Key Considerations for Sourcing Stampings

Key Considerations for Sourcing Stampings

During the 2009 economic recession, there was large-scale consolidation and subsequent closings of many smaller to mid-size metal stamping companies. Currently, the economy is crawling back and certain industries, most notably the automotive industry, are experiencing growth peak profits. Demand for metal stampings, especially larger tonnage pieces, are at an all-time high. There is currently limited capacity among stamping companies, globally. With this in mind, procurement professionals are left with major challenges to locate and source a capable metal stamping supply partners.

Before deciding on the best supply partner for metal stamping services, one must be conscious of all facets of the part and assembly, and look at each option from multiple angles. Below are a few considerations for selecting the right metal stamping supply partner.

Challenges

Sourcing the right metal stamping supply partner today is more challenging than ever due to both internal and external headwinds. Too often, supply partners, across commodities, are chosen based on cost alone as a result of corporate procurement team cost reduction initiatives that focus on and reward cost reductions above all other KPIs.

While cost remains critical in any sourcing activity, we would argue that overall capability, experience, quality, and location, are equally as important and should be weighted as part of the decision criteria. Before moving forward with a metal stamping supply partner, a procurement professional must have a stringent vetting process that ensures the following considerations are met and the results meet company goals. These considerations for choosing the right metal stamping partner include: capabilities, experience, price, and location.

Considerations

The metal stamping industry has changed tremendously in the last decade. Metal stamping capabilities vary from company to company. Some focus on larger production runs at a lower cost, while others focus on low volume with greater options for customization. Also, a metal stamping company is no longer only a metal stamping company. Most do some form of value-add services such as assembly, welding, post-machining or finishing, heat treating, etc.

Today, it is extremely rare for a supply partner to only provide metal stamping services. The game has certainly changed and that is why it is so very critical for a procurement professional to find the right metal stamping partner. Leading procurement professionals today go into a sourcing decision not with a supplier mindset, but a supply partner mentality.

Solutions

Capabilities

When considering the capabilities of a potential metal stamping supply partner, a procurement professional must analyze and evaluate every offering that partner provides or has the capacity to provide. One must ask, “Is this potential supply partner capable to meet all my business needs, and then some, without the risk of problems during production?” Below are a few common, yet extremely critical questions a procurement professional should ask in regards to the capabilities of any metal stamping company that is being considered for a program:

What materials does the potential supply partner work with?

There are many different materials that can be stamped, most notably steel and aluminum variants. Certain supply partners specialize in the different material types so it is important to know not just what your potential supply base is capable of, but also what it is good at and specializes in.

What thickness can the potential supply partner stamp?

Almost as important as the material specialty capability is the capability for the supply partner to be able to work with the size and thickness you prefer. Not everyone can do thin-wall stampings. There are a handful of good supply partners in the US that are capable of this. When you throw in the ability to do a thin-wall aluminum stamping, that number decreases even more. So, it is absolutely critical to know exactly how thin and how thick the potential supply partner can go, prior to sourcing them the stamping business.

What production services are offered by the potential supply partner?

Procurement professionals must always inquire on the specific production services and/or secondary operations that are offered by the potential supply partner. Some programs will require simple stamped parts and others full, finished and tested assemblies. Do yourself a favor and ask these important questions: Can this particular supply partner finish machine the part, if required? Can they clean the part to your company cleanliness spec? Can they assemble the plugs and fasteners required to make it an assembled finished good? Can they do leak testing or conduct additional testing that is required by your company before final shipping? Knowing all of this information ahead of time will save you the heartache down the road.

What design capability does the potential supply partner have?

It’s one thing to take a prototype through production, but what if you require design services? Not all metal stamping companies offer that. Ask each company you are considering whether they can work based on drawing (digital or printed), whether they can translate the drawings to shop drawings, and whether they are capable of starting from scratch without the help of an initial design provided by you. Getting these questions answered upfront will allow you to be comfortable in your supply partner throughout the entire process.

Experience

Manufacturing, and especially automotive manufacturing, is an industry where experience matters at both the individual level and the company level. A procurement professional must be assured that the potential metal stamping supply partner has sufficient experience in order to avoid future costly mistakes.

Ask the companies you are considering about their knowledge as it relates to industry codes and regulations. For automotive companies, being knowledgeable, experienced and certified in various ISO/TS standards is recommended, and in many cases required, for certain OEMs and Tier Is. Be sure to have potential supply partners describe how operations have continuously improved over the years to be as efficient and safe as possible. Ask about similar projects they have completed. Further, don’t be shy about seeking references from past customers. A good metal stamping company will have plenty that are willing to speak on their behalf.

Pricing

As a rule of thumb, we always like to get at least 3 quotes from highly qualified potential supply partners. Once attained, compare costs across the board as it relates to the program. Attaining an apples-to-apples comparison amongst metal stamping companies is not always easy. One company might use a higher quality metal or more precise cutting tools, meaning you can expect fewer costly mistakes in the long term. Some are priced higher because they are smaller shops that offer more customized services. While bulk can be cheaper, it might not be right for your specific project.

Make sure that the RFQ you send to each supplier details the specifics of exactly what you are looking for. The vetting and Supplier Capabilities Assessments, that you should be sending to each potential supply partner along with the RFQ, should also downselect many of the unknowns and discrepancies. Location can also negate the cost savings of a less expensive quote, which leads to the next consideration.

Location

Supply partner plant location is extremely relevant, especially in the manufacturing industry today. Whereas, centrally located industrial hubs would have sufficed in previous decades, fuel costs, proximity to customers and control over the product itself are increasingly important when choosing the right supply partner. This movement has resulted in manufacturing “clusters” found throughout the country. Whether you prefer a metal stamping partner that is near your own facility or close to your customers, be sure to crunch the numbers and make sure the company’s location makes the most business sense for you.

For example, a Korean supply partner may offer the best pricing versus a supply partner 50 miles down the road from your manufacturing facility. However, it is in the procurement professional’s best interest to ensure all the costs of logistics are considered before choosing a supplier. After accounting for the shipping, lead times, customs, etc., the supply partner right down the road from you may have the edge. Location is important not only for costs, but also critical in the instance there are ever issues with production. A closer facility could have someone at your facility or vice versa, within a day or so.

Conclusion

There are many items a sourcing professional should be cognizant of and consider before choosing a metal stamping supply partner. There must be full awareness on the bigger picture and not just the short-term cost savings or avoidances. Too often supply partners are chosen for the wrong reasons or for short-term gains. Understanding a potential metal stamping supply partner’s capabilities, experience, pricing and location will put you and your company in the best position to win for the long term.

Keeping these considerations in mind will ensure a procurement professional chooses the right metal stamping supply partner, every time.

-Tony