Truck and heavy-duty engine manufacturer Navistar, Lisle, Ill., sources components from suppliers around the globe and makes its buy- ing decisions based on total landed cost.
are focusing on who domestically does well with low volumes [in diecasting], to see who is willing to do 100 pieces or even less.” Even if the overseas diecaster would
accept lower orders, Wiegers said his company would run the risk of short- ages because lead times are so long. Hubbardton Forge is looking for
ways to reduce tooling costs at U.S. sources, which are still 50% higher than for Chinese suppliers. “We’re trying to get creative with
that—maybe getting multiple parts in the die. Or maybe we could have the dies made overseas,” Wiegers said.
Innovation Costs One of the variables in Moser’s
TCO estimator includes the impact a source has on innovation and product differentiation or mass customization. According to his calculation formula, impact on innovation can be deter- mined by multiplying the unit price by the innovation risk percentage, which casting customers must determine country-by-country or supplier-by- supplier. Moser suggested setting risk costs consistently, assigning higher costs for high risk items and develop- ing countries. Long lead times impact innova-
tion, as well. Fast reactions to market changes are more difficult, driving companies away from customization toward commoditization. Wiegers said inventory on-hand
also affected the evolution of Hub- bardton Forge’s business. Storage space that could have been used for expanded production capacity was tied up with years’ worth of castings. “What really jumped out at us
about calculating total cost of owner- ship was how many variables affect cost,” Wiegers said. “When we looked into the cost of having a shortage or sitting on too much inventory, we saw it start to add up.” Metalcasters who are in tune with
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