Sourcing die sets overseas

More than a decade ago, I heard a globally influencer on the automotive industry saying?

“The question is not "if" we should source die sets overseas, or not, the right question is "when" and "how".”

The reason way there is no dough on “if” we should, is because the installed capacity and the prices achieved are an enormous advantage, when comparing with western suppliers.

Since then, I’ve been working with LCC for the development and construction of die sets with different dimensions and complexities.

But I can find several risks with this sourcing strategy, that must be evaluated and adressed (the answer for the "how").

It is easy to find on LCCs toolmakers with bigger dimension and production capacity than on Europe or US.

This represents an advantage, on the ability to design, build and try-out tools even with very aggressive lead-times with very low prices.

In order to be competitive, and become a feasible option, overseas toolmakers need to shrink the lead-time from sourcing to buy-off at least the same amount of time that takes the maritime transport and customs clearance on the delivery destination.

To achieve this their capacity in terms of design and construction is significantly higher than the their western competitors.

Let’s analyse each phase:

Design:

Normally their design teams are several times bigger than what we find in the western world.

This is a great advantage but it also involves risks.

They can use several die designers to design the same die set, working several shifts per day, with the economy of software licenses, or splitting the die set in modules having a different designer for each module.

The main challenges are:

- Warrantying that all designers know, understand and comply with customer die design specifications/requirements;

- Having the same design concept, and cad file tree on all the die set design;

- In subsequent sourcing’s, the chances of having same die designers is very low. Not getting the advantages with lessons learned, and the expected reduction of number of design reviews needed (die design loops).

For this phase it is essential to develop very clear design specifications/requirements, and preferably invest in haveing a version in the supplier's language.

Normally I think what I need in portuguese, I translate to english (trying to find the best words), the tool makers project managers, translates the english message (understood), to their native language to the die designer.

This sucessive translations normally request time and are propitious to misunderstings.

These specifications shall include:

- Die materials requested “translated” to supplier’s country norms, using materials equivalence tables (DIN-ISO-EN-GB/T-ASME-AISI), etc.

- Heat treatment requirements, with heat treatment curves, because during production lifetime, repair welds or surface coatings can be needed and more detailed information necessary.

Construction:

Probably this phase is the less risky one, as apart of poor machining methods or poor quality standards no major risks may arise.

This is for sure the phase where the historical quality of the supplier can give some warranties on future dies.

Try-outs:

Here is the trickier phase.

Despite it is considered as normal procedure to make hand retouching on punch and die surfaces during try-outs to improve part quality, this operation is not recommended at all.

These reworks can be necessary due to poor machining procedures, or die design faults.

The problem is that even if they can improve significantly the part quality in a short period, the can compromise significantly the ability of the customer to deliver good parts in a short timeframe after a tool breakage.

On any tool breakage the customer’s maintenance team will use cad data to make a replacement part.

If the part is made as per design, it will not include the hand retouching so it is not expected to get parts with the same quality level just after component replacement.

New try-outs need to be done with the replacement components, under a very high pressure due to the risk of failing deliveries.

The main procedure to overcome this risk, is to make a digitalization of all components hand retouched.

This will ensure that we have the project in real condition.

Transport:

Usually neglected, for me, this is probably the most risky phase.

Even if the probability is low, we need to remember that there are very significant risks.

Some time ago, I couldn’t sleep when an Evergreen container ship, become stuck on the Suez canal.

When I heard in the television, I knew from the tracking information that 2 containers with die steps were travelling on an Evergreen.

Has I know that Murphy’s laws normally happen, I thought that that the containers were in that “Evergreen”.

My next day priority was to get an updated report, and starting a backup plan.

Several questions arise:

• How would I get the containers out of the ship, in the middle of the Suez canal?
• How many companies would also want their containers out of that ship?
• After the containers became out of the ship, I would need another ship.

Fortunately, the containers were in a different “Evergreen” ship, and had already crossed the Suez canal a few days before. If not the containers delivery would be delayed with significant time impacts on the project.

Now imagine the ship sinks, the delay would be huge, at least similar to the lead-time already had.

An insurance would only warranty not losing the die set cost.

And the cost of reputation, the impact on the project, and others???

Sourcing overseas mobile phones, clothes, or any big volume serial production goods is one thing.

If any container is lost or delayed, we request a new one, or wait for the arrival of the next one.

And probably:

• the supplier has the resources to replace the goods in a small timeframe,
• The dimension and the weight of the goods is small and we can make a delivery plan, with some quantities being delivered by air freight.

When we are speaking of customer made products, with a large lead-time, high volumes, high weights, and a very complex and time consuming “mis au point”, the transport risks are in a completely different level.

From my experience, I can say that sourcing die sets overseas, from a technical point of view (die set quality) have their risks but they can be minimized and addressed.

Incoterms should be carefully evaluated, and insurance discussed even if a seller's responsability.

The major risk to evaluate is the transport, even if we consider that the probability is very small, if we use a FMEA analysis to evaluate this failure mode, I would say:

- Severity – very high

- Occurrence – very low

- Detection – very low (or none)

So the RPN would be very high, and I don’t see how we can do a robust Action Plan to reduce it.

Thank you for your attention and I hope this article is useful.

#automotiveindustry ;#projectmangement ;#riskmanagement