Alternatives to Reduce Part Costs as Volumes Scale up

Information for IE - Case 79

Inviting Participation from Engineering Executives in Industrial Engineering for Productivity - NITIE International Online Management Development Program
31 August to 4 September 2020
Course Leader: Prof. K.V.S.S. Narayana Rao

Brochure - Industrial Engineering for Productivity, International MDP, 31 August to 4 September 2020 

https://www.nitie.ac.in/sites/default/files/Final-Brochure-for-International-MDP.pdf

Machining is normal considered as the popular option for producing components with input coming from various primary processes.  Certain complex metal parts can only be machined, but thinner gauge parts and enclosures are typically stamped using hard tooling or fabricated using lasers, turret presses, or press brakes. Stamping using hard tooling requires investment in tooling and when volumes are low, fabrication methods are used instead of stamping.

"One stop metal parts" offer multiple routes to producing parts. This facilitates  the transition to hard tooling for higher volume parts, mixing, and matching metalworking techniques for multi-component assemblies, along with incorporating hybrid and secondary tooling approaches to further reduce costs.

Cost Savings Possible and Investment Required

Fabricating a sheet metal part that costs $10  may be made at  cost of $6 by stamping, but the investment of $30-40,000 in tooling is required. For  $4 saving,  10,000 pieces per annum means one year payback. 

In another example, reported,  a customer was spending $18 for a power supply chassis with a $4 cover. As volume requirements increased, he was suggested to move to hard tooling with cost reduction opportunity of  $22 to $14.

The saving is $8 a unit and the volume is 3,000 units a month. As the tooling cost is $80,000, total saving is  $24,000 per month, giving  3.5 month payback period. 

Industrial engineers have the responsibility to continuously look for cost reduction opportunities.

https://www.machinedesign.com/mechanical-motion-systems/article/21836633/reducing-parts-costs-as-production-scales-up