Vantage Point - Less is not necessarily more

Less is not necessarily more

John J. Purcell
     President
     Simrit Division of Freudenberg-NOK
     Plymouth, Mich.
     www.freudenberg-nok.com

But squeezing cost from products has now taken center stage in many cases. Attacking the "soft costs" of dealing with multiple suppliers and numerous components has become a successful method of cutting costs. However, the right supplier must be chosen for this "less is more" approach to succeed without monopolizing scarce engineering resources.

When pursuing supplier reduction, it is critical to evaluate a supplier's ability to support future business. The fact is some suppliers lack the necessary product-development expertise or adequate capacity for additional volume production work. And testing and certifying new materials and processes consumes valuable engineering time if suppliers can't perform these functions themselves. Ultimately the responsibility for verifying suppliers are up to the task falls squarely on the shoulders of engineers.

This process is further complicated when vendor consolidation efforts include overseas suppliers. The challenges of spanning multiple time zones and language barriers can be overcome. But companies often underestimate the time engineers must invest to bring suppliers up to speed, evaluate their capabilities, ensure confidentiality, and meet project deadlines. It's no surprise that engineers may simply choose to work in familiar ways with existing suppliers rather than ask them to do more or look for more capable and cost-effective sources. This approach could cost more in the long run.

In our view, true cost savings come when a vendor base consists of key suppliers who can reliably provide extra services when needed, freeing engineers to do their jobs. One important example is help with component consolidation. Lowering product cost, simplifying manufacturing and installation, and improving product reliability, are all goals of component-consolidation efforts.

In our experience with industrial-sealing design, this requires that suppliers have a broad understanding of integrating mating components with seal design. For example, can a single plate seal replace multiple O-rings, thus simplifying installation? Or can a gasket be molded directly to a housing, reducing component count? Getting the job done may involve multiple suppliers managed through a cross-functional work team that includes purchasing and manufacturing. At Simrit, the 3P process (preproduction planning) and Six-Sigma tools have provided a reliable framework for such activities.

In the end, vendor reduction, global sourcing, and component consolidation, can lower total cost without sacrificing product reliability. Purchasing departments will always look to capture Purchase Price Variance, a component of true overall cost. However, it is the design engineer's responsibility to contain total cost which includes acquisition, design, manufacturing, and warranty costs.