Continental Corp
Surviving & Thriving As a Supplier

The roles of suppliers are undergoing rapid change as both technological and organizational issues impact what they do and how they do it. Here's a look at one supplier that's positioning itself for the future.

Teleflex Automotive. When we were invited to talk with George W. Hofman, president of the Troy, MI-based supplier, we realized that we knew absolutely nothing about the company. Which, in and of itself, isn't such a horrible thing, despite the fact that we are in business to know and report about companies, their technologies and their strategies. But, after all, there are hundreds—if not thousands—of companies about which we know nothing or less.*

Hofman admitted that he, too, hadn't known about the company before he joined it in February 1992 from A.D. Piston Products, a subsidiary of T&N plc, where he had been the president and CEO. This isn't because Teleflex Automotive is a small company. In 1992 it had sales of $90 million. Today they're $400 million. The company has been in auto for some 30 years. Its area of specialization is mechanical cable controls; it claims a market leader role in providing control cables. Applications include throttle controls and shifter controls...as well as for releasing hoods, doors, tailgates, etc. Teleflex Automotive is part of Teleflex Inc., a $1.3-billion firm that has operations that make things ranging from cables used on lawnmowers to endotrachial tubes.

Three points from those two paragraphs are important not only from the standpoint of this one supplier in particular, but also relate to all suppliers today:

  1. The importance of visibility
  2. The future of core products
  3. The importance of solid capability.

On the issue of the relevance of visibility, Hofman said that he and his colleagues are facing the changing nature of being a supplier. Although the company supplies the Big Three, Toyota, and Nissan and has been a Tier 1 supplier, as the consolidation of suppliers occurs, they have a concern that Teleflex Automotive could drop from sight. To be sure, the people at the various customer companies who are involved in purchasing cables recognize the name, but what happens if a system supplier gets assigned to an entire package, of which the cable is just one element? Will Teleflex be recognized?

So to be a supplier today means that although promotion may not be as important as product and productivity, it is still something to be taken into account.

Although Hofman said that being a Tier 1 supplier is preferable to being at other levels in the chain—due to the ability to better control one's destiny—he recognizes that being elsewhere is what it might take to get work, and they are interested in that, first and foremost.

But the company is doing something to assure its destiny. Which gets to the second point about core products. The throttle and shifter cable business is, well, one whose days are numbered. Cable is, in effect, going to be giving way to "wire." As in "drive-by-wire," which includes, but is not limited to, replacing the cable connection between the pedal and the powertrain and the one that links the shifter and the transmission. Asked about whether this might be analogous to the shift from carburetors to fuel injectors, Hofman replies,"Absolutely. In my opinion, electronic throttle control is going to happen." Happen more extensively. So their approach? "If we're going to lose business, let's lose business to ourselves."

Electronic throttle controls (ETCs) are going to become more prevalent on vehicles. They eliminate the need for mechanical linkages - as in cables, something that Teleflex Automotive produces lots of. So instead of trying to simply protect its turf in the throttle cable business, it has added ETC capability to its portfolio.

Even though Teleflex Automotive is actually doing more throttle cables today than it did five years ago (both through getting business from competitors as well as new jobs), management has positioned itself to offer electronic throttle control (ETC) pedal systems. Comcorp Technologies is a pioneer in this area; it supplied ETC for light-duty diesel trucks and diesel vans in 1993. Teleflex Automotive acquired Comcorp in 1997.

In addition, the firm acquired a Swedish company, United Parts, which has manual shifter business and pedal manufacturing work (along with plants in Sweden, Germany, Slovakia, the United Kingdom, and France).

The result of both of these acquisitions is that Teleflex has positioned itself to be a systems supplier: not just the throttle cable, but the pedal and the cable; not just the shifter cable, but the shifter, too—to say nothing of the ETC capability as well as geographic range (i.e., Europe) that had been lacking.

So, in order to grow a business as a supplier, it is important to anticipate where the market is going (e.g., What technologies are being sought? What capabilities are required?) and position the firm to get there instead of trying to hold onto familiar ground.

Finally, the issue of solid capability. One of the things that Teleflex Automotive does well is injection molding. For example, in producing the cable assemblies, it is typically a matter of putting the plastic onto the cable, not of inserting the cable into a plastic sleeve. One of the areas that Hofman sees growing is plastic pedals. So, in one of the Teleflex plants a large injection molding machine for pedal production has been installed right along with the smaller machines that are used for cable processing. Fundamentally, Hofman explained, the processes are the same and they have a core skill set to handle it.

Teleflex Automotive—as well as its kin groups within the overall Teleflex organization—utilizes the Teleflex Production System, which Hofman described as being a tailored version of the Toyota Production System. This system addresses issues including such things as floor space requirement, work-in-process, lead times, quality improvement, and cost reduction. Hofman said that he has a person who reports directly to him who spends his time in the Teleflex Automotive plants, training trainers in the Teleflex Production System. This is no new initiative; that person has been on the job for four years.

All of this supports design and engineering operations that have racked up more than 200 patents on production parts. These functions are fully equipped with an array of computer-aided design and engineering tools. "The way to get business," Hofman explained, "is to have a superior design; service during the whole engineering process; and a competitive price."

So a key to success is to have solid capabilities in design, engineering and manufacturing.

Perhaps Teleflex Automotive won't become a name that is widely recognized, a brand name. But it is a safe bet that the company will become well known in the areas where it needs to be.

*Knowing less than nothing? It's a situation wherein you think you know something about which you really know nothing. Consequently, there is an active misunderstanding. So if knowing something is characterized by 1, knowing nothing as 0, less than nothing is -1. It is conceivably more damaging than neutral ignorance.