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All About Rationalization and How It Can Save Your Company Money

Rationalization: the action of reorganizing a process or system to make it more logical and consistent.

When we talk to customers about saving them money as a supplier of fasteners, the term “rationalization” always comes up. So how does the definition above apply to saving money just by looking at fasteners?

There are a couple of ways to approach the process:

BOM

The first is to look at one product that is being produced and start with the BOM (bill of materials) for that item. Often the BOM is missing some key descriptors, which we need to identify first by reviewing samples or prints to make sure we have a complete description. Once we have good, complete descriptions, then we can filter the list by size, grade and/or finish and look for similar parts. Next, we ask the question, “Do you need three M8 nuts, or can you get by with one that works for all applications?” By going through this exercise, we can normally eliminate several part numbers which ultimately saves the customer money.

Large Scale Approach

The other way to approach the process is to look at the entire factory, assuming that multiple items are being produced. By looking at the larger scale, we can eliminate more parts and come up with more cost savings. This only works well if we see the entire fastener BOM, so if there is more than one fastener supplier, we need access to all items.

Suggestions from a rationalization exercise can always yield cost savings, at least in theory. However, the reality is that making changes to existing products also has a cost which may exceed the savings. So what is the value of rationalization?

By going through the exercise with existing products, a strategy can be developed to use going forward on future builds. If possible, make a “first choice” list using one drive style, one finish and one grade of fastener that will work in most applications. Publish this list and teach engineers to use it as much as possible. This will help keep the number of special parts to a minimum.

Rationalization can yield some good cost savings ideas, but for the best results, get us involved in the design phase of your engineering project at ProvenProductivity@Bossard.com.

Doug Jones
Applications Engineer
Email: djones@bossard.com

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April 27, 2018

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