Leaders’ Choice Advantage Award for Digitalization Effort

At the 2016 Goodman/Daikin annual supplier conference, Kloeckner Metals won the Leaders’ Choice Advantage Award. Goodman/Daikin is the number one supplier of residential air-conditioner and heating units in the United States. Within the past year, Kloeckner Metals has become a provider of steel for the company. The Leaders’ Choice Advantage Award recognizes a successful implementation as a new supplier and continued efforts to bring value added ideas. It was one of only six awards given out at the event, which involved 300 of Goodman/Daikin’s many suppliers.

“Value added ideas are ways that we can cut cost or waste out of a system,” says Grant Cousins, VP of sales for the Southwest Region at Kloeckner Metals.

In the steel industry, this translates to things like streamlining the supply chain and looking into cost reduction initiatives. For example, decimal thickness reduction, chemistry changes to lower the cost of the metal, and reducing the zinc coating on the steel all can reduce costs.

“Basically, it is helping them to find the lowest cost product that makes the part successfully,” Grant says.

As a new supplier, Kloeckner Metals utilized its Start Right Program to ensure a successful transition. The program included multiple on-site walkthroughs at both the Kloeckner and Goodman/Daikin facilities. It also involved bringing in metallurgists from the mill to better communicate capabilities.

“It is basically a checklist where we go in with our sales team and review all the specifications to make sure we get it right the first time,” Grant says. “We over-communicate.”

This transition coincided with Goodman/Daikin moving to a new, upgraded facility. The new facility is about 4 million square feet total and about 2 million square feet of manufacturing. It will consolidate all four of Goodman/Daikin’s current facility into this one new facility in northwest Houston. The new facility will be state of the art.

“If you are moving all that into one facility and you are starting with a new supplier, it just screams for issues to arise, and we helped them through that process,” Grant says.

One way Kloeckner was able to help was by providing stop-gap fabrication services. As Goodman/Daikin is idling down facilities and transferring machinery, it creates a stock build. Kloeckner was able to alleviate this problem by helping provide fabricated parts with its fabrication network during this gap period.

“It kept them from having to go all over and get fabricators to make parts for them,” Grant says. “Another big selling point was that our Murfreesboro, Tennessee plant is close to their two facilities in Tennessee, and we have a service center in Houston, so we line up very well geographically with Goodman.”

This geographical advantage allows for a seamless transition for Goodman/Daikin. When the move is complete, the mill’s shipments will simply move from the Murfreesboro Kloeckner plant to the Houston location. In coordinating all of these moving parts, Kloeckner drew heavily on Territory Manager Cory Phillips.

“He is the quarterback for the whole program,” Grant says. “His job has been absolutely phenomenal.”

Additionally, Kloeckner Metals’ mill partner, Nucor Steel, went above and beyond what is normally expected.

“They were doing things that you just don’t see mills do,” Grant says.

As these challenges have been met, Kloeckner has, in turn, moved into its Strategic Waste Elimination and Efficiency Program (SWEEP). This cost reduction initiative seeks out ways to add value and eliminate costs for Goodman/Daikin.

“We really brought the full efforts of our organization and the mill’s metallurgists to the table, and I think that impressed them,” Grant says. “We were able to get some quick hits, and solve some of the problems that they have had for a while.”

In addition, Kloeckner Connect’sPart Manager is the digital tools that Goodman/Daikin is actively using. It reduces paperwork and saves time by allowing the customer to order online. It also allows for better communication between the manufacturer and service center. Ultimately, these tools are one step toward a more fully integrated supply chain. This is differentiating Kloeckner Metals from the competition.

“This is just the tip of the iceberg,” Grant says. “We did a lot with the transfer, but once they get moved into their facility they will really be able to start working on strategic steel initiatives. The future is extremely bright. We intend to grow with them and continue to create value with our digitalization efforts.”