Case 6-3: Haniff Machining

1. What are the differences between purchasing capital goods and raw materials? Between capital goods and services?
2. What are the benefits to Haniff by standardizing to equipment manufactured by Mazak?
3. Would you be prepared to use another supplier if the price of the equipment was lower?
4. What benefits does the new equipment provide in the areas of quality and inventory costs?
5. Can you quantify all of the potential savings? How do you put a number on improved safety?
6. How will the new equipment change the flow and material handling in the plant?
7. Do you want to in-source some of the production at the supplier?
8. Are the maintenance costs on the new equipment going to be more or less expensive?
9. As Haley Gregson, what other factors would you include in your analysis? What information do you need and where would you get it?

Main Question:

9. As Haley Gregson, what other factors would you include in your analysis? What information do you need and where would you get it?

162 Purchasing and Supply Monagement Presently working for several other companies Recommended by our design enginders Consultants e. Has done considerable work in this state the subsidiary, although not for Moren above-grude work. However, McTaggart is recom- mended for the following reason: 1. Offers lowest bic. b. Highly experienced, Built thousands of miles of line in mountain, desert, and swamp. Experience included 230, 345, SIXI, and 750 kV instruction Chapter 6 Need Identification and Specification 1 Case 6-3 Haniff Machining o operators per shift (e.g., one operator for the lathe d one operator for the drill). Programming and set-up puld require approximately 20 percent of the time of the NC programmer/set-up person on each shift. Previously, e operators had been responsible for setting up the anual equipment. Speaking with Kevin Richardson, supply chain man rer at Haniff, Haley learned that the company spent proximately 586,000 during the most recent 12 months n outsourcing to a local machine shop. Haley believed that the additional capacity created by the purchase of new Mazak machine could be filled with production th was currently outsourced. Haley recognized that Haniff would benefit froi reductions in labor cOSLN as a result of reduced staffin and faster cycle times. However, as she sat down at he desk to work on her proposal, Haley wondered what othe factors needed to be considered as part of the analysi Since this was her first assignment, Haley wanted impress Matt. Haley Gresson, manufacturing engineer at Haniff Machining (Haniff), in Mississauen, Canadl was working on be first assignment. It was July 18, and lakeyined Hunitf the week prior, immediately after graduating from the engineering - gram at a local college. Matt Salsbury, Hamis metais manager, asked Haley to wurk in a prol for the purchase of a new live axis CNC machine. Mart needed Haley's ana sis the following weck in order to linalinet cupital expen- diture budget before the company board meeting on July 29. Mart believed that CNC equipment provided more consis- leni quality, less handling in laster cycle times oumsal to manual equipment. In addition, it had beoonte increas ingly dillicult for Haniff to hire and retain skilled open tors for its manual equipment. Haniff paid experienced machinists 20 per hour, while benefits added an addi t ional S5 per hour. CNC equipment did not require exten- sive specialized training for operators. There was one person on each shift with responsibility for CNC machine programing and serup, each person was paid $25 per hour plus bernelis COMPANY OPERATIONS Haniff supplied machined steel, aluminum, and cast iron purs for customers in the automotive and acrospace indus- tries. Most of Haniff's customers were til lic 2 suppliers to original equipotont manufacturers (OEM). Hamill was a Ranily-owned business that has been in ciper ation of more than 50 years, and the t iny had a reput tigo for providing unity m uch competitive price Manufacturing operations were loented in a 50.000- S -fra facility in Mississauga, Ontario, The company cumplowed poximately on e in the plan uch shills and 13 people in the nilice. Ilanill's manufactur- ine cupabilities included machining drillin tappins and grinding operations. It also had an anodizing line. Tonioment used in the plan included several man ollathe drills, and milling machines. During the past decade, mantenient had been replacing its old manual machines with new computer numerical control (CNC) coinnen CNC machines used computors to execute pre-m ammed sequences of machine cunt con- mands. In ennast, manunl machines relied on the oc tor to control wheels or lovers laterale the equipment NEW EQUIPMENT PROPOSAL Mallasku Haley in prepare a proposito purchase five xix vertical CNC machine, manufactured by Yamazaki Mazak (Mazak). The onpany had purchused three Mazak CNC machines in the past four years and had been happy with the performance of the guipment god the service