The average U.S. manufacturer spends roughly half its revenue to purchase goods and services, which makes their success dependent on their interaction with the suppliers. “By the time our clients engage us, they are already convinced of the utility outsourcing and usually have a good idea of what constitutes the ‘best value’ in their company and usually that is: cheaper (lowest price), better (best quality) and faster (minimum lead times),” CEO Hiten Shah says.
Dealing with suppliers can be a hassle for some companies when they must face foreign government regulatory risk, enforceability of contracts, protection of IP, business ethics and cultural differences. But when Marketing and Engineering Solutions (MES) Inc. steps in, companies save time, overhead costs and undo stress.
As a full-service provider of global manufacturing resources and supply chain management, MES deals directly with global suppliers to deliver top-quality aluminum, zinc, iron-cast and rubber components for clients in the lighting, automotive, agriculture, electronics and telecommunication industries.
Columbus, Ohio-headquartered MES sources manufactured components from India, China, Australia, Taiwan, Vietnam and Malaysia. It maintains warehouse facilities in Ohio, California, Texas and Mexico.
“We help many North American companies by managing the entire outsourced manufacturing process,” Shah says. “Our mission is to deliver engineering solutions to our customers. We identify those suppliers that can deliver the best quality products and work with the customer to forecast and deliver the parts in a timely and efficient manner. In doing so, we can reduce overhead for our customers in many areas.”
MES is a 15-year-old business, but the supply chain management side of the business was added in 2007. Some of Shah’s customers were looking for components and castings from India or China and needed help from someone with supplier connections to help them buy items from those countries. Shah heard over and over again from his customers: “We don’t want to work with suppliers. How can you manage this for us?” In 2007, Shah partnered with a friend who had warehousing capabilities and hired contract engineers to work with overseas suppliers. After that, the opportunities began rolling in.
The company has doubled in revenue every year for the last six years. “Our organic growth has been very humbling,” Shah adds. “The key is a continuous cycle of failure and learning that leads to success. Our team might make mistakes; as fast as we grow, that is bound to happen. We have adopted an outlook that failure is an organic part of our life. We look not to blame, but to focus on a solution.”
Within the next three years, MES will grow from one to three locations in Mexico, along with locations in Iowa and near the Mexico border in Texas to support its growing customer base across the country.
“We’re focusing on our customers and the entire supply chain, along with high variety, low volume,” Shah explains. “Most companies’ domestic suppliers require high-volume orders. We focus on the other side to set ourselves apart.”
The dynamics are particularly complicated when customers are looking for low and medium volumes because it is hard to delineate where exactly on the arm’s-length-partnership-relationship model continuum they should focus their energy.
MES’s largest competitors are those in the automotive space. Although Shah admits that they can essentially do the same thing as MES, his company sets itself apart by offering a mix of products through an efficient supply chain model. By focusing on a mix of materials, MES can reach a larger customer base.
Shah explains that MES has three important metrics that it strives to work towards: on-time delivery, quality parts-per-million (PPM) and optimized Six Sigma Level Inventories. “Our team monitors these metrics monthly and relentlessly works on improving them,” he says.
Mexico has been the biggest growth surprise for MES, considering the company began shipping directly to Mexico in 2012. Shah sees Mexico as a huge source for production in the coming years. “We don’t see that as a challenge; we see it as an opportunity,” he says.
Mexico’s incredible economic growth has been led by manufacturing exports, largely emanating from the massive increase in the automobile sector for the fifth consecutive year. “International and local OEMs, our clients included, are attracted and incentivized by the incredible business opportunities in Mexico such as competitive wages, the free-trade agreements, advantage in energy costs and the establishment of industry clusters,” Shah says. “They expect to invest significantly in manufacturing facilities and operations in the upcoming period.
“MES understands that in order to be successful in Mexico, our clients require their suppliers to deliver the highest product quality, demonstrate reliability and ultimately save them money,” he continues. “Mexican suppliers right now don’t have the necessary capacity and are struggling with the increase in demand, opening the way for Asian imports.”
The aluminum, iron and zinc market are very fluid, according to Shah. The exchange rates with countries such as China and India have a huge impact on the course of business for sourcing materials in a cost-efficient manner, along with the availability of materials. Therefore, MES has systems in place to reexamine its process every couple of months to ensure it’s working with the best service for the best price. But Shah isn’t worried. If the exchange rates keep climbing, MES is developing new relationships and infrastructure in other countries like Vietnam for sourcing its products.
To improve quality and efficiencies across the board from Mexico to India, MES has trained most of its suppliers in its quality expectations. “Everybody understands what we want,” Shah explains. “We have taken ownership of training; that’s how we improve the quality. We impart knowledge and hold them accountable.”
As mentioned, one of the most important metrics for MES is quality PPM. MES’s quality processes match the automotive industry’s stringent quality expectations because it is held to even higher standards. The company explains that it can achieve this in a number of ways: MES has a local U.S./Mexico-based quality engineering contact; it has boots on the ground in 100 percent of supplier locations, all within one day of travel from the supplier locations; it meets with suppliers on a regular basis; and the company has developed an app that allows its engineers in the factories to report in real time on quality control.
“Each and every metric is measured on a monthly basis from suppliers to deliveries,” Shah says. “We are very connected to all the locations. We want to know how the going is at the port and we have access to the port people in case of issues or urgencies. We are meeting with truck companies regularly to make sure everything is streamlined and costs are low. Overall, there’s a lot of engagement.”
MES is modest about its growth, but it has certainly made strides to get where it is. The company invested a quarter-of-a-million dollars in a new system to track inventory, sales, inquiries and much more. All requests from customers are put into its database and, with a click of a button, the information can be sent to all suppliers in all locations. It has allowed MES to scale quickly since it can now put a quote together from one of its suppliers within five to 10 minutes.
“We use our technology incredibly well and fluidly,” Shah explains. “We force ourselves to. All of our files are on Microsoft Sharepoint, so everyone has the same amount of information everywhere. Through our system we can track quality management, where any exceptions to the norm can be reported in real time and someone will get an alert. Without technology, we can’t run the deep analytics we do.”
With organic growth comes the opportunity to grow the company internally with new salespeople, engineers and even internships offered through universities. “We are being more selective with technical requirements,” Shah says. “We find that people who are engaged enjoy what they do, and we try to make this an exciting place to work where people feel like they are affecting everything. We’re not looking to change the world, just looking to change ourselves and bring in more customers from different industry backgrounds.”
MES’s people have to be responsive and creative because challenges can arise at any time. For example, the company had a Chicago customer that needed items from an Ohio warehouse by 11 p.m. the next day. But an issue arose that delayed the supplies. MES’s people then brought the parts to a parking lot, borrowed a forklift from the warehouse, loaded everything into a vehicle and delivered the items to the customer before the deadline.
“Our people don’t need to be told what to do,” Shah says. “I’m proud of our people locally and of our very engaged group of people thousands of miles away working in India and China. They are so aligned with us, they do their best and they make sure our customers are served.”
Overall, Shah is humbled by the company’s global development, especially its strong footprint in India, China, Vietnam, Mexico and Taiwan. It has been able to find suppliers all over the world to fit any customer’s need.
“We are in a unique space with the type of work we do,” Shah says. “We are problem-solvers for large companies. I’m very fortunate and lucky to be a part of this, and I’m looking forward to the next five years.”