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SPRING 2021

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Distributor's Link Magazine Spring 2021 / Vol 44 No 2

158 THE DISTRIBUTOR’S

158 THE DISTRIBUTOR’S LINK BRUNO MARBACHER THINGS THAT AFFECT THE COST OF FASTENERS FROM DESIGNING THEM TO INSTALLING THEM from page 140 ¤ Types of machines used: Cost factors of the machines used to make the parts have a cost impact, more advanced machines or 40 plus year old machines have different cost factors. A part made on a Single Die- Stroke machines vs. Progressive or Multi-Station former cost less. THREAD PROTECTORS ¤ Packaging: Some products require special packaging to prevent damage to the parts. Corrosion protection packaging for hot dip galvanized are more involved resulting in higher cost. Large parts with fine thread are more easily damaged during shipping, require special packaging thus impacting overall cost. Distributor’s Cost ¤ Freight: (ocean freight, inland freight). Air freight is exceptionally expensive. ¤ Receiving: Receiving, handling the product when dropped off, and putting into location etc. this is generally straight forward, not too many ways of doing it. ¤ Quality assurance: Inspection, testing, qualification, auditing, etc. Receiving inspection of parts may be reduced on parts from high quality manufacturers. Would save cost without reducing reliability of parts. ¤ Duties/tariffs of parts: Duties for parts vary; sometimes even antidumping duties may apply. Some protection tariffs also may have a serious impact of overall cost of securing parts. ¤ Customs Clearing/brokerage costs: There is often a flat fee for clearing items through customs, which has a particular cost impact on smaller quantities. Consolidation of air shipments may in some cases be possible, thus reducing overall shipping cost. ¤ Bulk purchases: Bulk purchase cost less but may require to be repackaged and that increases the price per unit. ¤ Re-packaging: Some products need to be repackaged into smaller containers. Packaging machines are costly. So to repackage in house is only efficient if it can be done regularly in high quantities. Distributers should do a thorough cost study to determine, whether inhouse re-packing or outsourcing this process is more economical. For bin stocking program repackaging is typically not required. ¤ Warehousing, Inventory keeping/management cost; Parts can be stored according to frequency of pics, making order picking more cost efficient. Some companies have order picking automated. The bins are brough to a shipping station. This high-tech system would require substantial investment, also would involve a detailed study but it can provide high efficiency for a mid to large size distributorship. ¤ Facility/utility cost: Handling equipment, electricity etc. ¤ Sorting: There are several reasons, why parts require sorting. During production or outside processes, defective, foreign, or mixed parts may be introduced into the lot. These could cause line shutdowns. Sorting Methods include hand sorting, roll sorting, acoustic, inductors, vision, and single laser. All reduce PPM levels to some degree. Hand sorting in house is not costefficient and only 200 PPM level (parts per million) may be achieved. (200 ppm = 4 defective pieces per 20000 pieces) Whether to invest in inhouse sorting equipment or have this process outsourced, depends on the customer base. Automotive, appliance customers etc., typically require low PPM levels. Inhouse sorting makes sense if a low-cost equipment can do the job. For 50 ppm level and below requirements, outsourcing sorting is most likely more economical. No matter who is doing the sorting, someone has to pick up the cost. CONTINUED ON PAGE 159

THE DISTRIBUTOR’S LINK 159 BRUNO MARBACHER THINGS THAT AFFECT THE COST OF FASTENERS FROM DESIGNING THEM TO INSTALLING THEM from page 158 the systems with scales requires some investment (scales may be leased). ¤ Kitting: Work and special packaging materials (special crates). Preassembly of a few parts, can be outsourced to places that specialize in preassembling/ kitting etc. Simple assemblies may be outsourced to institution with people with disabilities. Doing good work with a lower cost KANBAN SYSTEM ¤ Bin stocking: Stocking/replenishing systems have been around for some years, from the original Kanban (card system), 2-bin system, to the replenish systems with scales. The Kanban system (now with card reader or scanner) is still in use and relatively low-cost to manage, Conclusion When an individual first enters the fastener industry or even people who are already in this industry for years, they are not aware of all the costs involved in making, procuring fasteners and other cold headed parts etc. so the above information provides insight into these and allows one to find cost savings opportunities. Good luck. BRUNO MARBACHER

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