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Monday, May 23, 2016

Outsourcing Metal Stamping Dies

Blogger: Pete Ulintz
Technical Director, Precision Metalforming Association 
Many contract stamping manufacturers have the ability to build their own stamping dies onsite, in their own tool room. On occasion it may become necessary to buy tooling from an outside source. This is commonly referred to as outsourcing.

Outsourcing may be the required due to excessively high workloads in the tool room or short delivery requirements from the customer. For some companies, outsourcing may be part of an emerging or existing business strategy.  Sometimes, it is simply be a better economic choice.

When considering to outsource any tooling, either domestically or internationally, you should first conduct a “make-or-buy” study first. A high-quality make-or-buy study ought to include a thorough evaluation of the following:

Design and Engineering Capability: Does the project require you to have die designers and engineers on staff with varied experiences? Does the project require unique processes engineering skills that your company does not possess? Does your engineering department have the full range of capabilities and design tools (CAD, CAM and CAE) needed for the project being considered? Will the project require extensive communications with internal management, manufacturing, engineering and quality disciplines? Do you have experienced project managers that 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 outside supplier costs? Would your internal marginal costs be lower or higher using an outside supplier? Are the overhead costs associated with your in-house processes higher or lower? Are your internal labor rates lower? Can you purchase raw materials at a lower cost than your supplier due to economies of scale? Is your in-house operation competitive in delivery, service quality and price?

Other Considerations:  Airfare, car rentals, hotel bills and meals can add up quickly, especially if the project develops problems. Depending on your supplier's location, in-bound freight, taxes and duties can offset any perceived savings, not to mention transportation time.

You may have projects that would not be advisable to outsource. Products or processes that are part of a core business activity and those based on intellectual property would be two examples. Customers that require you to have in-house capability and capacity would be another.

A qualified supply base should consist of no more than three or four suppliers. When your suppliers know they only have two or three competitors they can to do a better job for you. Each company has a 25-33% chance of winning your business. If there are five or six other competitors bidding the same job, each has roughly a 15% chance of earning the business. When a supplier’s proposal department becomes very busy, attention will likely be devoted to the piece of business with a 33% opportunity rather than one offering 15% or less.

Don't rely on suppliers to do your estimating: The chances of receiving accurate quotes diminish dramatically for jobs you have not been awarded. It is not uncommon to see pricing vary by 50%, 100% or even 200% 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%. 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% opportunity. The bottom line for your tool suppliers is a meager 5% chance at the business. Tooling suppliers that realize they are acting as your estimating department may be quick to no-quote your business, or refuse to do business with you at all.

Establishing and Developing a Supply Base: First and foremost, look for companies that have experience in your specific industry. Just because someone has extensive deep drawing experience with automotive inner door panels doesn’t mean they can build deep draw tooling for your double-basin stainless steel kitchen sink or your brass ammunition cartridges.

Reputation and references are very reliable ways find qualified sources, but you have to ask the right people the right questions. Ask for references. Find out what their customers say about their quality, integrity, past performance and workmanship. Ask how well they handle short delivery and crash programs. Do they have strong program managers? What type of products and tooling do they have exceptional strength in?

Visit their facility. Do they have the support services you require, such as: process modeling, surface strain analysis, CMM and inspection capability, laser scanning? What about reverse engineering capabilities? Do you need them? Are their tryout presses high quality and the appropriate size for your work? Do the presses have feed lines in order to tryout progressive dies?

How well staffed is their engineering department? Will you have a dedicated program manager? Is all of the engineering done onsite or do they outsource? If so, where to? Can they design in 3D solids? Do you need them to? How available are services and supplies such as foundries, tools steel suppliers, heat treating, plating and coating? Are these services readily available or is there typically five to seven days lead time?

Look for tooling suppliers that are cooperative and proactive in addressing problems. Insist they be part of a team - your team - that is dedicated to continuously improving design, manufacturing, assembly and serviceability of your process. Do they have resources to support these activities? Are they committed to building good relationships with your organization through continuous and cooperative communication?

 Once you have established your potential supply base, the first obligation to communicate clearly and effectively lies with you. Your suppliers will need clearly stated (written) die design and build specifications. Make sure your technical requirements and acceptance criteria are written in a way that is clearly understood and make sure they agreed upon by the supplier in advance of any quotation.

