“You can’t compete today if you don’t have good quality,” said Mulder, president of ODL. “With the partners and vendors we use in all three countries, quality is a given. The unique factors come from the manufacturing advantages we get from having a presence in each country.”
In the US, that advantage comes from the flexibility inherent to manufacturing in Michigan. When a customer gives ODL an order on Wednesday, the company can turn it around by either Thursday or Friday. “Obviously, you can’t do that if you’re only manufacturing in China or Mexico because of travel time,” said Mulder.
Having a manufacturing presence in China enables the company to keep a handle on the cost content of its products as well, which include door glass, tubular skylights, decorative windows, and entry treatments. Producing product with the highest labor content in China gives ODL the ability to be competitive when longer lead-times are acceptable without breaking the bank.
“Mexico is in the middle of China and the US in terms of cost and speed,” said Mulder. “It is faster than China but not as fast as the US. In addition, the US has the highest labor rates but gives us the most flexibility. It’s our ability to work with all three of those countries that provides our customers the best value.”
To keep control of the day-to-day operations of each manufacturing facility, ODL employs an individualized management structure. Onsite general managers or VPs of operations at each location are responsible for safety, quality, and production.
One of ODL’s taglines is “Think globally, act locally,” which goes hand in hand with the company’s management style. “We have a general manager in China who is responsible for managing the vendor partners we work with in the East,” said Mulder. “The operations planning group at corporate determines what changes need to be made at each location to satisfy a customer’s specific requirement on price, availability, and service.”
ODL’s second differentiator, innovation, comes from the company’s desire to meet customer needs by looking for new ways to solve problems. The downturn in the housing market has led to fewer chances to innovate for customers, which are primarily one- and two-step distribution centers and home centers, but that doesn’t mean ODL has stopped looking for ways to improve its products.
“We haven’t stopped innovating, but we’ve delayed launching,” said Mulder. “We’ve been holding onto a few of our innovations and are preparing to launch them in 2010.”
ODL pays attention to green initiatives and innovations, but Mulder is the first to admit the changes aren’t entirely altruistic. “We’re doing green initiatives because they’re helping us from a cost-savings perspective.”
The company changed all the light fixtures in its Mexico facility as an example, and it’s getting products ready for the new Energy Star codes for 2010, even though those green initiatives might end up costing the company more money. “It’s the nature of our business to use glass and plastic, both of which are hard on the environment,” said Mulder. “All told, we’re doing the best we can to do what’s best for the environment and our bottom line.”
Strength in numbers
With the slowdown in the housing market and the global economic crash, ODL customers have slowed down their inventory requests. In most cases, companies would need to offset their slowing business by raising their prices. In ODL’s case, the manufacturing triangle between the US, Mexico, and China enables the company to maintain the same prices and production pace.
“We were anticipating a slowdown,” said Mulder. “So while other companies sped through 2008 and decided suddenly the pace was no longer possible, we had already made changes in 2007 to prepare.”
ODL wasn’t immune to price increases, but the changes weren’t a result of poor planning. In 2008, material prices on glass, plastic, aluminum, and energy—all of ODL’s primary materials—skyrocketed, and the entire industry was affected. “It was out of our control, but it’s also been the only shock that we put to our customer base, and they understood,” Mulder said.
With a business structure split almost evenly between remodel and new construction, it’s important that ODL maintains a position of reliability to its retail partners. The company doesn’t make decisions for the retail buyers, instead positioning itself as a resource for their entire home building product mix. “Our goal is to provide them as much information about our product niche as we can possibly get their hands on,” said Mulder. “From there, we let them make the decisions that will best suit their business needs.”