Enter the value-added supplier to change the tooling equation.

Position:Tooling strategies

Manufacturing in the 21st century is the unending quest for improved productivity and efficiency. Western manufacturers face unrelenting pressure to produce high-quality products at the lowest possible price and at ever-improving service levels, In emerging markets, manufacturers grow at such a frantic pace that they need assistance to manage start-up operations and expansion.

Both scenarios are creating opportunities for forward-thinking suppliers.

Cutting tools create such opportunities for suppliers. Purchasing relationships have been traditionally based on past experience, deliverability, application for the tasks at hand, and, of course, price. New to the scene, however, is supplier investing: effectively partnering with customers to fashion production savings across such areas as new project engineering, process optimization, and comprehensive onsite programs that, in particular applications, can effectively exceed the customer's total tooling spend.

Such a supplier brings extraordinary customer value while significantly improving its own business.

While tooling accounts only for about 3 to 5 percent of the cost of producing a typical metal part, it can have an enormous impact on overall production. For this reason, the cutting-tool business has begun to value application engineering and custom solutions development as corollaries to producing high-performance cutting tools.

A single custom-designed, high-performance tool, for example, can replace the machining operations performed by two or three different lesser-performing tools in certain applications. While the new custom tool may in fact be more expensive than legacy tools, the performance improvement of the custom tool and its ability to reduce non-value-added time associated with tool travel and tool changes may reduce overall cycle time and cost to produce the part by 50 percent or more. In these cases, the financial benefits of improving the overall manufacturing process dwarf the incremental increase in tooling cost.

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A Society of Manufacturing Engineers (SME) technical paper titled The Development of a Design and Manufacturing Collaboration concludes: "Open and close cooperation between companies is a fundamental basis for developing a world-class supply network where speed, cost effectiveness, and quality are the key issues." The theory of close collaboration between suppliers and their customers for extra value is certainly attractive but the proof is in the results actually being achieved.

Holistic approach

Consider how one company has already achieved savings exceeding $2.2 million through supplier-led continuous-improvement efforts. Kennametal, Latrobe, PA seeks to significantly augment the traditional supplier-customer relationship with its Kennametal Complete Service offering. Kennametal Complete is considered "a comprehensive portfolio of value-added services designed to work in collaboration with clients' engineering, production, and purchasing teams, and their machine tool...

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