Outsourcing can be a worthy consideration, but it is not a fail-safe strategy and there are many variables to consider. Regardless of your reasons to outsource, proper planning, sound execution and resolute follow-up are required and all have costs associated with them.

The Skills Gap, Efficiency, and the Industrial Internet of Things

Did you know that 91% of Millennials plan to stay in a job for less than three years before moving on? Imagine your own business’s turnover rate if every new employee you hire will only be there for a maximum of three years. Add that to the baby boomer retirement rate of nearly 10,000 people leaving the workforce each day in the US, and that is a lot of holes to fill. Those are some intimidating stats!

All that considered, let’s think beyond the skills gap for a moment. How does this turnover rate favored by Millennials affect your business as an operation? We asked ourselves this question and the first thing that came to mind was: “inefficiency.”

When you consider the amount of work and time that goes into each new hire, from the hiring process itself to training to probationary periods and more, not only are resources constantly redirected from the shop floor to the training room, but the risk of error rises, too. How can you prevent the same mistakes from being made by each cycle of under-experienced hires over and over again? How can your organization meet its goals if a decent amount of your workforce is always green?

This is where all the new tech taking the manufacturing sector by storm comes in. With the Industrial Internet of Things (IIoT), real-time data captured across systems provide each other with information about efficiency, variance, and error. This means that mistakes can be caught as they happen, not hours later when those mistakes start affecting someone else’s work. This is a revolutionary update to one’s shop floor and has the potential to radicalize our sector.

Not only this, but consider that Millennials and innovative, ever-changing tech tend to go hand in hand. Young operators interact with new systems much collaboratively than previous generations could, and this natural extension from personal to professional tech leads to higher achievement and confidence in new hires.

Not only does IIoT help eliminate inefficiency that could become more prevalent as Millennial preferences force higher turnover rates, but it also speaks a language Millennials have been fluent in since early childhood. By adapting to the new wave of manufacturing best practices, even the smallest manufacturing companies can be a part of a true revolution.

Wednesday, May 18, 2016

Collaborative Learning: What Is It and How Do We Use It?

We all know about the skills gap and our industry’s concerns for the future of manufacturing. According to research from Deloitte, nearly 3.5 million skilled jobs will need to be filled in the next decade, and the skills gap is predicted to result in over 2 million of those jobs remaining vacant. One of the many proposed adjustments is the integration of collaborative learning.

What is collaborative learning?

Whenever someone is learning a skill, process, or system outside of the typical instructor/trainee scenario, that is collaborative learning in its broadest sense. Hands-on experience, mentorships, online tutorials, message boards, and any other kind of interactive learning outside of a classroom lecture environment is considered collaborative.

Why is this model so important to manufacturing?

There are many reasons why collaborative learning is critical to the future of manufacturing. First, this type of engagement will allow the highly-skilled generation that will soon be retiring to pass on their knowledge long after they have left the shopfloor. Technology and the Internet make it possible for employees with nuggets of wisdom to share to record quick instructional videos, write brief blog posts, or host Q&A forums that can be archived and searched at a later time. Daisy Hernandez wrote this week in MBT Magazine about the importance of offering incentives for this type of knowledge-sharing.

Another reason for collaboration is continuous learning. When message boards, instructional videos, tutorials, etc. are already set up for new hires, the exploration of these platforms by established employees should be encouraged. Real-time collaborative tech like message boards and chats also allow for interaction with peers, instructors, and experts outside of one’s immediate environment on the fly. These practices also streamline critical functions and eliminate inefficiencies, something that a recent IDC survey found could cost companies as much as $30,000 per employee.

How can I use collaborative learning in my workplace?

Many manufacturers already have some of the systems mentioned above in place, so it’s just a matter of encouraging employees to use them for collaborative purposes. A good place to start might be by asking a handful of established employees to dedicate an hour per week to simply be available to answer questions. Another option is to ask those same employees to think of 5 specific things (shortcuts, tools, etc.) they wish they had figured out back when they started their current job, compiling them, and posting it somewhere employees can access and search through  it easily whenever they need.

Monday, May 16, 2016

The Relationship Pendulum Swings between Procurement and Sales

Guest Blogger
Kelly Barner, Editor, Buyers Meeting Point
Traditionally speaking, procurement and sales have been ‘uneasy bedfellows.’ We each represent our organization through an important interaction that may or may not result in an ongoing relationship. Even if a deal is struck, there is likely to be a change in the point of contact on one or both sides. Procurement may hand off to budget holders within the business and sales may hand off to technical or account managers.

