Commercial Gas Diaphragm Meter

Overview:

A leading manufacturer of pressure regulators which measure and control gas, water, and electricity, unhappy with their current metal parts vendor, the company set out to find a new partner with fresh ideas.

Problem:

They contracted Boly to solve issues with two different product groups.
1) they purchased a large variety of metal components in factories across America. In order to reduce the operation cost, they planned to do sourcing and manufacturing activities out of America and scheduled to shut down 2 assembly factories and outsource the long-lasting meter model to third parties within 3 years.
2) they needed a faster, more reliable manufacturing solution for high-precision components with improved balance in their assembly.

 

Approach:

Boly took over their production of metal components instead of sourcing in the state. In order to determine whether a production run will produce parts with consistency and repeatability, all components went through the PPAP sample process before mass production. It could be ensured that the quality of the components same as the previous sourcing.

On the other hand, in order to guarantee sufficient components ready to use on the assembly line, we adopted Vendor-Managed Inventory (VMI), an arrangement between a buyer and our factory to automatically arrange production, stocking, and replenish customers’ inventory under weekly or monthly forecast usage. There were more than 30 metal parts for one model gas meter installation. By analyzing SKUs in multiple categories and customer assembly weekly usage, we built production and inventory planning to decrease overall stock. It could help them to make better buying decisions, including managing costs by reducing spikes and dips in inventory, allowing customers to maximize savings.

There are three main advantages of our VMI program take benefits to the buyer:

1) Lean Inventory

The meter manufacturer told us which components they needed and when, and we’ll consolidate and prepare them just in time. Obviously, there were details that must be worked out. Both parties outline a detailed arrangement with clearly defined terms such as inventory hold periods, must-take deadlines, payment terms, and the like. It avoided buyers watching the dust settle on slow-moving products sitting in their warehouse which took on the burden of the tied-up cash/stock. An added bonus was that our inventory management program can help them plan for supply chain disruptors like the Chinese New Year shutdown.

2) Lower Operating Costs

Since then, the meter manufacturer provided the usage history and the amount of inventory on a monthly basis. We’ll use that data to forecast their demand and come up with a production plan which includes the quantity and frequency of orders. Once the components were ready, we consolidated different quantities of components and directly shipped them to customer warehouses. Now that we were managing components inventory, they can free up capital paying for space or personnel.

3) Stronger Supplier Relationship

VMI program required a high degree of trust between buyer and supplier. That sort of trust developed a real partnership that brings about lower costs and higher efficiencies. We managed manufacturing requirements by forecasting data and mitigating unanticipated fluctuations in seasonal demand and market shifts.

 

Result:

Boly successfully helps them to shift their manufacturing activities out of America.  For most of the components, we can finish the PPAP approval within 3 months and arrange the first lot shipment in 30 days upon sample approval. They finally shut down the factory after 3 years as planned.

 

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