Global_purchasing of Casting

8/11/2019 Global_purchasing of Casting

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Purchasing of the casting productsin global working environment

Researcher Olavi PihaProfessor Juhani Orkas


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Table of contents

Cast production in Finland Image of a foundry industry Examples

Which resourses are needed for global purchasing? Total Cost of Ownership concept


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Cast production in FinlandCast iron and steel

Source: Teknologiateollisuus


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Cast production in Finland 2009,summary: 2009 was also for foundries so called

free falling Ferrous metal production decreased

51% (GJL -31%, GJS -60% and GS -54%)

The production of aluminum alloysdecreased 51%

The production of copper alloysdecreased only 33%

Exportation of the castings decreased insame ratio.

Amount of personnel decreased 22%(685 persons)

The value of cast production decreased46 % (over 200 M)

2010 the situation is getting better, butwe are still far from where we used tobe.

Source: Teknologiateollisuus


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Users image of the foundries

Passive Conservative Foundries vs. other manufacturing methods

High startup expenses Foundries havent been investing to technology as much as the

other manufacturing methods Foundries has more quality problems than the others


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Observations about choosing thesupplier of the casting products References of the foundry is of great concern Environment- and quality systems arent crucial choosing the

supplier Significant purchasing volume gives power to negotiate and better

service Focus the purchases on the chosen supplier

Especially with a new supplier, its all about money Invitation to make an offer will be made from every new casting

product Interest in a long-term cooperation

Amortization of the start-up costs

Breaking in a new foundry is expensive and takes a lot of time.


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Customers experiences from the Finnishfoundries, negative sides Supplying problems: lack of capacity and delays High price level Foundries arent interested in small volumes and prototype

castings

Lack of flexibility Indirect costs are left for customer to pay Foundries arent ready to build special route networks. Foundries has always been late

Managing own capacity is weak Foundries arent able to offer competitively priced machining Finding the right partner at the beginning is challenging


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Customers experiences from the finnishfoundries, positive sides Designing cooperation Technical know-how Flexibility Easy to stay in touch through whole organization

With the Finns they develop the product, with the othersthey solve problems Deliveries daily when needed Exploiting the 3D-model in the production chain Availability and fast delivery times of the The management of the product variations


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Development of the purchasing

(Price) competition tightens Global purchasing self evident for more and more customer

Owners want to reduce the purchase costs At the moment delivery time forces to search for new alternatives

New competitive chains wont be easily changed back to domestic chains

Surveys about purchasing single castings from China World has became smaller and smaller place for young purchasers

No more extra points for Finnish production

Purchasing of the larger entities All the cast-using interviewees are looking for this! Customers wants foundries to take care of machining, finishing and

installation of the small parts.


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Company cases of global castingpurchasing Konecranes Wrtsil


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Case: KonecranesExamples of applications of castings Spheroid graphite- and gray cast iron

Pulleys Bearing wheels Cable guides Gear box housings

Pockets Motor parts Aluminium castings

Gear box housings Motor parts Coupling boxes

Few steel- and zinc die castings Bearing caps

Most of the castings comes through component suppliers


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Case: KonecranesPurchasing status at moment Dozens of casting suppliers

Konecranes has grown heavily during the last few years alsothrough acquisitions

-> new suppliers

The size of the components vary largely Small chain elevator vs. harbor crane

Serial amounts vary depending on product from one to manythousands

Different materials

Spheroid graphite- and gray cast iron Aluminium castings Few steel- and zinc die castings


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Case: KonecranesObjectives for global purchasing Reducing the number of suppliers from many dozens to

one dozen. At least two sources for critical castings Location of the suppliers from the Konecranes- supply

chains point of view Machining of the castings as close as possible to the

foundry Revealing of the possible problems much faster Finishing possibility Flexibility and swiftness of the delivery times


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Case: WrtsilCasting purchases in numbers Purchases 2009 about 50.000 tons The number of casting suppliers altogether is 200 including services so

called spot-foundries The used amount of money 2009 about 100 M including machined

castings About 10% of the whole amount are purchased from so called EM countries About 30 % of the medium size castings are purchased from EM countries The most used materials are spheroid graphite- and grey cast iron, in

addition heat-resistant iron such as SiMo (Silicon molybdite ductile iron)and aluminium casting. The amount of steel castings in motor production isalmost none

Engine blocks represents 50% of the total volume, covers and other

castings are both 25% Casting team lead by Category Manager is in charge of casting purchases.The team consists of members from all product factories, service and socalled EM countries


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Case: WrtsilGlobal purchasing organization structure


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Case: Wrtsil Assets of Finnish foundries by Wrtsil

Casting patterns Patterns have modern design- and production methods, accuracy Materials in use are better, especially the quality of tree Lives of the models and the maintenance interval are longer. Plastic patterns.

