Tooling by Design



Buying Metal-Stamping Dies--Part 1

By: Peter Ulintz

Tuesday, January 1, 2008
Have you considered outsourcing as a to help reduce costs or improve your business relationships through better turnaround time and volume? It’s a worthy consideration, but you should be aware that outsourcing is not a fail-safe strategy and there are many things to consider beyond price.

Many contract-stamping manufacturers also have the ability to build their own tooling inhouse. On occasion, they may obtain tooling from an external tool and die shop. This is commonly referred to as outsourcing.

Outsourcing can result from high toolroom workloads and short customer delivery requirements. For some companies, outsourcing is part of an emerging or existing business strategy. Sometimes outsourcing just seems to make the most economic sense.

If you are considering whether to outsource your next tooling job, first conduct a make-buy study.

Knowing the total cost in a make-buy study begins by gaining a comprehensive understanding of the real internal costs for manufacturing compared with clear knowledge of your supplier strengths and areas of leverage. A high-quality make-buy study should include a thorough evaluation of the following:

Design and Engineering—Does the project require designers and engineers with varied experiences? Does the project require unique processes and engineering skills? Does your engineering department have the full range of capabilities and design tools (CAD, CAM and CAE) needed for the project under consideration? Will the project require extensive internal communications with management, manufacturing, engineering and quality disciplines? Do you have experienced project managers that can communicate effectively with internal and external customers and tool sources?

Cost, Price and Delivery—Do you know your fully allocated internal fixed and variable costs? Are they higher or lower than outside supplier costs? Would your internal marginal costs be lower or higher using an outside supplier? Did you account for your supplier’s geographic location? In-bound freight, taxes and duties can offset any perceived savings, not to mention the additional transportation time. Airfare, car rentals, hotel bills and meals can add up quickly, especially if the project develops problems.

Other Considerations—Products or processes that comprise your core business activity, especially those containing intellectual property (IP), are not good candidates for outsourcing, regardless of the cost savings. IP products that differentiate your company by providing better products at competitive prices usually provide enhanced market share and greater profits. The engineering know-how you developed for these products and processes should be kept internally as much as possible.

Do not overlook the possibility that you may have customers requiring you to have inhouse capability and capacity. They may not allow or permit outsourcing. Be sure to read your contracts thoroughly.

Regardless of your reasons to outsource, proper planning, sound execution, continuous communication and regular follow-up are essential elements and each has an associated cost.

In order to outsource tooling, you will need a qualified supply base. A qualified supply base should consist of no more than three or four suppliers. When your suppliers know they have only two or three competitors they can do a better job for you because each company knows it has a 25- to 33-percent chance of winning your business. When you have six or seven suppliers bidding on your job, each has roughly a 15-percent chance. When your supplier’s proposal department becomes very busy, more attention will likely focus on the piece of business with a 33-percent opportunity than one offering 15-percent or less.

A word of caution: Don’t rely on your supply base to be your estimating department. The chances of receiving accurate quotes diminish dramatically on jobs you have not been awarded. It is not uncommon to see pricing vary by 50, 100 or even 200 percent between suppliers.

The reason for this disparity is quite simple: If your company is bidding a job against four other competitors, the likelihood of you winning that business is one in five, or 20 percent. Your four tooling suppliers still have a one-in-four chance to win the business from you; but it is a one-in-four chance out of your 20 percent. The bottom line for the tool supplier is a five-percent opportunity. You may receive your tool quotes but rest assured, those opportunities having a 33-percent chance of becoming an order received much more attention.

If you currently lack a supply base, establishing and developing one takes time and effort. First and foremost, look for companies with experience in your specific industry. Just because a company has extensive deep-drawing experience with automotive door panels doesn’t mean it can build a deep-draw tool for a double-basin stainless-steel kitchen sink.

Reputation and references are reliable s to find qualified sources, but you have to ask the right people the right questions. Ask for references. Find out what your suppliers’ customers say about their quality, integrity, past performance and workmanship. Ask how well they handled short delivery and crash programs. Did they have strong program management? With what types of products and tooling do they have exceptional strength?

Visit the facility of any serious potential supplier. Does it have the support services you require, such as: design-center capabilities, process modeling, circle-grid analysis, CMM inspection, process-capability analysis and laser scanning? Does it have reverse-engineering capabilities? Are the tryout presses of high quality and the appropriate size for your work? Does the company have feed equipment in order to tryout your progressive dies?

How well staffed is its engineering department? Will it provide you with a dedicated program manager? Is all of the engineering done onsite or does that company outsource? If so, where to? Can it design in 3D solids? Do you need it to? How available are services and supplies such as foundries, tool-steel suppliers, heattreating plants, plating and coating? Are these services readily available or is there a 5-7-day leadtime?

Look for tooling suppliers that are cooperative and proactive in addressing problems. Insist that they be part of a team —your team—that is dedicated to continuously improving design, manufacturing, assembly and serviceability of your processes. Verify that they have the appropriate resources to support these activities. Work with suppliers that value “creation through collaboration.”

Once you have established your supply base, the first obligation of effective communication lies with you. All of your suppliers need clearly stated (written) specifications, technical requirements and acceptance criteria that are understood and agreed upon in advance of any RFQ. We’ll tackle that next month. MF


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