The Portable Instrument Division of Tektronix used a large number of unnecessary duplicates of other parts, and collectively increased procurement costs, and negatively impacted manufacturing cost, time and quality.
The Challenge. The Portable Instrument Division of Tektronix used a large number of different part types and vendors in the design of its products. Many of these parts were unnecessary duplicates of other parts, and collectively increased procurement costs, and negatively impacted manufacturing cost, time and quality. Reducing the number of parts and vendors was considered critical to accomplishing cost, quality, and flexibility goals of their manufacturing excellence program.
The Solution. The Division used activity-based principles to drive down the part count and the number of vendors. This division used the number of part numbers as a product driver for procurement, storage, receiving, and part data base maintenance activities. Because each part number received the same cost regardless of volume, the cost per part was much less for high-volume part numbers than for low-volume part numbers. This situation made it more expensive for the product designer to use a low-volume unique component than a high-volume common component. The result was that the design engineers used substantially fewer unique components in their product designs. The part count for the division fell from about 6000 to 1500 in three years, while the number of vendors fell from over 1500 to less than 200 in the same time period. Procurement overhead fell, quality improved, and several products that had previously been produced on separate lines were now produced on the same line.
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