5 Buyer Decisions That Increase Costs

Here are  5 things that can unnecessarily add costs or delays to your Precision Machined Part:

  • Small  Order Quantities
  • Material Selection
  • Special Diameter Holes
  • Close Tolerances
  • Unnecessarily Fine Surface Finish

“Parts is parts.” But costs are influenced by decisions on manufacturability.

Small  Order Quantities are a two edged sword. Minimizing inventory on hand is an important Lean concept; but often the cost of separate setups for small runs is more expensive than holding a modest inventory. If your parts are standard to you, getting the economic order quantity correct can save you money by minimizing what you have to pay for set up costs. (And by the way, we’re working like crazy to reduce those setup costs!)

Material Selection can increase costs of production and can mean missed deliveries if the grade is “just not  commercially available.” Engineering requirements for the end use must be paramount, but the material contribution to manufacturing costs need to be evaluated as well. The reduction in suppliers, suppliers’ inventories, and every one’s attention to ‘Lean’  along the supply chain means that the ‘perfect material’ for that part just might be a six month lead time rolling lot accumulation with no assurances of delivery…

Special Diameter Holes are often overlooked as a cost driver. But with every non standard hole diameter specified, The suopplier will need to purchase higher cost non-standard drills, reamers, and plug gages. Lead times for specials could also mean your parts are delayed while tools are made for your job. Are you certain that a standard hole size won’t do the job needed?

Close Tolerances are a source of pride to the craftsmen of the precision machining industry. Our people, processes, and engineering can assure that the hole delivered is as specified. But if you specify tolerances that are ‘closer than needed,’ the extra attention, more frequent tool adjustments and changes, and loss of productivity to make those adjustments can add incrementally to the cost. We can make what you need- are you asking for more precision (cost) than you need?

Unnecessarily Fine Surface Finish, like close tolerances can add higher costs when specified unnecessarily. What is the reason for the finish specified? While today’s modern tooling and machines are able to provide better surface finish than machining technology of the distant past- for some requirements a separate grinding, shaving, burnishing or other treatment may be required. If there is not really a close fit, sliding fit, and there is no movement on/of the surface, over-specifying surface finish can needlessly increase your part costs.

Practicing ‘Lean’ and minimizing waste is not just the responsibility of the producer. As the 5 items above point out, eliminating needless waste is also a responsibility of the customer.

As my grandparents- who came through the WWI, The Great Depression, WWII rationing, and a host of other economic and life challenges- used to say to me:

“Take what you need. No more, no less.”

I think it’s great advice.

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4 Responses to 5 Buyer Decisions That Increase Costs

  1. T Wolfe says:

    Buyers are usually not the driving force for tight tolerances, finishes, materials and other cost drivers. They are engineering specifications. Yes sometimes they can be changed to reduce costs but the use and safety are also factors that engineers must take into account. You are not going to pull to the side of the road when you are in an airplane. Bottom line is to use common sense which is somewhat lacking nowdays.

  2. Vinny Egizi says:

    Buyers or Purchasing Agents should have enough information of the application to be able to go back to the engineers with recommendations on how cost and delivery can be improved if these parameters are changed. An engineer will always err on the side of overcautious. It is up to operations, to push back to what is really needed…CTQ. There is usually a safe and efficient compromise if people are willing to push back, work together, and buy what is really needed.

  3. Sam Johnson says:

    I could not agree with you more. However I am not convinced that it is entirely the buyer’s fault. In most organizations the buyer buys what the engineer designs to the specs engineering requests. It is true engineers do sometimes over spec a part because it is better to error on the side of safety. The responsibility in the equation is in the buyer’s selection of sources and/or sales people he uses. I am a sales representative and frankly I have seen it go both ways many times. In my opinion it is the sales representative and his companies’ responsibility to make suggestions to changes that can be made to reduce the cost for the customer. They are in the best position to know the cost and they can easily quote alternative prices. i.e. if the finish is as requested the price is X. If you can use Y finish deduct Z amount from the quoted price, etc. With that information in hand the buyer then has something concrete he and engineering can discuss. Many times engineers are not aware that the cost of X vs. Y increases the cost so substantially. It is a learning process for all involved.
    A case in point the other way.
    We quoted a Titanium casting that has an extremely high rotational speed. A note on the print specified that each casting be X-ray inspected. I was told we could ignore that note. I asked if they wanted them hipped and was told that was not necessary. I sent the drawing to the foundry with the X-ray information in my cover letter but asked that our engineering department quote what they felt was best for this particular part as we have been casting similar parts for many years. They quoted it hipped, X-rayed and with the other standard inspections that are normally run on this type of Ti cast part. We did not offer options because our experience dictates the operations necessary to guarantee a good casting for this particular part. I explained to the buyer why we quoted it with the hipping and X-ray. We took a good chance of not getting the job because we added operations that some other foundries will probably not add. Everybody wants to get the jobs they quote, especially in these times. But we must not forget that our first responsibility to the customer is to supply him with a good quality, usable part, at a reasonable price.

    • speakingofprecision says:

      Sam, I did the exact same thing with a fuel nut for the gas line to an OEM carburetor. They should have known better, but the buyer asked for it with out the NDT (eddy current inspection for cracks) just to get his cost savings and bonus. I refused to produce without NDT. HAd their been a recall, you know it would have been “supplier’s fault.”

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