Learn to Hedge Against Inflation through Proactive Purchasing
The world of manufacturing is filled with risks. Staff turnover, overseas competition and third party vendor issues can all threaten your service level and put pressure on your organization. But one of the biggest risks in 2018 is inflation.
Rising material prices and inflationary forces are impacting costs at every level. Master suppliers are reporting price increases of 7%+ on steel products and 10%+ on stainless steel. What is a manufacturer to do?
One of the most powerful ways to mitigate the risk of rising prices is through a proactive supply chain strategy that includes issuing Blanket Purchase Orders (BPO). With a stable price for a fixed period of time, the BPO serves as a hedge against inflation.
- What is a Blanket Purchase Order?
A blanket Purchase Order is a contract to buy parts at a guaranteed price within a specific time period or schedule (typically one year). For example, a manufacturer forecasts to use 10,000-12,000 pieces of an MS16555 stainless steel dowel pins annually. They issue their supplier a Blanket PO for 12,000 pins a year at a negotiated price with 12 monthly releases of 1,000 pieces. This gives them 12 months of predictable costs at today’s 12,000 piece price, rather than tomorrow’s 1000 piece price. As we start to see double digit price increases in the industrial marketplace, the savings multiply.
- What are the benefits of Blanket Purchase Orders?
A Blanket PO can add certainty to a business and can make your production process leaner, guaranteeing the price and availability of parts without the burden of holding the parts in stock. Suppliers also benefit because they have a predictable revenue stream. Both sides have certainty concerning quantity, price, delivery requirements and payment terms.
Beyond certainty, the top benefits of BPOs for manufacturers are:
- Reduces unit costs through quantity discounts.
- Guarantees pricing & reduces time spent on price negotiation.
- Shortens lead time and eliminates stock outs.
- Assurance of quality of products and vendors.
- Improves efficiency of ordering, receiving and bill paying process.
- Leaner operations with reduced stock burden.
During inflationary times, the benefits of locking in today’s prices for up to 1 year multiply.
- When should a manufacturer issue a Blanket PO?
- When an item has a high minimum annual usage ($500 minimum EAU).
- When a quantity discount can be achieved.
- When you are already making repetitive purchases from the same supplier within a certain time period (typically 1 year).
- When parts are used according to a production schedule.
- When parts have a lead time.
- When should a manufacturer NOT issue a Blanket PO?
- When minimum annual usage of item is low (under $500).
- When part is only used for project work and usage in unpredictable.
- When price is subject to change without notice.
- When quality of product or supplier is questionable.
- What other factors should I consider?
The main risks when using Blanket Purchase Orders occur when BPOs are not monitored or extended past their final scheduled release, which can lead to price changes and inventory availability problems. The best way to mitigate this risk is through the use of an effective spend management tool that includes a minimum safety stock level. Collaboration with your supplier is also recommended.
The other main risk occurs when a blanket order is issued for more than the needed quantity of a specific part due to demand forecast issues or product changes. This risk can be mitigated by working with your supplier to set conditions to manage this gap, such as extending a 1 year blanket to 18 months.
Blanket Purchase Orders at MF Supply:
Here at MF Supply, we can help you effectively craft a proactive BPO strategy based on your organization’s unique needs. We offer blanket orders for up to 18 months with flexible terms and low minimums.
For more detailed information about Blanket Purchase Orders, to request a line card, or to send an RFQ, visit our website. And if you don’t see what you need listed, as always, ask us. “Finding the right screw for you” is our tag line after all!
Contact me at email@example.com with your questions, comments or helpful hints!
8 Things to Know When Buying Dowel Pins
If you are a manufacturer working with complex assemblies or fixtures, then you’re likely very familiar with precision dowel pins. Commonly used as a hinge, shaft or pivot to locate or hold assembled parts together, dowel pins can withstand frequent insertion and removal without distortion. They are broadly used across various applications in many industries, including: aerospace, electrical motors, hydraulic equipment, instrumentation, tooling and fixtures, machinery, military and many more.
Our goal is to help simplify the buying process for this sometimes complex and confusing category of fasteners.
1. What is a precision dowel pin?
Dowel pins are solid, headless cylindrical shaped straight metal pins with a centerless ground finish. Manufactured to precise fractional diameters and lengths, dowel pins come in a variety of sizes, styles, designs and materials. This variability can cause confusion among buyers, engineers and end-users alike.
