OMCO SUMO Insights
The growing global economy and grain prices continue to drive global demand for agricultural equipment. Volumes are increasing. Competition is increasing. While expectations for differentiation, functionality and sustainability are high.
However, Agriculture OEMs often buy similar off-the-shelf bearing models for the equipment they manufacture.
And many North American agriculture OEMs feel compelled to purchase from the same few suppliers that dominate the industry.
Why is this situation a problem for OEM engineers, bearing buyers and product managers?
- Competition for bearing supply and service: Recently, labor and Covid-driven supply chain issues have caused a huge amount of risk and uncertainty while supply of bearings and other key components needs to be locked down. With many Agriculture OEMs sharing the same few suppliers, you are competing for attention with numerous other OEM brands. You may be waiting on design changes, answers to supply chain and lead time issues, or pricing. Many well-known agriculture OEMs are benefitting from partnering with specialty suppliers like OMCO SUMO, with extensive custom design experience, mature quality systems, deep operations throughout Asia, while still maintaining North American manufacturing capabilities and responsive inventory strategies.
- Limited options for differentiation: How could you improve the design and functionality of your products with custom-tailored bearing solutions and engineered assemblies? Many Agriculture OEMs sell products globally. Competition is intense. Unique functionality and differentiation are a key part of customer perception of value. OEMs are continuously improving products and adding value by using power transmission components with bespoke features. Often by working directly with the manufacturer you may benefit from deep technical knowledge regarding material selection, clearance, noise level, lubrication, seal configuration, housing and mount design, or other value-added features.
- Lack of visibility into bearing supplier sustainability and ESG (Environment, Social, Governance): Over the last decade, priorities for bearing buyers have shifted from “lowest cost” to transparency and control of the supply chain. Especially in agriculture and food processing, today’s customers and investors want assurance that products are made with sustainable materials, labor, and processes. Procurement TCO analysis now must include the risks from potential ESG-related consumer and investor backlash. Not every bearing buyer is aware that most bearing brands rely on a complex supply chain that often includes China. Like all manufacturing ecosystems, this network includes state-of-the-art suppliers. Unlike others due to its sheer size and rapidly emerging infrastructure, it also includes reliance on regions like Shandong where it is estimated that as many as 10,000 small workshop factories, including family home factories, feed product to larger suppliers. For more information, see OMCO SUMO’s article “Lifting the Curtain on Chinese Bearing Production.”
- Higher bearing prices: Much of the technology associated with manufacturing standard ground bearings has largely been democratized over the past 20 years, meaning the differences between a premium and non-premium today and between countries of origin can be quite negligible for many applications. Premiums invest huge sums into R&D, inventory, marketing, and global manufacturing operations, which understandably contributes to the cost of their product. While many do, including safety-critical and extreme operating conditions, not all applications benefit from this investment. Similarly, distribution provides a meaningful value for many OEMs and particularly those with large and complex spends. From a TCO perspective, these additional costs may make good business sense for some, but probably not for all higher volume requirements. In many cases you can buy the exact same product – possibly even from the same sub-supplier that better known brands are using – for a much lower cost.
- Labor constraints or missed opportunities for indirect cost savings: Filling production roles has never been more challenging and with older workers opting out of the workforce this trend will continue. How can a bearing supplier help? Customizing or optimizing bearing mounts or assemblies often brings both direct and indirect cost savings. Through combining bearings and related mating components into a value-added assembly furnished complete, savings can go further than lower component or inventory costs. OMCO SUMO has developed more than two thousand custom solutions over the past six decades, often that eliminate assembly operations on our customers’ floors. We see it frequently and are well suited to advise and support your engineering team directly, and/or partner with engineering and procurement at your current distributors if preferred.
We’d love to hear from you about ways OMCO SUMO can support your agricultural equipment with manufacturing and sourcing of bearings, value-added engineered assemblies, and other motion-related solutions.
OMCO Sustainable Motion is a manufacturer and global OEM supplier focused on ESG and sustainable sourcing for bearings, engineered assemblies, and motion-related components across all industries requiring mechanical power transmission. Established in 1964, with our extensive experience and global supplier networks from over 50 years in business, we are deeply knowledgeable and passionate about helping customers achieve sustainable sourcing and ESG goals, focusing on both the integrity of product performance and the corresponding influence on human rights, the environment, and fair business practices. OMCO is the first and only provider of proprietary ESG ratings within the power transmission industry covering an extensive and expanding network of manufacturers throughout Asia that provide high-quality lower-cost products, and often sharing the same supply chain with well-known premium brands without the accompanying overhead. Our goal is to support our customers with transparent values-driven business practices that help achieve sustainability of the triple bottom line: people, profit, and planet. Curious to learn more? Click here or contact us directly at: email@example.com. You can also follow us on Twitter @OMCOSUMO and LinkedIn.