Zetwerk’s Strategic Solutions for a Fortune 1000 OEM

Background

A Fortune 1000 Original Equipment Manufacturer (OEM) specializing in work lifts and platforms
used in construction operates a complex global supply chain supporting multiple production
sites across the United States and internationally. The company requires cost-effective and
highly reliable safety-critical components, including fabrications and castings.

Challenges

The OEM faced several supply chain challenges, including:

• Global Supply Chain Management
• Tariff Engineering
• Global Sourcing
• Cost Savings
• Warehousing & Logistics Operations Centers (LOCs)
• Logistics Optimization
• Quality Control
• Just-In-Time (JIT) Delivery

Challenge: Cost Savings

When launching production for a new series of fabrications, the OEM’s selected supplier
imposed a significant cost increase. The company turned to Zetwerk to quickly re-source and
achieve cost savings and cost avoidance.

Key Initiatives

Zetwerk leveraged its pre-approved supply base and:

• Identified a cost-effective supplier that met the necessary technical and quality
  standards.
• Developed a New Product Introduction (NPI) schedule and a Production Part
  Approval Process (PPAP) qualification plan within a 16-week timeframe.
• Procured long-lead custom raw materials from the incumbent vendor to ensure
  continuity.
• Mitigated long-term raw material exposure (~$70,000) by coordinating inventory transfer
  between suppliers.
• Seamlessly managed the transition from the old supplier to the new supplier.

Results

• $935,000 in annual cost avoidance
• $183,000 in additional annual cost savings
• $1.118 million in total annual impact
• Successfully ramped up production within the quoted lead times while managing
  inventory transitions efficiently.

Challenge: Quality Control

The OEM encountered an issue with aluminum die-casting surface quality for a safety-critical
component. The absence of a standardized method for surface quality assessment posed a risk
of production stoppages and inventory obsolescence.

Key Initiatives

Zetwerk facilitated collaboration between customer and supplier quality teams to:

• Define a visual quality standard based on supplier capabilities and the customer’s
  finite element analysis (FEA) and aesthetic requirements.
• mplement process improvement initiatives at the supplier location to enhance
  production yields.
• Conduct containment, sorting, and disposition of all U.S.-based inventory to ensure
  compliance.

Results

• Prevented production line stoppages.
• Minimized inventory obsolescence.
• Improved part per million (PPM) defect rates:
  • Inbound PPM (2021): 21,350
  • Outbound PPM (2021): 3,151

Challenge: Tariff Engineering & Logistics Operations
Centers (LOCs)

With the implementation of countervailing and anti-dumping duties (AD/CVD) on products
imported from China—incurring penalties of up to 85% of part value—the OEM required an
immediate solution to mitigate cost increases.

Key Initiatives

Zetwerk partnered with trade attorneys and:

• Developed a tariff mitigation strategy to eliminate AD/CVD costs.
• Coordinated with Chinese suppliers to implement necessary modifications.
• Revised purchasing and inventory management systems to support restructured product
  classifications.
• Re-engineered supplier packaging to align with the new import requirements
• Established necessary assembly processes and secured equipment to support the
  revised supply chain strategy.

Results

• 100% mitigation of AD/CVD costs.
• $500,000+ in savings in 2021, with continued savings in 2022.
• Investment in an additional LOC to enhance customer operations beyond 2022.

Challenge: Global Sourcing

The OEM sought to reduce in-house manufacturing costs, as its supply base was deemed
non-competitive due to Section 301 tariffs. New global suppliers had to be identified and
qualified to maintain profitability.

Key Initiatives

Zetwerk initiated a comprehensive global sourcing strategy by:

• Issuing RFQs for 120 fabricated components to its supply base.
• Identifying cost-effective suppliers in India and Korea for both light and heavy
  fabrications.
• Conducting virtual supplier quality audits.
• Completing weld and paint qualification audits and identifying a new in-country paint
  material provider.
• Collaborating with the OEM to revise standards to accommodate global steel
  specifications.

Results

• Eliminated reliance on high-cost internal manufacturing.
• Expanded supplier options beyond those impacted by tariffs.
• $3 million in annual cost savings on fabricated components.

Conclusion

Through its strategic sourcing, quality control improvements, and tariff engineering solutions,
Zetwerk provided a transformative impact on the OEM’s supply chain. The collaboration led to multi-million-dollar cost savings, increased supply chain resilience, and seamless
production transitions, reinforcing Zetwerk’s role as a critical partner in the OEM’s operational
success.