Sometimes a commodity is not really a commodity. A TPG-322 diamond-tipped insert, for example, seems fairly common until a cost engineer tests it.
An engineer for a major U.S. automaker decided to take a closer look at these standard PCD inserts. He was working with two eight-spindle, 24-tool Saginaw dial machines, making reverse input pistons. In his operation, a TPG 322 is used in tools one, three and four. Tool one cut the OD face, and tool three cut the ID face. Tool four cut the bottom face.
The original 24 inserts used in each machine were purchased from a longstanding vendor at $37 each (based on purchases of 210 inserts). The normal lead-time for delivery was 6 weeks but could be as long as 12 weeks. Additionally, the quality of the inserts fluctuated considerably, causing inconsistent run quantities. An average number of parts per insert was 9,370, based on a range of 1,782 to 17,680 parts.
The engineer purchased 210 TPG 322 inserts from J & M Diamond Tool, Inc. (East Providence, Rhode Island), a family firm founded in 1972 that specializes in the design and manufacturer of PCD and natural diamond tooling. The cost was reduced from $37 to $33.70 each, and the leadtime for delivery was reduced to 4 weeks instead of 6 to 12 weeks. Based on a range of 7,235 to 22,236 parts per insert, the engineer judged the insert quality to be “very consistent.” In addition, the average number of parts per insert was increased to 11,770 from 9,370.
A head-to-head test was conducted. Saginaw #1 was tooled with TPG 322 from the longstanding vendor, and Saginaw #2 was tooled with TPG 322 from J & M Diamond Tool. During the 3-month test period, 206 of the longstanding vendor’s inserts were used, versus 130 J & M Diamond inserts.
The cost savings for this 3-month time period were $3,229.30. The J & MDiamond insert ran 2,400 more parts per insert, on average, than the longstanding vendor.
Because of the cost savings and the longer runs with the 4-week lead-time for delivery, the decision was made to change vendors for the inserts to J & M Diamond Tool.
In the year prior to switching vendors, the automaker made a total of 1,702,196 reverse input pistons, using 653 inserts. At $37 per insert, the tooling cost was $24,161 for the year. Given the same number of parts, adding the 2,400 additional parts per J & M insert (equaling a total of 5,007 parts per insert), only 340 J & M inserts would have been needed. At $33.79 per insert, the tooling cost would have been $11,489, less than half the amount spent.