2. What materials and platings are available?
Precision dowel pins are available off the shelf in alloy steel (typically hardened) and stainless steel grades 18-8/303, 316 and 416 (typically hardened). Other exotic materials or special finishes are available for special order with a lead time.
3. What sizes are available?
Standard sizes include inch from 1/16″ to 1″ diameter, and metric from M1 to M20 diameter. Length options vary by diameter. Other diameters and special lengths are available for special order and usually involve a lead time.
4. When ordering, do I need to specify the dowel pin tolerance or call out attributes such as standard, undersized or oversized fit?
Precision dowel pins often show up under their MIL-SPEC numbers, MS16555, MS16556 and Mil-P-21143. Metric dowel pins might show up under the following DINs and ISO numbers: DIN 7, DIN 6325, and ISO 2338 and 8734. Dowel pins might also show up under a manufacturer part number such as Pic, WM Berg, Unbrako or Holo-Krome. If you are ordering by MIL-SPEC, manufacturer’s part number or DIN, then the general attributes including tolerance and style are known. Here are a few of the other options that will help you order the correct pin:
The most common standard inch or imperial sized precision dowel pin is made to the ASME ANSI B18.8.2 spec and has a diameter tolerance of -0.00 / +0.0002 and length tolerance of +/-0.010. For example, a ¼” (0.25) diameter standard dowel pin will have a diameter between 0.2500–0.2502″.
The standard metric tolerance is related to the DIN. Both DIN 7 and DIN 6325 have a standard m6 diameter tolerance of +0.012mm / +0.004mm and a length tolerance related to the specific pin length.
Undersized series dowel pins are used for inconsistent holes. They have a basic diameter 0.0002″ under the nominal diameter. For example, a ¼” (0.25) diameter undersized dowel pin will have a diameter between 0.2500–0.2498″. The Mil-P-21143/2- falls into the undersized category.
Important note: All pin options may not be available in all sizes and materials.
Finally, the Oversized series of dowel pins are usually used to fit into worn holes and are generally used in the aftermarket for repairs. These pins are only available off the shelf in steel in a small range of sizes.
5. Can I specify if I need radius or chamfer on the pin ends?
The pin style will depend upon the spec and the material. Precision dowel pins may come with either a double chamfer or a radius on one end and a chamfer on the other end. Specific style requirements are available for special order and usually involve a lead time.
6. What information do I need for ordering?
The easiest way to order is by either the manufacturer or MIL-SPEC part number. To order by description, you need the diameter, length and material and if applicable, and any special tolerance, plating or style requirements.
7. Do I need to buy special installation tools?
Just remember, no hammers! When installing dowel pins, never drive the pin into the hole with force. Always press it in for best results. And production favors pins since they require no extra fastening hardware for insertion, no secondary operations, and no mating parts. This ease-of-use adds up to speedier production, which makes everyone in the food chain happy!
8. What level of certification is required?
Generally, a Certificate of Conformance or a COC is sufficient for your customer. Full certification with material certs and test reports are often available for USA made and MIL-SPEC parts for a fee.
- The full range of commercial and MIL-SPEC parts, including parts that are USA made, DFARS and ROHS compliant.
- Brand names and generic equivalents.
- Custom-made parts per print in non-standard sizes and exotic materials and finishes.
- Inch and metric sizes including ASME ANSI B18.8.2, DIN 7, DIN 6325, and ISO 2338 and 8734
- Metric Precision Dowel pins including Press-Fit A, B and Slip-Fit C series and all MD series pins in 416 and 303 Stainless Steel.
For more than 40 years, MF Supply has helped American manufacturers streamline operations, saving them time and money with our sourcing expertise and unique supply chain strategies. We are a WBE/WOSB certified stocking distributor of fasteners and electronic components.
We work with the best-established factories in the United States and DFARS-certified countries, and stock a huge inventory including all major brands and equivalents. MF Supply provides solutions including: same-day drop ship direct from the factory; custom sizes, materials and plating options; and DFARS parts with full paperwork and Certificates of Conformance.
We creatively solve common problems including hard-to-find parts and long lead times. Our sourcing and reworking expertise includes fast turnaround for modification of existing parts, hard to find standards and specials, special threads, non-standard diameters and lengths, exotic materials, special platings and short runs. We provide functional equivalents to expensive brand name fasteners and help our customers save money while reducing lead times.
Follow our blog at http://mfsupplyblog.wordpress.com/