provided by the supplier. Mozak hau a lechnology center in Cambridge, Ontario, aliul li ape-hour drive from the Hanillplan The list price for the new machine was $275,000 plus approximately $10,000 for freight and rigging. Haleysti mated that Hamill would alwe need to invest about SDL000 in ling. The manufacturer indicate that the usellal life of the machine would be approximately 20 years Haley's analysis of machine nicesine times indi- Caled that the flew CNC machine would replace on manual Lathe and one drillon beth shifts and provide an addition 15 Com m ent in cycle tim e an Consequently, the new CNC machine would require opera per shift, cumpared to the existing staffing S e ymounts in Canadian dollars unless specified the CAD USD $ O MADE WITH Photo Editor 162 Purchasing and Supply Monagement Presently working for several other companies Recommended by our design enginders Consultants e. Has done considerable work in this state the subsidiary, although not for Moren above-grude work. However, McTaggart is recom- mended for the following reason: 1. Offers lowest bic. b. Highly experienced, Built thousands of miles of line in mountain, desert, and swamp. Experience included 230, 345, SIXI, and 750 kV instruction Chapter 6 Need Identification and Specification 1 Case 6-3 Haniff Machining o operators per shift (e.g., one operator for the lathe d one operator for the drill). Programming and set-up puld require approximately 20 percent of the time of the NC programmer/set-up person on each shift. Previously, e operators had been responsible for setting up the anual equipment. Speaking with Kevin Richardson, supply chain man rer at Haniff, Haley learned that the company spent proximately 586,000 during the most recent 12 months n outsourcing to a local machine shop. Haley believed that the additional capacity created by the purchase of new Mazak machine could be filled with production th was currently outsourced. Haley recognized that Haniff would benefit froi reductions in labor cOSLN as a result of reduced staffin and faster cycle times. However, as she sat down at he desk to work on her proposal, Haley wondered what othe factors needed to be considered as part of the analysi Since this was her first assignment, Haley wanted impress Matt. Haley Gresson, manufacturing engineer at Haniff Machining (Haniff), in Mississauen, Canadl was working on be first assignment. It was July 18, and lakeyined Hunitf the week prior, immediately after graduating from the engineering - gram at a local college. Matt Salsbury, Hamis metais manager, asked Haley to wurk in a prol for the purchase of a new live axis CNC machine. Mart needed Haley's ana sis the following weck in order to linalinet cupital expen- diture budget before the company board meeting on July 29. Mart believed that CNC equipment provided more consis- leni quality, less handling in laster cycle times oumsal to manual equipment. In addition, it had beoonte increas ingly dillicult for Haniff to hire and retain skilled open tors for its manual equipment. Haniff paid experienced machinists 20 per hour, while benefits added an addi t ional S5 per hour. CNC equipment did not require exten- sive specialized training for operators. There was one person on each shift with responsibility for CNC machine programing and serup, each person was paid $25 per hour plus bernelis COMPANY OPERATIONS Haniff supplied machined steel, aluminum, and cast iron purs for customers in the automotive and acrospace indus- tries. Most of Haniff's customers were til lic 2 suppliers to original equipotont manufacturers (OEM). Hamill was a Ranily-owned business that has been in ciper ation of more than 50 years, and the t iny had a reput tigo for providing unity m uch competitive price Manufacturing operations were loented in a 50.000- S -fra facility in Mississauga, Ontario, The company cumplowed poximately on e in the plan uch shills and 13 people in the nilice. Ilanill's manufactur- ine cupabilities included machining drillin tappins and grinding operations. It also had an anodizing line. Tonioment used in the plan included several man ollathe drills, and milling machines. During the past decade, mantenient had been replacing its old manual machines with new computer numerical control (CNC) coinnen CNC machines used computors to execute pre-m ammed sequences of machine cunt con- mands. In ennast, manunl machines relied on the oc tor to control wheels or lovers laterale the equipment NEW EQUIPMENT PROPOSAL Mallasku Haley in prepare a proposito purchase five xix vertical CNC machine, manufactured by Yamazaki Mazak (Mazak). The onpany had purchused three Mazak CNC machines in the past four years and had been happy with the performance of the guipment god the service provided by the supplier. Mozak hau a lechnology center in Cambridge, Ontario, aliul li ape-hour drive from the Hanillplan The list price for the new machine was $275,000 plus approximately $10,000 for freight and rigging. Haleysti mated that Hamill would alwe