Chris Chlon: Buy Laws

In the first installment of this new column, four ways to reduce the cost of gear cutting machinery before the purchase order is issued are discussed.

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Purchasing machinery for cutting gears is an expensive undertaking. In many instances the price tag for a new broaching or honing machine is over one million dollars. When tooling, options, and unique specifications are included, the final purchase cost is significant. In addition to these, machinery automation is often required, which can include conveyors, robots, and gantries, etc., which drive up the cost to the end user.

There are several measures that can be taken to help reduce the purchase cost. First, it is extremely important to have a clear, well–defined set of specifications or scope of work. This means current part prints, material specifications, automation, required controllers, cycle times, estimated annual usage, and plant locations.

Part prints can change due to customer–directed dimensional changes, many times involving tolerances for machining and assembly. Another reason is because the customer has changed material specifications, often in the form of chemistry, which affects process time, tooling, and tolerances, etc.

One of the most important components of a large gear cutting machine is the controller system, and some companies have preferences. If the end user’s preferred system isn’t offered by the supplier, problems can develop, creating delays.

In some applications automation is required due to the size of the gear being cut, the quantity, the assembly process, and final inspection. Having a well–defined concept of the automation needed can prevent delays at the supplier. For example, knowing the overall space requirement is critical to obtaining a valid quotation. Also, knowing the size and weight of the parts involved, the production process, assembly, and inspection requirements will enable the supplier to quote accurately. The estimated annual usage of the parts will also help ensure that you get the right machine for the job. Having this data enables the end user of the machinery to calculate a cycle time for each part to be processed, and the supplier needs this information to quote the right machine.

Today we truly work in a global economy. Many American companies have established manufacturing plants in countries such as Mexico, China, India, and Eastern Europe. Providing the correct “ship–to” address helps to eliminate any unpleasant surprises in terms of shipping costs and import duties and taxes. This information is also critical if the machinery could be potentially used in the production of weapons.

There are many types of information that must be included when soliciting a quotation. Providing this information means getting a quotation that will meet all of the end user’s requirements, also helping to prevent delays in design, manufacturing, assembly, run off, and shipping.

A second concern is to have a cross-functional team involved in the purchase of such equipment. The team should include personnel from manufacturing engineering, controls, operations, supplier quality, safety, and purchasing. Depending on the size of the company, having such a team may not be possible; however, every effort should be made to use this approach. By doing so, the chances of omitting a key specification or requirement are minimized. Ideally there should be a project leader which, in many instances, is the manufacturing engineer as well as those from the functions that will be involved with the machine’s operation and production output. Face–to–face technical reviews with potential suppliers are an absolute “must–do” when considering the purchase of broaching machines, honing machines, and hobbers. These reviews are meetings with each bidding company and the cross–functional team. The bidder’s proposal is reviewed by all, and layouts, part prints, machine footprints, controller requirements, electro–mechanical constraints, and safety issues are all discussed—or should be. Revisions of proposals, drawings, layouts, components, and lead time are often made as a result of a technical review. Depending on the complexity of the project, there can be many such meetings. Web–based meetings and video conferences will also work.

A fourth measure is to have limited contact with the bidders. One approach involves having the project leader oversee technical aspects and the purchasing representative handle commercial issues with the bidders. The benefits involve preventing side conversations which may cause problems regarding the specifications and technical issues, and also to prevent unauthorized commitments being made prior to supplier selection, negotiating, and awarding of business. A verbal, unauthorized commitment can be a huge problem if the person who made the commitment leaves the company, or if the official award of the business was given to a company different from the one that was given the verbal commitment.

Finally, it should go without saying that minimizing cost and eliminating potential problems can be achieved only by hard work, paying attention to details, excellent communication, and teamwork. Insuring that data is accurate, part prints and layout prints are current, and estimated annual usage is as accurate is possible are extremely important for obtaining quotations that are appropriate for the requirements in question.

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is a certified purchasing manager with more than 30 years of experience. He can be reached at (260) 456-8624.