Automation buyers take many approaches to managing their relationships with suppliers. Some take an adversarial approach. They are constantly suspicious of suppliersâ motives, bidding out every purchase request in order to squeeze out every cent of cost. Others negotiate long-term contracts with favored automation suppliers, preferring a stable relationship.
Choices also abound for determining the best support services to keep a plant running after automation implementation. Larger plants in metropolitan areas may be able to afford staffs of technicians to keep equipment uptime at a maximum. They may also have close proximity to distributors and other stocking sources for parts on demand. Other plantsâparticularly those in more remote locationsâmay find that a better choice is to form a partnership with a supplier. Depending upon each customerâs unique situation, suppliers offer tailored programs to help users maintain an adequate supply of spare parts kept up to the latest revision, provide troubleshooting support, or perform on-site upgrades or preventative maintenance. Properly managed by both parties, these services can save manufacturers a lot of money.
Uptime equals profits
Manufacturers realize the correlation between equipment uptime and profitability, and that idle equipment means lost revenue. This is especially true for suppliers to the automotive industry, where margins are low, parts are needed on a 24/7 basis, and companies must sustain high levels of productivity while continuously meeting strict quality demands.
Such is the case for Gates Corp., of Denver, Colo., a Tier One automotive belt supplier serving the Big Five manufacturers. Recently, the company completely automated its production equipment and invested in a lean manufacturing initiative at its Ashe County, N.C., manufacturing facility. Plant managers wanted to establish a comprehensive parts management program to support the new automation technology and help the facility maximize capacity, minimize downtime and reduce inventory costs.
In early 2000, Gates adopted the parts management program, and in less than a year, realized $250,000 in reduced inventory expenses. The program helped solve ongoing repair and supplier services issues, and minimized the amount of idle equipment on the plant floor, while generating a 98 percent run rate. It has also helped Gates significantly reduce its overall repair costs. As the company matures and becomes more efficient at controlling inventory, less repair work is now being outsourced, further reducing operating costs.
Founded in 1911, Gates has grown to be one of the worldâs largest manufacturers of industrial and automotive belts and related products. It is the only non-tire-producing rubber company with sales and manufacturing operations in all of the worldâs major markets, including Asia, Australia, Europe, North America and South America.
Gatesâ Ashe County facility provides Micro-V belts to automotive assembly plants around the worldâacross 24 time zones. The Micro-V belt is used in automotive drive systems for small-diameter pulleys, backside idlers and automatic tensioners. The Ashe County facility manufactures 3,800 varieties of automotive Micro-V belts each yearâapproximately 12 million belts in all, or 1 million belts per month. Operating three lines around the clock, seven days a week, the facility has no time to make up for equipment failures, making unplanned downtime a disastrous proposition. Additionally, the facility is located in a rural, isolated region with limited access to on-demand spare parts.
Shutdowns unacceptable
âBecause weâre tucked away in a remote, rural area of North Carolina, we donât have access to Saturday FedEx or UPS deliveries,â says Shannon Holdaway, maintenance and engineering manager, Gates Corp. âIf a machine breaks down on a Friday night and we donât have a spare, we have to wait until Monday to get a replacement. With the high demand for our belts, a shutdown of this magnitude is unacceptable.â
In 1999, Gates completely automated its Ashe County production facility to increase production speed and efficiency. The company wanted to make sure that its new equipment was maintained properly while optimizing inventory levels and minimizing repair costs. To maximize equipment reliability, plant managers wanted to establish a comprehensive parts management program that would help assure parts availability while minimizing inventory-carrying expenses.
Gates collaborated with its automation supplier, Rockwell Automation Inc., to design and implement the parts management program that supports the companyâs goal of reducing its cost-per-part by increasing volume. Optimizing its spare parts inventoryâhaving the right parts available when neededâallowed Gates to increase manufacturing efficiency, reduce downtime and minimize its inventory investment.
In early 2002, the company installed new equipment and moved from manufacturing automotive hoses to manufacturing Micro-V belts. With its leap to completely automated technology, the company was challenged with finding the most efficient and reliable way to assure access to spare parts.
To manufacture the Micro-V belts, the company processes rubber slabs in sheet form, then transfers the sheets through automated build cells equipped with Rockwell Automationâs Allen-Bradley control components, including controllers, drives and operator interface terminals. At the end of the manufacturing cycle, operators package the Micro-V belts into containers to be shipped around the world.
âWe didnât know what level of inventory would be required to maintain the new equipment, so we had to decide early in the renovation process how much we needed to invest in spare parts inventory,â Holdaway says. âWe considered whether we should invest several hundred thousand dollars in purchasing controllers, drives, switches and other replacement parts, or if a customized parts management program would be a better solution for us.â
Coordinating control
Because of the large installed base, the company relied on the expertise of an outside service provider and enrolled in a comprehensive parts management program from Rockwell Automation. Gates selected Rockwell Automation because of the automation supplierâs established industry experience and extensive support capabilities, including a network of local distributors and repair centers throughout North America. The program gives Gates quick and reliable access to control components and spare parts they need to maintain 24/7 operations.
The agreement provides Gates with the best of both worlds: reliable access to Rockwell Automation spare parts when it needs them; and, because Rockwell Automation owns and manages the inventory, Gates has significantly reduced its inventory and maintenance costs.
The program also enables Gates to better coordinate control of spare parts that have been revised or changed by keeping Gates informed of revision changes to assure that it always has the latest version on its shelves.
âIf there is a fit, form, function or obsolescence change on a product in the asset management program, Rockwell Automation automatically replaces that part,â Holdaway notes. âAnd, in the event a part is defective, the parts management program guarantees a replacement part within 24 hours. Itâs like belonging to a special club with membership privileges. We have priority to get the parts we need, when we need them.â
The parts program has been instrumental in helping Gates meet its aggressive production goals while minimizing costly downtime. âWithout the parts management program from Rockwell Automation, we would have wasted thousands of dollars in production costs if even one of our manufacturing cells had to shut down,â says Holdaway. âInstead, we have increased capacity and reduced inventory by 25 percent, helping save approximately $250,000 in inventory expenses. More importantly, it has helped us maintain our leading share in the North America power transmission market.â
As part of its effort to increase capacity on an annual basis, the Ashe County facility recently installed its fifth manufacturing cell in five years. Holdaway credits the parts management program for helping the facility produce 2.5 times the capacityâenabling the company to significantly increase its return on net assets.
âThe $30,000 annual investment to run the parts management program enables us to save hundreds of thousands of dollars that can be invested in other lean initiatives,â says Holdaway. Gates plans to continue its parts management contract with Rockwell Automation.
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