need to invest about SDL000 in ling. The manufacturer indicate that the usellal life of the machine would be approximately 20 years Haley's analysis of machine nicesine times indi- Caled that the flew CNC machine would replace on manual Lathe and one drillon beth shifts and provide an addition 15 Com m ent in cycle tim e an Consequently, the new CNC machine would require opera per shift, cumpared to the existing staffing S e ymounts in Canadian dollars unless specified the CAD USD $ O MADE WITH Photo Editor 162 Purchasing and Supply Monagement Presently working for several other companies Recommended by our design enginders Consultants e. Has done considerable work in this state the subsidiary, although not for Moren above-grude work. However, McTaggart is recom- mended for the following reason: 1. Offers lowest bic. b. Highly experienced, Built thousands of miles of line in mountain, desert, and swamp. Experience included 230, 345, SIXI, and 750 kV instruction Chapter 6 Need Identification and Specification 1 Case 6-3 Haniff Machining o operators per shift (e.g., one operator for the lathe d one operator for the drill). Programming and set-up puld require approximately 20 percent of the time of the NC programmer/set-up person on each shift. Previously, e operators had been responsible for setting up the anual equipment. Speaking with Kevin Richardson, supply chain man rer at Haniff, Haley learned that the company spent proximately 586,000 during the most recent 12 months n outsourcing to a local machine shop. Haley believed that the additional capacity created by the purchase of new Mazak machine could be filled with production th was currently outsourced. Haley recognized that Haniff would benefit froi reductions in labor cOSLN as a result of reduced staffin and faster cycle times. However, as she sat down at he desk to work on her proposal, Haley wondered what othe factors needed to be considered as part of the analysi Since this was her first assignment, Haley wanted impress Matt. Haley Gresson, manufacturing engineer at Haniff Machining (Haniff), in Mississauen, Canadl was working on be first assignment. It was July 18, and lakeyined Hunitf the week prior, immediately after graduating from the engineering - gram at a local college. Matt Salsbury, Hamis metais manager, asked Haley to wurk in a prol for the purchase of a new live axis CNC machine. Mart needed Haley's ana sis the following weck in order to linalinet cupital expen- diture budget before the company board meeting on July 29. Mart believed that CNC equipment provided more consis- leni quality, less handling in laster cycle times oumsal to manual equipment. In addition, it had beoonte increas ingly dillicult for Haniff to hire and retain skilled open tors for its manual equipment. Haniff paid experienced machinists 20 per hour, while benefits added an addi t ional S5 per hour. CNC equipment did not require exten- sive specialized training for operators. There was one person on each shift with responsibility for CNC machine programing and serup, each person was paid $25 per hour plus bernelis COMPANY OPERATIONS Haniff supplied machined steel, aluminum, and cast iron purs for customers in the automotive and acrospace indus- tries. Most of Haniff's customers were til lic 2 suppliers to original equipotont manufacturers (OEM). Hamill was a Ranily-owned business that has been in ciper ation of more than 50 years, and the t iny had a reput tigo for providing unity m uch competitive price Manufacturing operations were loented in a 50.000- S -fra facility in Mississauga, Ontario, The company cumplowed poximately on e in the plan uch shills and 13 people in the nilice. Ilanill's manufactur- ine cupabilities included machining drillin tappins and grinding operations. It also had an anodizing line. Tonioment used in the plan included several man ollathe drills, and milling machines. During the past decade, mantenient had been replacing its old manual machines with new computer numerical control (CNC) coinnen CNC machines used computors to execute pre-m ammed sequences of machine cunt con- mands. In ennast, manunl machines relied on the oc tor to control wheels or lovers laterale the equipment NEW EQUIPMENT PROPOSAL Mallasku Haley in prepare a proposito purchase five xix vertical CNC machine, manufactured by Yamazaki Mazak (Mazak). The onpany had purchused three Mazak CNC machines in the past four years and had been happy with the performance of the guipment god the service provided by the supplier. Mozak hau a lechnology center in Cambridge, Ontario, aliul li ape-hour drive from the Hanillplan The list price for the new machine was $275,000 plus approximately $10,000 for freight and rigging. Haleysti mated that Hamill would alwe need to invest about SDL000 in ling. The manufacturer indicate that the usellal life of the machine would be approximately 20 years Haley's analysis of machine nicesine times indi- Caled that the flew CNC machine would replace on manual Lathe and one