Introduction – The purchasing of complex components
Operational purchasing of complex components is a challenge for many companies.
Complex products are in most cases assembled from complex components. A typical situation today is that the OEM of a complex product like a car, an aircraft or a power plant is purchasing complex components from several suppliers. The quality of the final product is depending on all components being correctly specified and then manufactured and delivered as specified.
The definition of the component is in most cases based on a standard offering and configured for the specific project or product. The standard offering typically changes over time and the specification of the specific component does the same. The specification of the complex component is by nature complex and is in most cases managed in a PLM tool.
A crucial part of a successful purchase is having a common understanding with your suppliers on what component to deliver, taking into account the original definition and any changes that will occur. Other areas to address include when to deliver, where to deliver, required certificates, required documentation and pricing.
The complete purchase process involves many roles like engineering, purchasing, logistics and more that define the overall product as well as the specification of the components. Operational purchasing agrees on and issues the purchase order, project/manufacturing management sets time and cost restrictions and a lot more goes on.
The purchasing process will involve at least one supplier per component but in many cases several. Purchasing requires the transfer of information defining the complete purchase as described above. Before digitalization, this was managed by sending paper drawings including all information required to define the product along with a RFQ/PO paper document adding
the commercial parts. This way of working had some advantages as it managed to capture the information in one container (the drawing) in a neutral format (paper drawings). Responses were then sent in the same way.
The typical situation today is that the defining information is kept in a PLM system, the PO information is managed in an ERP system and the transfer of information is done by email. The contents of the email are in many cases still a document or a drawing. Formats like PDF are used even if the intention by many companies is to communicate the information in a more intelligent way enabling re-use.
Having a common view of what to deliver, where and when is a common interest for the OEM and the suppliers but there are a number of challenges and shortcomings with the current approach. A key requirement is to have a common view of what should be delivered. This includes but is not limited to:
- The valid configuration for the component including agreed changes
- The valid standard that the configuration is based on includes changes
- Any issues that are being processed like change requests stated by the supplier
- What to deliver including certificates and documentation
- Where to deliver
- When to deliver
Some of the questions that need to be addressed are shown below. When these questions cannot be answered properly there is a risk they will add to projects cost, lead times, lead quality issues and bad relations between OEM and suppliers but also of course bad relations between OEM and end customers.
5 things to address to improve an OEMs purchasing of complex components
There is, as demonstrated above, a number of issues and challenges that need to be addressed to ensure that the correct components are delivered as planned.
- Transparency – Information about the valid information including the configuration of the component, the agreed delivery time and place, required certificates and documentation needs to be visible to all involved. This includes any changes; planned or in discussion. An email approach will not fulfil this requirement as it is only visible to those on the mailing list and even so there is no checking email is read.
- Security – This is crucial as the information in many cases is confidential, for commercial reasons or as part of a security classification. Email is not a safe way of communication. Information should be available only to those who need it, when they need it. A typical scenario is an RFQ process when material should be made available to all the bidders but restricted to the one getting the order after the RFQ is closed.
- Readability – The information needs to be possible to understand by all involved partners. This is today in many cases solved by transferring documents in electronic formats like PDF and TIFF, formats that are possible to understand by all. A more efficient process will require the information to be in a more intelligent format like STEP or JT. This puts higher demand on the involved systems but the process is more efficient.
- Access – Different participants will have different abilities to connect, the minimum required access method should be using a standard web browser.
- Consolidation of information – This means that all required information, originating from the PLM, ERP and other systems at both OEM and supplier should be possible to view in a consolidated way.
Managing the information related to the purchasing process for complex components in an efficient and secure way is a prerequisite to ensure the ability to deliver high-quality complex products, on time and on budget.