And yet, for the duration of the sourcing/sales/negotiation processes, procurement and sales bear the majority of the responsibility for exploring the potential benefit of helping their organizations work together on an ongoing basis.

Over time, the nature of these processes, and the relationships that result from them, have changed significantly. One of the most meaningful changes has been the perception of the relationship between procurement and sales. Unlike the curve we typically associate with maturity or evolution, the changes have come in the form of a pendulum swing.

Starting Point: Casual Supplier Relationships
Before formal procurement, each organization had buyers that were responsible for the acquisition of goods and services from suppliers. In the natural course of doing business, buyers formed relationships with their sales representatives. Certainly, some portion of the relationship was due to procurement wanting to get a preferential deal, and some of it was due to sales putting a little extra effort into the deal to win the buyer over, but for the most part, relationships sprang up organically. The supplier would be in the office to demonstrate something new or check inventory, and over time details would be shared on both sides: vacation plans, hobbies, and kids’ sports.

Swing 1: Relationship Deconstruction
Then strategic sourcing hit the scene and all such ‘relationships’ were declared counterproductive and unethical. Procurement was trained to see ‘value selling’ as an effort by suppliers to bypass structured decision making processes. Companies passed formal guidelines that set boundaries for dealing with suppliers. No more lunches or golf outings – even charity ones. No more holiday gifts or easy familiarity. The casual nature of buyer supplier relationships was blamed for preventing the buying organization from objectively making business decisions and establishing supplier performance expectations. While some savings wins were achieved, the downside to all of this ‘objectivity’ was that something intangible – and beneficial – was lost.

Not only was the sourcing process taken out of the hands of the buyers, the people who would be using the product or service, and put in the hands of centralized procurement, the sourcing process itself – known to suppliers as the sales process – was forced through an eSourcing solution. This also confined contact between procurement and suppliers to orchestrated review sessions, allowing some face time but preventing relationships from forming, even by mistake.

Swing 2: Formal Supplier Relationships
In an effort to repair some of the damage, and regain lost value, supplier relationship management (SRM) caught on as a movement, driven by procurement and made the most of by suppliers. While some face time was better than none, many of these sessions were structured in accordance with carefully designed performance scorecards. No selling allowed – just reviews of quantitative performance scores and feedback from internal users, collected in advance and delivered in aggregate form.

While SRM was a move in the right direction for procurement and sales, it was a process change. What was really needed in order to redefine the nature of the relationship between sales and procurement – and the value created by it – was a mindset change, or a philosophy change.

Swing 3: A Return to Equilibrium?
Over the last couple of years, supply base collaboration has become the order of the day. And while procurement got our feet wet by attempting to collaborate with suppliers selected through existing strategic sourcing processes, we quickly learned that a relationship-oriented mindset has to exist from the very beginning: moving the line all the way back to the beginning of the sales process.

Not for all categories of spend or demand, mind you, but for the ones where a collaborative relationship creates a benefit for sales and procurement, value selling is back on the table for suppliers. No longer do their responses have to fit exactly in the boxes we give them – there is room to move and differentiate their company’s solution without threatening the objectivity of the process procurement was established to facilitate. And while sponsored lunches and golf outings may be gone for good, the occasional conversation about vacation or the local Little League team probably wouldn’t do any harm – it might even improve how the category is managed.

The Future of Manufacturing and How to Be Ready, Part III

For the past few weeks, we’ve worked through the definition of smart manufacturing, its potential to radically change our industry, and common traits of manufacturers who are ready to adopt smarter systems. This week, we’ll discuss Larry Korak’s 5 steps for starting your expedition into the world of Industry 4.0.