Communication Finnish language Contractual usage, respecting the contracts, business culture Supplier visits are easily arranged

Comissioning of the castings Co-engineering The need for test series is substantially smaller The swiftness of the corrective actions of the flawed castings. Response time days instead of months

Transportation Transportation prices The swiftness of the cargo, delivery in days instead of months

No material damage like corrosion etc. caused by the cargos Challenging castings

Expertise in domestic foundries is much better than in EM countries Use of common sense


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Which resourses are needed for globalpurchasing?

How much more expensive spheroidal grafite cast iron ifcompared to grey cast iron?

Anonym

Company NN

At 2000s


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Buy iron from the foundry as long as it itll go out ofbusiness. Then move on buying from the next foundry.

Direktr Gsta Mattsson

Thuresson & Mrch

1976


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Ill buy protocastings and pre-series from Finland, then Illtransfer the mass production to low-cost countries.

Anonym

Company NN

At 2000s


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The purchase of castings is extremely easy- there is nomystique in it. If new foundry wont manage thedeliveries, Ill return to a customer for the previoussupplier.

Anonym

Company NN

At 2000s


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Delivery times and -punctuality are not listed in my jobdescription.

Senior Buyer Eddy de Vriese

Spicer Clark-Hurth

1996


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Required resourses

Adequate volyme Methodicalness and persevarance Possibility for the great investments at the beginning

Language proficiency in whole organization: All theinstructions, forms and papers in english


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Total Cost of Ownership

We never buy a new casting piece from a new supplier.

Inkpschef Arne Steen

Volvo Lastvagnar1988


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Our principle is that we give the order and theresponsibility from the deliveries to the most critical partof the production chain- almost always it is a foundry.

Inkpschef Arne Steen

Volvo Lastvagnar

1988


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Purchasing casting products is extremely easy cheapestoffer wins.

Anonym

Company NN

At 2000s


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Procedures when starting-upco-operation with new foundry Foundry Visit Report Audit Paperwork or homework has to be made well

Dont forget the people behind the papers Test deliveries with known product, careful and truthfulreporting


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Information needed to invitation forbids/with cast drawingSender of the inquiry and contact address for the company:

1. Name and retrial/drawing number of the casting

2. Quantity, annual need and desired shipment

3. Is the test casting / trial sample needed before starting up the production: Y/N(Quality requirements of the test casting / trial sample)

4. Cast drawing, preferably 3D-CAD file.

5. Earlier quality feedback will be given from the similiar casting pieces. Thecontact person of the purchasing company will be let known. The person willcollectively give similiar feedback for every foundry who entered invitation forbids.


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Information needed to invitation forbids/with cast drawing6. Casting weight of the piece will be noted. Casting weight is the weight of the

piece without any machining or cleaning. If agreed, net weight term can beused instead of casting weight. If it is known how the preceding weight isaquired, the following notations will be noted: weighted / estimated / calculated

7. Casting metall standard and the number of standard, possible deviationsanalyzing the standard

8. Special requirements resulting from the casting standard or customers ownbases (for example limits to repair weldings, need for certificated welders,deviant heat treatments)

9. Pattern equipment of the casting: Will the new ones or old ones from customer

offered. Mentioning that the pattern equipment will be offered itemized andevaluation about the in-service life. Usually the in-service life is the number ofmouldings.


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Information needed to invitation forbids/with cast drawing10. Delivery state of the casting piece can be for example one of these:

1. Rough casting

2. Pre-machined for example to 2 mm tooling allowance

3. Completely machined.

Besides preceding three points, delivery state also strongly refers to heattreatment. Desired heat treatment is mentioned if they differ from standardand/or local customs. The most common reference is for example mentioningwith tempering steel temper hardening to 240 HB.

