About Me

§ 36 years manufacturing experience

§ 8 different industries ( Automotive, Appliance, Commercial Playground,

MRO Supply, Off-Road Vehicle, Vending Machine, Manufactured Housing, Building and Plumbing Supply))

§ 30 year member APICS – The

Association for Operations
Management
§ CPIM – 1986, 2003, 2008
§ BBA – Production & Operations Mgmt.,
1991
§ MBA – Strategic Quality Leadership,
About Me (continued)
§ 23 years teaching of APICS CPIM review
courses
§ 12 years teaching Business, Management, and
Operations courses at Community Colleges
and Universities (SHU, JCC, MCCC, UT)
§ Positions held include Inventory and Production
Coordinator, Scheduler, Buyer, Production
Manager, Materials Manager, Operations
Manager, Purchasing Manager, Director of
Operations, Materials Manager / Master
Scheduler, General Manager…but what’s in
a title?
§ Currently, General Manager / Purchasing with
Dundee Manufacturing Company (1 year)
Dundee Manufacturing Company
 Producer of home building products
 Stud guards
 Hanger iron

 Pipe straps

 Duct straps

 Customized specialty products

 Simple product stamped from steel sheet

 Stamping dies most important part of
process
 3,500,000 lbs. of steel purchased
annually
3

Dundee Manufacturing Company
§ Produce and market in several ways
• DMC Catalog & Website (standard
packs offered)
• DMC Specials (DMC owns tooling but
packs to customer specifications)
• Customer Catalog (DMC standard pack
but customer label & part number)
• Customer Specials (DMC part but
packed in customer packaging and
label)
• Customer Owned (customer owns
tooling, parts sold only under their
name & label)
– 4
Dundee Manufacturing Company
 Customer base includes:
• OEMs such as Sioux Chief, Oatey,
DiversiTech, and Arlington Industries
• Master distributors such as Jones-Stephens
Corporation and All-Pro
• Direct distributors such as Grainger,
McMaster-Carr, Lee Supply, and Central
Supply


5
PURCHASING

It's not glamorous in the

trenches…
Michael K. Byrd, CPIM, MBA, CL, ATM-B
…but that is where the

MONEY can be found!

$$$$$$$$$$$
Our Coursework Misnomer
q Strategic planning
q Creating corporate infrastructure
q Global networks and positioning
q Business policy
q Web sourcing and reverse auctions
q Business relationships
§ Supplier open houses
§ Lunches and dinners
§ Sports outings
•
• All pictures of grand management positions at
the top, however the real impact that we
can have on our organization’s bottom-line
…In The Trenches

1)How our organizations pay

2)Materials for products sold
3)Items to support the production
processes
4)Items to support the organization

Trench #1
The Money Side

qDoes the organization pay on-time?

qDoes the organization pay early to
take advantage of discounts
offered?
§ By purchase type?
§ By dollars purchased?
qDoes the organization utilize long-
term agreements for pricing
benefits?
Trench #1

qGet the facts from:

 Accounts payables department
 Supplier specifics
 Payment history

 Changes in pay policy

 Triggers to pay policy


Example 0f Trench #1
qIf buying $1000 of product monthly and
paying late (over 60 days) at 12% per
year for late pay, then chances are
new quotes will come in at $1020 to
cover the loss of income for late pay
qThis is a small example, now increase
the magnitude by 100 times and you
come to $24,000 annually ($20 diff. x
12 mo. x 100)!
qNow consider 100 items handled this
Trench #2
MRP - Part structures or BOM's
qSpecify
§ the type and quantity of raw materials
§ the component parts and quantity used
§ may specify packaging
qDo not specify
§ Specification ranges of raw materials
§ Specifications of component parts
§ Specifications of packaging requirements
Trench #2
qGet the facts from:
 Sales & marketing
 Customer specifics
 Design engineering
 Material and part tolerances
 Process engineering
 Process tolerances for materials & parts
 Packaging engineering
 Part protection tolerances
•


Example of Trench #2
q.055 - .061 thickness tolerance
 If delivered on the high side vs. the low
side
 If the purchase was made for $0.30 per
lb.
 If the part weight is .891 lb. at nominal
thickness
 What is the excess cost or profit loss?
 Part wgt. to .937 (((.003/.058) x .
891)+.891)
 RM cost per part = $0.281 vs $0.267

 At 1,000,000 parts per year = $13,000 loss

Trench #3
Maintenance, Repair, and Operating
Supplies (MRO)

qEquipment repair items

qEquipment maintenance items
qJanitorial supplies
qOffice supplies

Trench #3
qGet the facts from:
 Machine maintenance and repair group
 Preventive maintenance program
 Mean-time-to Failure (MTTF) history
 Stocking levels, re-order points

 Process engineering
 Machine process parts (die components
and other non-machine related parts that
transform RM)
 Mean-time-to Failure (MTTF) history
 Apply SPC



Trench #3 (cont.)
qGet the facts from:
 Janitorial staff
 Items used and why
 Monitor consumables

 Lowest price does not mean lowest usage

cost
 Office staff
 Items used and why
 Monitor consumables

 Lowest price does not mean lowest usage

cost

Examples Of Trench #3
qA machine goes down and due to a lack
of a stocking program or a re-order
point alert, the machine sits idle for 24
hours waiting for a $13.00 part or a
$0.13 part which causes a late
customer shipment
§ Upset customer
§ Loss of capacity
§ Added costs of overtime

Trench #4
Non-MRP - Services
qInformation Technology
qDisposal or recycling services
qFreight
qTravel
qPersonnel / staffing
qBenefits
qOffice equipment
qFleet
qJanitorial / cleaning
qExternal grounds
Example of Trench #4
qScrap
qWhat is in the hopper?
• Metal and trash?
• Metal only?
ü Mixed types or alloys?
ü One type or alloy?
qMetal and trash yields lowest value due to
added cost to sort by the vendor
qIf all metals, the value will increase
slightly, but still a sorting cost by the
vendor
qIf a program is put in place internally then
the value can jump two-fold!
ü
So, get in the trenches about

1)How our organizations pay

2)Materials for products sold
3)Items to support the production
processes
4)Items to support the organization

… A N D FIN D T H E $$$$$$
Thank you!

• QUESTIONS??