As we said before, there is no conclusive checklist of tools that must be incorporated in order for one’s company to be considered a smart manufacturer. Some companies will need to deploy many forms of new tech while others will be able to use only two or three disruptive technologies to maintain a strong market position. With  that in mind, here are Korak’s suggested stepping stones to get involved in the world of smart manufacturing, however you choose to jump in:

  1. Develop a basic strategy and set clear goals. Think about your business and what you want to achieve. Not only that, think about why you want to achieve those particular goals. Be specific and realistic so that the next steps do not require further breaking down. Make sure you keep customer satisfaction in the forefront of your mind as you build your strategy.
  2. Utilize the expertise of those around you and build a diverse team. By putting together a group of people whose wealth of knowledge differ, your strategic roadmap will be significantly more sturdy and efficient. However, try to avoid too-many-cooks syndrome by appointing an executive decision maker. Don’t be afraid to include skeptics in your circle; the difference of opinion can often lead to new insight.
  3. Enhance your market prospects. Do research on your target market to better understand each step of the buying process from their perspective. Don’t be afraid to look into other demographics if you find that your original data doesn’t reach your standards. Find ways to make opportunities if they can’t be found.
  4. Set your plan in motion gradually. Korak suggests using a model often utilized by successful companies: “Use a phased approach to deployment of major initiatives… [this] provides you with early wins and chances to refine your strategies over time.” Start with the basics and with tech that can be used across several applications so that you can get a better picture of what the tech is capable of.
  5. Assess and perfect. Understand that implementing new systems will rarely be flawless the first time. Set steps for your progress and make your goal continuous improvement. Celebrate successes and continue to raise the bar as your expertise grows.

Change is daunting and taking risks for the sake of your business can often be an entirely new level of apprehension. By breaking down the process and keeping things simple, orderly, and open-minded, you can ease your way into the world of smart manufacturing faster and more easily than you’d think. Get excited for the future and start exploring!

Tuesday, May 3, 2016

For More and More Millennials, an Apprenticeship is a Surer Thing Than a College Degree

If you had to choose between job-prep that costs thousands of dollars and could leave you with no clear career path or job-prep that pays you a wage to learn high-demand skills, which would you pick? When you put it that way, most people would opt for the latter, and data is showing that more and more millennials agree. As Labor Secretary Thomas Perez says, apprenticeships are “the other college, except without the debt.”

Apprenticeships are typically a combination of classroom instruction at a trade school or community college and hands-on instruction from mentors. Since apprentices earn a wage for their work  and tuition is typically covered by a grant or the employer, many young people are finding that this really is a better alternative to a college degree. Millennials who have finished their apprenticeships are even finding that their new skills are so marketable that the average starting salary is $50,000.

So what does this mean for the skills gap and the future of manufacturing? If there’s ever a time for an apprenticeship boom, it’s now: as Baby Boomers begin to retire, having a mentee to whom they can pass on their knowledge is an excellent way to ensure that the years of experience held by these shop floor veterans are not lost. According to the Labor Department, the number of registered apprentices rose by over 27,000 between September 2014 and September 2015, and estimates show a similar number of unregistered apprentices.

If your company doesn’t have an apprenticeship program already in place but you’re interested in knowing what it takes to start one, check out these great resources.

Monday, May 2, 2016

The Future of Manufacturing and How to Be Ready, Part II


Last week, we defined smart manufacturing and discussed its potential to radically change our industry. It got us wondering: what exactly would a company that is ready to take on the 4th Industrial Revolution look like?

Lucky for us (and for you), an excellent article by Larry Korak was published in Industry Week recently that discussed just that. Here some highlights from his list:

Common Traits of “Future-Ready” Manufacturers
  • An innovative mindset. If your company already supports out-of-the-box thinking and    encourages team members to contribute, you are ready to try news systems that are agile and flexible, allowing for easier rearrangements to the status quo when someone spots a better way to meet a goal.
  • A desire for up-to-date stats. With new tech, especially the Internet of Things, real-time data communicated between systems is becoming a reality on the shop floor, in the sales rooms, and more. If you already work with the most current data possible when making decisions, you are ready to take on real-time, highly detailed stats.
  • An automated work space. If your employees are already accustomed to working with automation to some degree, it will be much easier to further modernize your shop floor. This will waste fewer resources and minimize downtime, creating a more efficient environment.
  • The ability and willingness to collaborate. Engaging with partners and customers to allow for participation in product development will help prepare you for the increase in user input that projected consumer trends demand and that smart systems can bring. 
If you feel that you are ready to start making the transition to becoming a smarter manufacturer, consider the advice given in a report from the research firm McKinsey: “The age of experimentation with digital is over. To stay competitive, companies must […] commit to transforming themselves to full digital business.”

The time is now, let’s join the future!

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