Developing a set of goals and objectives for your casting supplier is an important task for every casting buyer. In order to accomplish these goals, they need to be monitored and measured so you know if that supplier is improving or losing ground. 
So, as a casting buyer, what do you measure to gauge the performance of your casting supplier?

If you’ve been in the world of procurement for any length of time, you’ll know there are many possible measurements related to supplier performance, and it’s important to select the correct criteria to ensure success. Following are some common measurements that you can consider as a casting buyer. Note that the measurements I have listed are external, meaning this is data that you as a casting end-user collect, as opposed to internal measurements that the foundry collects from their process and will review with you during performance discussions.

Let’s begin with quality, since it is definitely the most important metric of supplier performance. In terms of castings rejected within your facility, you are most likely measuring the foundry’s performance in terms of parts per million rejected––commonly referred to as PPM. This measurement is widely used in the industry and works well when comparing supplier-to-supplier performance. However, if one of your suppliers is only providing castings that have a low annual usage, even the rejection of a few castings can make the PPM measurement appear extremely high. As I’ve stated in the past, any numbers that are outliers in an analysis require deeper investigation to fully understand the cause. To limit further investigation, perhaps an alternate measurement for low volume foundries would be a simple reject percentage, or the percent of dollars rejected versus dollars received. 

Shipping Performance

The foundry’s shipping performance is another common metric that buyers are concerned with. On-time delivery is the most common measurement, whether it is for delivery within a specified window of days or for delivery on a specific day. Sometimes, delivery can be impacted by shipping delays that are due to conditions that are beyond the control of the foundry. To address this, an alternate measurement could be shipping on the specific date, which takes the variation caused by the freight line out of the equation. Other metrics can be related to order fulfillment––the amount of parts received versus the amount ordered, and the amount of expediting required (if any) to get your castings on time.

The amount of open capacity the foundry has can be a critical factor and often impacts delivery time. In my experience, the methodology used to assess capacity varies widely; some foundries express their capacity as a percentage of hours per shift versus uptime. Other foundries go much further in their analysis and measure the production rate through each asset and the available hours of production, giving them the ability to forecast bottlenecks and other capacity constraints. For this metric, it is vital that you understand how the foundry determines their available capacity and how their method will impact your operations.

Cost Issues

The financial health of a foundry is an important factor that can be managed through commercially available means such as Dun & Bradstreet reports. Enlisting the aid of financial experts on your team is critical to develop your understanding of the foundry’s situation. As a buyer, financial issues more directly related to your goals may be related to part cost. In this area, you may choose to measure cost increases over time, and challenge the foundry to implement cost reduction efforts that either reduce or offset any cost increase impacts. Some OEMs measure foundry performance by the amount of cost reduction ideas generated versus those implemented on a year-over-year basis. 

In an effort to keep up with the performance of your supply base, I support the development of a periodic “pulse survey.” This is something that you need to develop and monitor yourself with the measurements that are important to you. 

What I’m describing here is not a form that you send to each supplier to fill out and return––a form will be ignored. This is a list of points that you talk about with the foundry during a routine phone call. These items include: (1) Is employment headed up or down; (2) Are you working overtime; (3) What are company sales per employee; and (4) How does your short-term order board look? These are questions aimed at opening up discussions that go beyond the general “How’s business?” talk that you often have. 

Another good practice is to schedule formal reviews with the foundry management team to create agreed-upon common goals and objectives to improve both their performance as a supplier and your performance as a customer.