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Competitive Analysis of the P/M Industry

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Competitive Analysis of the P/M Industry Competitive Analysis of the P/M Industry Report 00-2 Research Team: Walter R. Coyle (Undergraduate Assistant- Honors Thesis) Shivani Shukla (Research Assistant) Diran Apelian (Advisor) Jacqueline Isaacs (Advisor Chickery Kasouf (Advisor) Project 1: Economic Comparisons of Alternative Technologies Project Goals § To develop economic assessment tools that allow analysis and quantification of the tradeoffs and attributes of different metal processing technologies § To identify several case studies for components fabricated through machining processes § To develop appropriate technical cost models for machined components § To identify the major cost drivers by quantifying the cost breakdowns of individual manufacturing process steps § To compare economic results from machined components with results from the PowderEx P/M technical cost model, and identify opportunities for infusion of P/M technologies Achievements Since April: Since P/M parts compete with machined components in various markets, opportunities to improve P/M competitiveness are explored in this project. In an undergraduate honors thesis project started in July 2000, a new set of case studies is under investigation for large gear components. A technical cost model has been developed for machined gears to compare the economic manufacturing costs with P/M part costs generated from the PowderEx technical cost model. Each model is used to identify major cost factors within each fabrication route. Analysis of results will target the areas in the P/M process where cost reductions provide the greatest impact. Thus far, accomplishments include: § Development of a machined gear technical cost model § Identification of three potential case studies for investigation § Analysis of one component for comparative manufacturing costs The machined gear model is a stand-alone technical cost model, like the PowderEx model. Output from the model will provide P/M manufacturers with information on process economics for production of gears of varying dimensions and complexity. 1 Component size, required quantities, tolerances, performance requirements and process economics must be considered together when selecting of the best method of production. Most machined gears follow a generalized process, with small deviations for gear specific requirements or specifications. First a gear blank is produced. The gear blank may be either cast or machined. This model assumes the gear blank is outsourced and the price per piece is input. The inner and outer diameters are cut to size, and the relevant surfaces are surface ground to tolerance. Inner features, such as keyways and splines, are broached into the inner diameter. The teeth themselves are cut into the gear using a gear hobbing machine. After hobbing, shaving may be required, after which, the gear is heat- treated. The technical cost model includes manufacturing process steps for all of the processes discussed above. One of the goals for development of the machined gear model is to make the model robust enough to handle many different types of gears and machining processes. For this reason, process steps can be switched on and off as needed. For components that do not require every process step available in the model, the steps can be switched off. Additional process steps can be added to the model later if required. With each process step modeled, changes to the various input parameters can be varied and the effects on total cost can be investigated. The main goal of this project is to assess whether it is more economically advantageous to create a part using P/M processes, or by machining. Three gear components have been selected with the help of PMRC members: a timing gear, a transmission sprocket and a helical balancer gear. These gears are chosen to provide varying part complexity. Showing greater complexity than the timing gear, a transmission sprocket with a 5" total outer diameter and a 2" ID, will provide the first case study for investigation. Results from the machined gear model will be used in conjunction with results from the PowderEx model to determine the scenarios where one method of production is favorable over the other. Initial results will be presented at the Fall 2000 meeting. For each gear or case study under consideration, it is likely that different trends will result. Identification of general trends for manufacturing costs using specific case studies will allow P/M manufacturers to make more informed decisions. Future Work • Additional case studies using the machined gear technical cost model, which will be fine-tuned. • Additional case studies using the PowderEx model. • Comparative economic analysis of each component 2 Project 2. Statistical Data Base for the P/M Industry Objectives Develop of a statistical data base for the P/M parts industry to enable firms to: • Benchmark key performance data vis- -vis other part producers • Develop relationships between success measures and independent variables Strategy • Develop a relationship with the PMPA to develop a joint statistics project • Initiate a set of annual questionnaires to develop a continuing industry data base. Achievements Since April: • Chick Kasouf worked with Craig Paullin, the PMPA Statistics Committee, and MPIF to develop three questionnaires that were mailed to PMPA membership during the summer. Response rates were approximately equal to earlier PMPA efforts. After meeting with the Statistics Committee at the MPIF Fall Management Conference, a second mailing of the questionnaire will be administered to nonrespondents with final results for the year presented at the 2001 PMPA Winter Meeting. These surveys are included with this package. • The cover letter to PMPA members is attached along with a copy of the three questionnaires given in Appendix A. 3 August 28, 2000 Dear PMPA Official Representative: As we noted in our previous letter, the PMPA Statistics and Benchmarking Committee, working with WPI s Metal Processing Institute, has revised its statistics program. We will be conducting three annual surveys of the industry, each with a specific focus. Each of these new surveys is included with this mailing. These are replacing Reports 2, 3 & 4. After submitting your 2nd quarter data for these reports, please destroy any remaining forms for Reports 2, 3, and 4. Report A: Expense Asset Management/Sales Distribution Report measures your expenses and asset management to benchmark resource efficiency in the P/M parts industry. It also contains a brief section measuring sales and production distribution in the P/M parts industry. The other two surveys are Report B: Operational Benchmarking Survey (includes plant level data about operational efficiency), and Report C: Wage and Salary Survey (a continuation of the wage and salary survey with additional data on turnover and absenteeism). By participating in this study, you will have a summary of current practice in the industry. As noted in the cover letter, all responses are confidential and will be analyzed anonymously. John Pavlovsky, CPA will be collecting data for PMPA and forwarding it to the research team at WPI with identification codes to disguise the identity of participating companies. Neither the Statistics Committee nor WPI staff will have any access to your identity when dealing with your responses. Each participant in the study who completes 75% of the items will receive a customized report that includes a summary of all responses and your responses compared to the aggregate data. As noted above, this report is prepared using codes to analyze data anonymously. In order to facilitate timely analysis of the data, could you please return the questionnaires to Mr. Pavlovsky s office by September 18, 2000? If you have any questions, please feel free to call Pete Johnson (609.452.7700; [email protected]), Craig Paullin (310.715.9800; x 108; [email protected]) or Chick Kasouf (508.831.5548; [email protected]). We look forward to your participation and hope to see you at the Fall Management Conference. Best regards, Craig Paullin Chickery J. Kasouf President, Pacific Sintered Metals Metal Processing Institute Chairman, PMPA Statistics and Worcester Polytechnic Institute Benchmarking Committee 4 PMPA/WPI Report A: Expenses, Asset Management/ End Market Sales Distribution (Corporate Level) Summer/Fall 2000 5 Report A Expense, Asset Management/End Market Sales Distribution Report This questionnaire measures your expenses, asset management, and end market sales distribution to benchmark the resource efficiency of P/M part producers at the company level. By participating in this study, you will have a summary of current practice in the industry. As noted in the cover letter, all responses are confidential and will be analyzed anonymously. John Pavlovsky, CPA will be collecting data for PMPA and forwarding it to the research team with identification codes to disguise the identity of participating companies. Neither the Statistics Committee nor WPI staff will have any access to your identity when dealing with your responses. Each participant in the study who completes 75% of the items will receive a custom report that includes: • A summary of all responses • Your responses compared to the aggregate data. As noted above, this report is prepared using codes to analyze data anonymously. Please use data from your most recently completed financial statements. Section I uses data from your income statement and Section II uses data from your balance sheet. Section III asks for information about firm size to classify companies in the analysis. Section IV measures sales end market and production distribution. To facilitate timely analysis of the data, could you please return the survey to Mr. Pavlovsky s office by September 18, 2000? If you have any questions, please feel free to call: Peter Johnson (609.452.7700; [email protected]) Craig Paullin (310.715.9800; x 108; [email protected]) Chick Kasouf (508.831.5548; [email protected]). 6 Report A I. Expense Statistics Please provide information regarding aggregate company operations from your most recently completed fiscal year. Each item asks you to report data in percentage of net P/M sales, i.e, total sales of P/M parts, tooling, and services less returns.
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