Case Studies-The Roughness of Rice

• The Roughness of Rice
• The Randomness of Rocks
• The Raceways of Railcars

CASE: Gaining further cost reductions for an existing product.

The Situation:
To sell capital equipment today you have to be price competitive. Progressive manufacturers are bringing in their suppliers to assist as early as the design stage in an effort to “build-in” cost efficiency in new products.

The pressure, however, is just as intense to reduce the cost of products already in production. CASE (now CNH Global) needed to reduce the cost of the chute on their rice combine as part of a larger, overall cost reduction.

The Challenge:
To reduce costs for products currently in production.

A Solution:
Demand annual price concessions across the board from your suppliers.

However, requiring suppliers to grant unilateral concessions every year weakens your supply chain by destroying the supplier’s incentive to improve performance and contribute to the relationship. They initially won your work by offering the best combination of price, quality and service; barring change in design, an arbitrary price cut must be financed by a reduction in quality or service.

The Solution:
When CASE asked, Pickwick’s engineers pointed out that each component of the chute had originally been made in quantity and stocked for later assembly. This had permitted each component to be made of a different material: because of the highly abrasive nature of rice, stainless was used in areas exposed to the rough, high speed kernels. Areas exposed to the weather were plated and mild steel was used on internal parts. Although logical at its inception, neither CASE nor Pickwick wanted to stock these parts today; Pickwick was expected to furnish just the number of completed weldments needed to satisfy production, at any given point in time.

A joint CASE/Pickwick engineering team determined that all the parts could be laser cut from a single piece of stainless steel, a heavier gauge than what was used previously, which extended the life of the component. This also allowed the components to be produced in small lots and delivered when needed. CASE authorized the change, Pickwick redrew the prints, and CASE realized an annual savings of $80,000 on a better rice chute.