Delivery state can also refer to other things such as polishing, painting, batingfor acid-resisting materials, dynamically and statically balanced etc.

10. Cerificates of matter. Notification about that the product inspection and reception isattended by rating institution XYZ.


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Information needed to invitation forbids/with cast drawing12. Quality definition, inspections. In this point will be noted at least the abnormal quality definitions

required (and prepared to pay) by the customer.The most explicit for all parties is to notify every quality definative action that is made to casting piece:

Visual inspection Ultrasonic inspection Liquid penetrant testing X-ray inspection Pressure test after machining of the flanges

Can the pressure test be made for un-machined piece Required water pressure for pressure test Other quality methods

In every action an existing standard is referred to and in standard, to the manufacturing class product isrequired to be manufactured in. This is important especially when the customers own standard is used.

In case of dealing with a new bidder, adequate literary material about the customers own standards must bedelivered with the invitation for bids. In this context will be noted if customer requires a record to be drawnup and the companys own record models will be given.

In case those documents arent delivered with the purchase order, foundry will use its own record models.Customer will inform if the 100% field log is required from the first castings. When required, every castingwill be inspected. If 100% is not required, customer will clearly inform or mark to the drawing whichdimensions are essential and will be inspected according to the standards.


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Information needed to invitation forbids/with cast drawing13. Required casting tolerance will be informed, usually it is according to SFS-ISO 8062. Allthe dimensional exeptions from the standard must be clearly presented in the drawing or

in other reliable method.

14. Following things must be informed in drawing or in other reliable method1. Machined surfaces2. Starting point of the machining3. Amount of machining allowance4. Accuracy of shape5. Geometric tolerances

15. Unusual requirements for surface quality: refering to valid standard or to some otherreliable source (for example an official test specimen or customer supplied samplepiece).

16. Following things will informed in drawing or in other reliable method1. Bends2. General thickness of the walls3. Deviations to 1. and 2.


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Information needed to invitation forbids/with cast drawing17. Markings and their positions in castings will be informed. Customers own company logo

will be delivered to foundry with offer (???). Typical markings are:1. Manufacturers (foundry) logo

2. Code required be the production control of the foundry

3. Customers drawing- or part number

4. Retrial number

5. Date

6. Material code (for the heat treatment)

7. Customers logo

8. Number of the cast model

Clear instuctions for the markings must be delivered with the purchase order or refer to thecustomers own standard in this matter. Notification if the markings has to be made with raised- or

submerged letters.

18. Packing- and protecting requirements for the casting


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Information needed to invitation forbids/with cast drawing19. Mentioning about that the customer will accept with gratitude suppliers propositions to

change the construction for reducing the manufacturing costs

20. Terms of delivery a.k.a. delivery clause. In global business is absolutely necessary tomention after the terms of delivery word INCOTERMS 2000 (International Chamber ofCommerce). In domestic trade (Finland) word FINNTERMS 2005 will be added,

otherwise the reference is incompetent. Chosen delivery clause defines watertight whopays and what in the production- and delivery chain and who is in charge of the cargoduring the deliveries. As a precaution the liability is all the time on one of the parties. Thesystem is created so that forwarding agents and transportation companies would get paideventually and to minimize the disputes. One can never be too thorough and careful.

21. Time of delivery

22. Other conditions (NLG 03, CAEF 2006, SFS-EN 1559 -1, SFS-EN 1559 - 2, SFSEN 1559 3, EN 1559 - 4)


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Information needed to invitation forbids/with cast drawing23. Final date of delivery for the offer

24. Period of validity for the prices.Often this one goes with the old suppliers quite easily. With new supplier one should becareful becouse prices might rise suddenly just before the serial production

25. Period of validity for the offer and gratuitousness.This is also a very important point for example when living upswing in the economy.Chrome, nickel and molybdeneum might cost twice as much to foundry as it will cost at thedelivery moment. The same timing problem always applies to energy and salaries. The offerwill be asked without price.

26. Term of paymentThe purchaser informs in his invitation for bids what kind on term of payment his offerrequires.

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Global_purchasing of Casting