Results from the AMBA survey show that the majority of mold shops (90 percent of respondents) deal with both purchasing and engineering when quoting, negotiating price, and developing a mold program. Only 2 percent responded that they work primarily with purchasing, and 8 percent reported they work primarily with engineering.
However, about half of the moldmakers responding said that purchasing and engineering people typically don't work well together to facilitate the mold buying process. When asked why these two groups don't seem to work well together, most respondents said that purchasing and engineering have different agendas; also cited was a general lack of communication between the two departments.
When it comes to agendas, moldmakers said that purchasing people buy strictly on price, while engineers are better equipped to make decisions based on quality and value. Generally, reported purchasing agents, purchasing has budgetary responsibility for a mold program. Whether or not a program falls within budget rests on the shoulders of the purchasing department.
However, this often puts purchasing agents at odds with moldmakers and engineers, who better understand the tooling process and the costs involved. This knowledge covers less tangible factors like productivity, efficiency, downtime, and maintenance considerations.
Different groups within a large OEM have varying responsibilities, explains Jay Mortensen, who has a background in manufacturing finance and is currently with Maytag's Global Procurement division in Chicago. "When budgets and performance measures are fractured, it is easy to overlook important costs and risks related to procuring, developing, operating, and maintaining a mold," he says. "By using a disciplined, strategic cost management process the benefits of understanding the total cost of ownership can be realized."
Most moldmakers responding to the survey (77 percent) said they understand the procurement procedures of their OEM or molder customers. Of the 20 percent who responded that they do not understand procurement procedures of their customers, 52 percent admitted they were unable to collect payment or had payment delayed because of misunderstandings about procedures.
Susan Patton, purchasing manager for Corning Gilbert Inc. in Glendale, AZ, says it's not absolutely necessary for moldmakers to know their customers' purchasing policies, but it is critical to know who authorizes projects and expenditures. "Small shops who serve large multinational companies often clash philosophically," she notes. "However, it's just smart business to protect yourself from getting burned. Somebody was perceived to have the authority but didn't. It's just good common business sense to find out who has the authority."
Although 15 percent of survey respondents reported that engineering determines who will build the mold and places the PO, in a more typical scenario, according to 37 percent of respondents, engineering determines the vendor and purchasing places the order. Only 16 percent of respondents said that purchasing chooses the vendor and places the PO with some input from engineering. And a mere 5 percent of respondents said that purchasing chooses the vendor and places the PO based strictly on quotes received with no input from engineering.
Rick Finney, president of M.R. Mold Engineering in Brea, CA, says it's particularly frustrating when nontechnical people are involved in the quoting process. "They ask for some-
thing we can't do and we try to talk to them about the technicalities of a mold and why we can't build what they're requesting, but they don't understand what we're talking about," he explains. "We get drawings sent to us that have no specifications on them. We call and ask, 'What do you want?' They ask, 'What do you recommend?'"
Finney, like many moldmakers, is more likely to respond to RFQs that are focused, detailed, and indicate that the customer knows what it wants.
Overwhelmingly, moldmakers responding to the survey said the biggest problem they have dealing with purchasing people is their lack of knowledge about molds, manufacturing, and the process of mold buying. Less than half (45 percent) of the moldmakers responding said that purchasing people understand molds and mold buying. That said, however, few moldmakers try to educate customers on the subject. Only 7 percent offer some type of formal education for customers, such as a plant tour.
Tech Mold Inc. (Tempe, AZ) is one moldmaker that regularly holds seminars for customers. Frank Baker, director of sales and marketing for Tech Mold, says that "educating the customer is the best way to get them to be on your side." Tech Mold sponsors seminars at its customers' facilities for engineers as well as purchasing agents, and has sold or given away more than 10,000 copies of the book What is a Mold? since its publication five years ago.
Such seminars improve purchasing techniques and help establish long-term relationships between moldmakers and customers. "Going from one moldmaker to another [based solely on price] is not in the best interest of anyone," comments Baker.
The Purchase Order
A whopping 95 percent of survey respondents said they begin work on a mold without a purchase order, a practice that can come back to haunt the moldmaker. Just more than one-quarter of the respondents (26 percent) said they have been refused payment of an invoice because it lacked authorization from purchasing.
Many moldmakers get caught in this trap because of the pressure to satisfy engineering, which is usually up against a tight schedule. Waiting for the red tape involved to cut a PO can threaten the entire production schedule. Moldmakers also know that if they refuse a job because it lacks a PO, a competitor will certainly pick up the program.
Some mold shops said they begin work on a mold with a written authorization from the project engineer. Here the moldmaker risks being caught in the middle between engineering's demands and the purchasing department's reticence to issue a PO.
Patton says that most moldmakers are "trusting their customers too much" by relying on verbal instruction. "They think they're doing us a favor by going ahead without a purchase order," she says. "Purchasing plays a key role in the process, and my job is to make sure the right people are involved in the mold purchasing process from the get-go."