The & cable industry is characterized by ongoing consolidation. The top 10 companies are getting larger and taking more and more of the market share to gain economies of scale and better commercial and financial positions in the market. Still a ‘long tail’ of smaller cable manufacturers exist that focuses on specific customer requirements that the large players cannot deliver
The industry saw a significant demand fallout due to the recession. Some companies could cushion the hit by focusing on demand related to renewable energy (wind, solar). In recent years, the revenues in the industry have been recovering, but margins fail to improve due to strong international competition.
Competitive pressure has forced cable manufacturers to further rationalize the production processes in their factories. The drive to continuously improve these processes has resulted into a less diverse product mix that is run in factories. In fact, generally speaking, we see factories in this industry moving to two extremes. Operations become focused on either standard cables or on custom specific cables. Factories that run standard products are optimized for the mass production of cable types with limited variation to minimize change-overs so that material costs are minimized and resources utilization is maximized. Factories that move to a diversified mix of custom cables position themselves to maximize their ability to absorb customer information and process this information throughout the supply chain. For this type of businesses it’s crucial important to be agile to the continuous changing information in their environment.
Risk of price volatility
There is one constant in the wire & cable industry: the continuously changing prices of the conducting materials. In recent years the price of copper has been any place between $3,000 and $10,000 (metric tonne). Price jumps of $500/month are not exceptions. This explains why executives in this industry have a close eye on the operations: a lot of the company capital is stuck in inventory in the factory and warehouses. Significant improvements have been made in working capital reductions, but this remains a top priority for this industry.
Application of Information Technology
There are numerous possible applications of IT in the wire & cable industry. It’s a matter of validating and prioritizing these potential projects. At the end of the day, IT investments have to obey the same ‘financial regime’ as other investments in a company. In the past CEOs may have decided to purchase an ERP software product based on conversations at the golf course. Or because a consultant told them that their IT systems would collapse if they wouldn’t replace it with software that knew there was life after December 31st 1999. These days are behind us. Given the capital intensity of the wire&cable business, it makes sense to assess the impact of an investment in this industry on the capability of a business to efficiently utilize capital to operate, show a profit and grow.
Albert Groothedde will discuss how Enterprise Software can contribute to the increase of profitability by margin improvement and increased inventory turns. During his presentation he will explain how this applies in the various business domains including Engineering & Quoting, Sales, Planning, Production, Quality Assurance and Warehousing & Logistics.
About InnoVites: InnoVites is an Independent Software Vendor with offices in India and The Netherlands. InnoVites is exclusively focused on the wire & cable industry. InnoVites sells and develops Cable ERP©: the Industry Solution for the wire & cable industry, certified on Microsoft Dynamics AX©. InnoVites resells and Implements CableBuilder, the leading cable design software of our partner Cimteq. At InnoVites we believe that only a software solution with a natural fit with a cable manufacturing company will deliver its full potential and unleashes enormous business value to our customers in the cable industry.
For more information, please refer to:
Albert Groothedde, CEO InnoVites
(t) +31 (0) 88 5000 150