drillon beth shifts and provide an addition 15 Com m ent in cycle tim e an Consequently, the new CNC machine would require opera per shift, cumpared to the existing staffing S e ymounts in Canadian dollars unless specified the CAD USD $ O MADE WITH Photo Editor 162 Purchasing and Supply Monagement Presently working for several other companies Recommended by our design enginders Consultants e. Has done considerable work in this state the subsidiary, although not for Moren above-grude work. However, McTaggart is recom- mended for the following reason: 1. Offers lowest bic. b. Highly experienced, Built thousands of miles of line in mountain, desert, and swamp. Experience included 230, 345, SIXI, and 750 kV instruction Chapter 6 Need Identification and Specification 1 Case 6-3 Haniff Machining o operators per shift (e.g., one operator for the lathe d one operator for the drill). Programming and set-up puld require approximately 20 percent of the time of the NC programmer/set-up person on each shift. Previously, e operators had been responsible for setting up the anual equipment. Speaking with Kevin Richardson, supply chain man rer at Haniff, Haley learned that the company spent proximately 586,000 during the most recent 12 months n outsourcing to a local machine shop. Haley believed that the additional capacity created by the purchase of new Mazak machine could be filled with production th was currently outsourced. Haley recognized that Haniff would benefit froi reductions in labor cOSLN as a result of reduced staffin and faster cycle times. However, as she sat down at he desk to work on her proposal, Haley wondered what othe factors needed to be considered as part of the analysi Since this was her first assignment, Haley wanted impress Matt. Haley Gresson, manufacturing engineer at Haniff Machining (Haniff), in Mississauen, Canadl was working on be first assignment. It was July 18, and lakeyined Hunitf the week prior, immediately after graduating from the engineering - gram at a local college. Matt Salsbury, Hamis metais manager, asked Haley to wurk in a prol for the purchase of a new live axis CNC machine. Mart needed Haley's ana sis the following weck in order to linalinet cupital expen- diture budget before the company board meeting on July 29. Mart believed that CNC equipment provided more consis- leni quality, less handling in laster cycle times oumsal to manual equipment. In addition, it had beoonte increas ingly dillicult for Haniff to hire and retain skilled open tors for its manual equipment. Haniff paid experienced machinists 20 per hour, while benefits added an addi t ional S5 per hour. CNC equipment did not require exten- sive specialized training for operators. There was one person on each shift with responsibility for CNC machine programing and serup, each person was paid $25 per hour plus bernelis COMPANY OPERATIONS Haniff supplied machined steel, aluminum, and cast iron purs for customers in the automotive and acrospace indus- tries. Most of Haniff's customers were til lic 2 suppliers to original equipotont manufacturers (OEM). Hamill was a Ranily-owned business that has been in ciper ation of more than 50 years, and the t iny had a reput tigo for providing unity m uch competitive price Manufacturing operations were loented in a 50.000- S -fra facility in Mississauga, Ontario, The company cumplowed poximately on e in the plan uch shills and 13 people in the nilice. Ilanill's manufactur- ine cupabilities included machining drillin tappins and grinding operations. It also had an anodizing line. Tonioment used in the plan included several man ollathe drills, and milling machines. During the past decade, mantenient had been replacing its old manual machines with new computer numerical control (CNC) coinnen CNC machines used computors to execute pre-m ammed sequences of machine cunt con- mands. In ennast, manunl machines relied on the oc tor to control wheels or lovers laterale the equipment NEW EQUIPMENT PROPOSAL Mallasku Haley in prepare a proposito purchase five xix vertical CNC machine, manufactured by Yamazaki Mazak (Mazak). The onpany had purchused three Mazak CNC machines in the past four years and had been happy with the performance of the guipment god the service provided by the supplier. Mozak hau a lechnology center in Cambridge, Ontario, aliul li ape-hour drive from the Hanillplan The list price for the new machine was $275,000 plus approximately $10,000 for freight and rigging. Haleysti mated that Hamill would alwe need to invest about SDL000 in ling. The manufacturer indicate that the usellal life of the machine would be approximately 20 years Haley's analysis of machine nicesine times indi- Caled that the flew CNC machine would replace on manual Lathe and one drillon beth shifts and provide an addition 15 Com m ent in cycle tim e an Consequently, the new CNC machine would require opera per shift, cumpared to the existing staffing S e ymounts in Canadian dollars unless specified the CAD USD $ O MADE WITH Photo Editor