Corning Incorporated: supply chain in manufacturing space
As one of the leading innovators in materials science worldwide, Corning Incorporated is used to being in the ascendency. Established in 1851, Corning has become a major heavyweight in the glass manufacturing space, with its products used in applications including smartphones, automotive interiors, large-size televisions and displays, and even pharmaceutical packaging. Tom Kruse, Global Head, Supply Chain Collaboration & Consortiums of Corning, understands the importance of procurement to his firm’s operations and believes it is considered a vital priority. “As a manufacturing company, supply chain and procurement are front and center of everything that we do,” says Kruse. “It’s an old adage, but every dollar that we save contributes directly to the bottom line of the company and reduces our adjusted manufacturing costs.”
Corning has a range of business lines including products that serve and enable the latest trends in the optical communications, mobile consumer electronics, life sciences vessels, automotive, and display markets. “Overall, we manufacture a really mixed product line with our clients, customers and other multinational companies in mind,” Kruse explains.
He stresses that the key to success is a clear procurement strategy. “There’s only so many times you can keep going to the well and reducing costs from the suppliers via e-auctions and negotiations,” he says. “You can do value engineering, optimize and manufacture products more effectively, but what we’ve found is the next threshold is really to work with other like-minded organizations and highlight the importance of supply chain collaboration and to leverage procurement consortiums where applicable. We can look at it from two ways in our collaboration: either combine our volumes if our products align and go to market together or approach it from a supplier’s perspective and say: ‘We’re buying these 10 cubes of packaging from the same suppliers that you’re buying from, it’s just that you’re buying different products – but by combining our spend together, we’re making it more attractive to the suppliers’.”
Corning has overseen a rapid transformation in the number of consortia it has become involved in over the past few years. Having participated in just one consortium two and a half years ago, the company has experienced a major surge, with the figure increasing to 11 in a short space of time. “We’re seeking out new consortiums or Group Purchasing Organizations (GPO’s), in different markets to understand what they’re doing and how we can benefit by joining them,” explains Kruse. “Ultimately, we measure the savings by evaluating the contribution to operating margins (COMs) and decide how we can make them perform. Other than savings we need to ask ourselves: what other value can we gain from them? For example, we’re pursuing market intelligence, understanding best practices and working with other organizations to exchange information.” Some of Corning’s key supply chain collaboration partners include Chain IQ, who is a leading global Sourcing Service Provider (SSP) and OMNIA Partners, the largest GPO in the US. “Both organizations have proven to be vitally important in our collaboration journey and we work closely with them to seek out new opportunities across different markets and categories,” Kruse explains.
With the introduction of Industry 4.0 and the Industrial Internet of Things (IIoT) over the past few years becoming increasingly prevalent in the manufacturing sector, companies must adopt and embrace new technologies in order to remain a leader in the field. Kruse affirms how crucial digital transformation is to Corning’s decision-making processes moving forward. “We have different internet platforms where we exchange information externally with collaboration partners, suppliers, like-minded organizations and customers,” he explains. “We’re working on this with a great sense of urgency because we recognize that digitalization and digital transformation are becoming vitally important to us.” Whilst the implementation of new technology can often seem like a good idea, there is no value in introducing new systems that do not enhance the current processes already utilized by companies. Kruse affirms that the only way to achieve his company’s goals is by learning from mistakes. “You’re never going to be consistently successful with all of the different technological and supply chain collaboration elements,” he says. “It’s not a given that the new technology you’re introducing is going to be better than the current one you already have – you just have to use trial and error. You have to seek this new technology, try it, incubate it and keep what works for you as well as understanding how you can improve it to enable better practices.” With sustainability in mind, Kruse recognizes how important recruitment is to ensuring long-term success at Corning. “In my particular area, it all boils down to people. I have to constantly find the right people in my organization to help drive our collaboration and consortium interests forward,” he says. “I will then help to find and shape a successor who will continue to drive this forward, adapt to change and modify when required to be changed.” Looking to the future, Kruse harbors clear goals of where he wants his supply chain and collaboration function to be over the next few years. “I think we just need to constantly seek out new innovations and understand them as much as we can in order to help embed them into Corning and make them work for us,” Kruse concludes. “You have to make technology useful for you in order to shape the direction you want it to go in.”