• Does the project require unique process-engineering skills?
• Does your engineering department have the full range of capabilities and design tools (CAD, CAM and CAE) needed for the project being considered?
• Does the project require extensive communications with internal management, manufacturing, engineering and quality disciplines?
• Do you have experienced project managers who can effectively communicate with internal and external customers and tool sources?
Cost, Price and Delivery
• Are your fully allocated internal fixed and variable costs higher than those of outside suppliers?
• Would your internal marginal costs be lower or higher using an outside supplier?
• Are overhead costs associated with your inhouse processes lower?
• Are your internal labor rates lower?
• Can you purchase raw materials at a lower cost than your supplier?
• Is your inhouse operation competitive in delivery, service, quality and price?
Other Considerations
Regardless of your reasons to outsource, proper planning, sound execution and resolute follow-up are required, and all have costs associated with them. Airfare, car rentals, hotel bills and meals can add up quickly, especially if the project develops problems. Depending on your supplier locations, in-bound freight, taxes and duties can offset any perceived savings, as can transportation time.
You may have projects that have traditionally been completed inhouse that would not be advisable to outsource, such as products or processes that are part of a core business activity, or those based on intellectual property. Customers that require you to have inhouse capability and capacity would be another reason not to outsource.
A qualified supply base should comprise no more than three or four suppliers. When your suppliers know they only have two or three competitors, they can do a better job for you. Each knows it has a 25 to 33 percent chance to win your business. Conversely, with five or six competitors bidding on the same job, each has a 15 to 20 percent chance of earning the business. When a supplier’s quoting department becomes busy, it likely will pay more attention to the piece of business offering the greatest opportunity to succeed.
Don’t rely on your supply base to be your estimating department. The chance of receiving accurate quotes diminishes dramatically for jobs you have not yet been awarded. It is not uncommon to see pricing vary by 50 percent, 100 percent or even 200 percent among suppliers. The reason for this disparity is quite simple: If your company is bidding a job against four competitors, the likelihood of you winning that business is 20 percent. Your four tooling suppliers each have a one-in-four chance to win the business from you. But, it is a one-in-four chance at your 20-percent opportunity. The bottom line for your tool suppliers is a five-percent opportunity. You may eventually receive a tool quote, but only after those opportunities with a 33-percent chance get their proper attention.
If you do not have a supply base, establishing and developing one can take a considerable amount of time. First and foremost, look for companies experienced in your specific industry. Just because a company has extensive experience developing dies for deep-drawing automotive panels does not mean it can build tooling for a double-basin stainless-steel kitchen sink or a high-strength aluminum aerospace product.
Reputation and references provide reliable s to find qualified sources, but you have to ask the right people the right questions. Ask for references, and find out what customers say about a supplier’s quality, integrity, past performance and workmanship. Ask how well they handle short-delivery and crash programs. Do they have strong program managers? What types of products and tooling do they have exceptional strength in?
Visit the facilities of prospective suppliers and gauge whether or not they have the support services you require, such as process modeling, circle-grid analysis, CMM and inspection capability, laser scanning and reverse-engineering capabilities. Do they operate high-quality tryout presses properly sized for your work, and do the presses have feed lines to enable tryout of progressive dies?
Also evaluate the engineering department, and find out if you will have a dedicated program manager. Is all of the engineering done onsite or do they outsource? If so, where to? If necessary, can they design in 3D? How available are service providers such as foundries, tool-steel suppliers, heattreaters and platers? Finally, look for tooling suppliers that are cooperative and proactive in addressing problems. Insist they be part of a team—your team—dedicated to continuously improving design, manufacturing, assembly and serviceability. Your suppliers should be committed to building good relationships with your organization through continuous and cooperative communication. MF Technologies: Management, Tooling
Peter Ulintz
Podcast