Repurposing sourcing: a procurement strategy worth looking at

Repurposing is a strategy that is generally overlooked when it comes to sourcing. Procurement does not necessarily have to be a pricey undertaking, as it is also possible to reuse existing parts. Dr S. Vijayakrishnan delves into this procurement strategy.

Activities of the procurement activity in organisations begin with the user department providing specifications and other details of the item or part to be procured. This is typically engineering or design department in manufacturing companies and engineering, operations or maintenance departments in processing companies.
A significant difference between these two types of companies is the volumes of parts procured. A manufacturing company procures large volumes of parts, makes equipment, and sells them. Procurement volumes of processing companies would be huge for raw materials but small for parts or components for plant equipment, usually for maintenance.
The objective of any procurement function is to source the parts at optimal prices, which may not necessarily be the minimum prices, but usually are. This is much more important for a manufacturing company due to the large volumes involved; a small differential in procurement cost may add or subtracts a significant figure to the bottom line.
Procurement teams, therefore, constantly strive for and innovate ways to source at a marginally lower cost. This article is about a strategy useful in this pursuit but usually overlooked – that is to source items that can be repurposed rather than designed and produced on order.
Repurposing essentially means sourcing and using a part or component that is produced by its manufacturer for some other purpose or user. In general, it would be possible to procure such parts more economically than those produced to order based on our specifications- sometimes even at huge savings too. Also, as these can usually be procured in small quantities with no MOQ restrictions, just-in-time sourcing and reduction in inventory are additional positive fallouts.
A manufacturing company that embarks on adding repurposing sourcing to its strategy should include their design/engineering and often, the sales & marketing team too. Along with the Purchase department, they should evolve a joint ‘search, evaluate, adjust and incorporate’ plan. Final product specifications may need to be changed slightly with trivial or no impact on functionality; some other minor changes may have to be communicated and got accepted by product end users.
Briefly, the activities should involve the following:

• A search for the required part by its broad specifications (vague systems).
  It is easy to do this on the net these days with a wide amount of information made available by manufacturers – usually all except pricing.
• Obtain budgetary pricing for some likely candidates for small quantity orders.
• Using a couple of the commercially attractive ones, evaluate with Engineering on the feasibility and modifications required to use them.
• If found attractive, evaluate with Sales team on implications to customer.
• Conduct a proper vendor evaluation with regards to quality norms, standards compliance, etc.
• Incorporate said evaluation and proceed if acceptable.

To illustrate reprocessing sourcing, we will look at some possible examples from the valve industry.

Hand wheel

A large amount of valves produced in the world are manually operated and many of them use a hand wheel. Well, we can design a specific hand wheel to suit our valve and source it by sending out the drawings to manufacturers. Alternatively, a search of the net will show handwheel of all sizes, shapes and materials that are already produced for other manufacturers – both for valves and for other equipment. It would be a simple matter to adopt one of these for your valve.

Pneumatic actuator cylinder

A critical component is the pressure holding cylinder tube, usually made of metal and sometimes of composites. If you look at sourcing them to your exact design, most suppliers will stipulate MOQ requirements; however, if you source from someone who already makes them for others, small quantity sourcing at good prices may be feasible.

Elastomer moulded parts

Usually some dimensional changes are easy to accommodate in product design without affecting product functionality. If that is
the case, redesign to use widely produced equivalents.

Plate, rod raw material

Many parts are made by suppliers out of plates and rods sourced to drawings and specifications. While this is not exactly repurposing, if care is taken to align to raw materials (plates and rods) that are widely sourced by many, the ultimate part cost will come down. This may usually involve some redesign but may be worth it.
A similar opportunity exists for bolting and fasteners. Design your product using the most commonly sourced sizes.

Conclusion

Of course, not all parts could be sourced this way, nor is it desirable; at least to retain manufacturer’s unique product and brand identity. However, the possibility of using repurposed parts should be examined in this day and age when cost pressures are mounting on manufacturers and global, competitive sourcing is the success mantra.