors who can back us up."
Under the terms of its one-year contract with Husky, Xaloy will provide some 65% of the company's barrels, a marriage that is worth $600,000 a year. "It all adds up," Cox says of Xaloy's involvement with JIT. "We're getting stronger and stronger, while our competition is just treading water."