Evaluating Precision Machining Suppliers
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Posted On :
May-30-2011
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Article Word Count :
1421
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JC Gibbons Manufacturing discusses that always focusing on price when evaluating machining suppliers could cause a business to lose money long term. Criteria such as industry associations and quality systems should also be in the purchasing equation.
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Finding the right precision machining company to manufacture your finished products can be a daunting task. Therefore, when evaluating manufacturers for precision CNC machining, screw machining, tooling, or any additional type of manufacturing, it is imperative to give weight to multiple criterion. With that in mind, there are a few do’s and don’ts to live by, or at least to make an honest effort to consider when making a final decision.
Do Not Focus on Pricing
Many companies give precedence to price, which is reasonable to a point. Price centricity is focused on the existing budget and how much cash you can outlay towards the transaction. The problem is that this method is based on one condition of sale, and not the grand scheme of the project. For example, by relying on price alone, many manufacturers have resorted to off shoring their production to countries in Asia, like China or Taiwan. The short answer why companies do so is because of the very low direct labor costs that keep total expenses down. Many companies find out later that moving overseas is far more costly than the original ticket price. Fellows Inc. is one great example of losing big by off shoring. The company shifted production to China through a joint venture with Shinri. There was a change of hands at Shinri that equated to a major shift in managerial philosophy, and Shinri attempted to take over complete control of Fellows’s Chinese operation. Shinri demanded price increases and full equitable control, which was a contractual violation of the joint venture terms, not to mention illegal. After Fellowes approached the Chinese government for help in resolving the matter, little help was offered. In short, Fellowes accrued $100 million dollars in sunk costs.
With international shipping costs and the lag in delivery time from China, companies must often order parts 6 months in advance of final assembly in the United States. Parts from Asia are ‘sometimes’ plagued with quality issues or product engineering issues because of the communication disconnect with controlling entities in the United States. When you receive a product that does not meet quality standards, you have lost 6 months of lead time and the initial cash investment. If you practice a JIT or demand pull system, or just want control of your product, then keeping to domestic suppliers is highly suggested. When you think about the price, think beyond the invoice – think about potential losses and the opportunity cost of not having the parts produced locally or at the quality standards that you need. Moreover, think about the under cutters that will try to gain your business.
Under cutters are generally new companies that are trying to make a name in the industry. They often resort to entrance based pricing strategy to both spark long term relationships with new customers and take clients away from other suppliers. Often times these companies respond to quote requests with dollar values that are too good to be true, sometimes even below their own costs which is just bad for business. This results in corner cutting during the manufacturing process, less than desirable customer service, and low quality machined parts. Not that a new company cannot offer you great service or a low price, but you should evaluate their standing in the industry and the quality measures that they have in place. The premise here is similar to looking at a firm’s credit history when deciding to do business with a supplier. We can research a company’s standing by evaluating their industry associations and quality process controls. I’ll start off by looking at a few reputable manufacturing associations and the benefits of being a member.
Do: Look at Manufacturing Associations
In order to evaluate a machining service provider you should always check their credibility in the marketplace. One method of doing so is to cross reference the company’s name with industry associations, and by reviewing their website. Often their associations are listed right on the home page or in the ‘about’ section. It also does not hurt to ask the companies what associations they are members of if you don’t immediately find them listed.
NAM
One noteworthy association is NAM or National Association of Manufacturers. The National Association of Manufacturers is the superlative US manufacturers association, which is also the nation’s largest industrial trade association. Their membership is comprised of over 11,000 members of varying company sizes and from all 50 U.S states. An association with NAM ensures that companies are actively participating in their industry. Additionally, NAM provides industry information that addresses the manufacturing problems that many manufacturers face. The premise here is that when you’re educated about your own process, you can ultimately improve it. This usually results in a healthier bottom line, and generally, the company may be able to compete more on price, which assumes a direct correlation between efficiency and price point.
PMPA
Another noteworthy association is the PMPA or Precision Machined Products Association. Unlike NAM who is far spread among many industries, the PMPA is focused more on precision machining, but don’t let that fool you. The PMPA is an international trade association that represents the precision machined products industry well. The association was originally founded as the National Screw Machine Products Association in 1933 but the name was later changed. Their strategic focus is evaluating the latest technology, assessing interests in government regulations, performance benchmarking, and evidence based data collection industry wide. Their member base of 2,654 consists mostly of manufacturers located in North America, but many of these firms are global and hold subsidiaries or export across borders. Many of their members provide precision CNC machining; turning and milling services, rotary transfer, and screw machine products. The majority of these companies have a diversified portfolio of industries served, such as automotive components, aerospace, heavy truck, oil, medical devices, appliances, construction equipment, and much more. Additionally, with green technologies such as wind turbines emerging and dotting the landscape, many companies have penetrated that market as well.
Other Associations
There are hundreds, even thousands of industry associations. It would be extremely difficult to list all of them here. Although NAM and PMPA are prominent, it is important to determine the specific industry your potential supplier is a part of, and to identify the respective associations that they should be a part of.
Do: Evaluate Quality Systems
One of the most heavily weighted criteria in the assessment suppliers should be the quality of the finished product. There are many quality systems that companies employ to ensure that you receive the highest quality machined parts. I’ll discuss the major practices here, but it is important to ask the suppliers about what they do to ensure a quality product.
Six Sigma and Beyond
If you believed Six Sigma was born from Toyota or the automotive industry in general, your assumption is false. Motorola, a well know telecommunications company, pioneered the practice all the way back in 1986. The objective of Six Sigma is to improve the quality of outputs by isolating defective parts and correcting the processes that creates them. This removes process variability which makes it easier for managers to target cost reduction and profit increasing opportunities. The term Six Sigma is derived from statistics. If you’re familiar with the bell shaped curve and standard deviation, then you should have a good grasp of what sigma represents. If not, I’d suggest doing a little additional reading or statistics homework to be enlightened. In short, a measurement in sigma (1-6) indicates the quality yield (the percentage of non-defective parts) of a manufacturing process. A process designated as being Six Sigma is one that has achieved a 99.99966% efficiency rating. This means that the process is expected to produce 99.99966% of parts without defects. Not unlike Lean manufacturing where a product team is deployed, there are usually teams of people that are designated to execute Six Sigma initiatives. These individuals are often referred to as black belts, green belts, and so on, where the degree of training and certification defines the belt type. There are many SPC (statistical process control) activities that a firm could engage in. Additionally, initiatives such as 5S and Lean manufacturing are now a common place. Be sure to ask each precision cnc machining shop, screw machine products manufacturer, or other type supplier what types of controls they use to ensure a quality product.
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Article Source :
http://www.articleseen.com/Article_Evaluating Precision Machining Suppliers_62746.aspx
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Author Resource :
JC Gibbons Manufacturing Inc is a precision cnc machining and screw machine products manufacturer
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Keywords :
precision cnc machining, screw machine products, six sigma, lean manufacturing, PMPA, NAM,
Category :
Business
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Small Business
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