Top Tool

Posted by Duane Kari, Technical Sales Support Lead, Top Tool

There is good news and bad news related to sourcing an uncommon, custom blend of nickel silver specified for its mechanical properties. I like to get the bad news out of the way first.

The material – available only from a European supplier – has a 12-week lead time. Actually, the lead time is just kick-off to a potential chain of bad news. The electronics OEM buyer also has to wrestle the guaranteed metal market price fluctuations in order to manage price variation. And the material is too expensive to park in inventory. Or, even worse, to overstock or “safety stock.” Especially because the electronics manufacturer pulls through approximately 1 million of the components that Top Tool precision-stamps annually.

Now, for the good news. The really good news. It’s a Kanban. To be more specific, the ´”three-bin” version of Kanban.

Three-bin, just-in-time replenishment scheduling tells the supply chain what to produce, when to produce it, and how much to produce. One “bin” supplying the OEM factory. One bin being filled at Top Tool. And the third buffer bin, in between Top Tool and the OEM, ready for the factory floor. Using the three-bin system puts parts on the receiving dock within three days of getting the twice-monthly re-supply signal from OEM operations. Which, in the case of producing 1 million nickel silver parts annually, avoids weighing down the supply chain with complications like a 12-week lead time.
 
Top Tool sources the material – forecasting from hard production data – at locked-in volume prices. Which reduces the per-piece cost. Pulling the material from the supplier, according to the Kanban, reduces inventory carry. The work-in-progress reflects only what is needed to fill the next bin in the cycle. A Kanban fits the need perfectly when there is a dedicated – at least monthly – shipment schedule. With volumes in the thousands of parts. And especially when sourcing lead times are extended. Which tends to be the case with medical and electronics components manufactured from custom-rolled, precious metal materials.

There is one more supply chain-smoothing technique that takes Kanban streamlining up another notch. With an increasing number of OEMs who deploy a Kanban for precision-stamped components, Top Tool uses a web-based portal to view the customer’s manufacturing operations in real-time. Integrating seamlessly with customer operations – in real time – is a chance to remove even more lag in supply chain response.

A Kanban can keep the good news coming.