Re-sourcing manufacturing processes in metal forming operations

Abstract

Deciding which activities to conduct in-house and which to outsource has become increasingly important due to its implications on a company's supply chain and overall business model. A number of factors can lead a company to outsource manufacturing processes. As a result of this outsourcing, the supply chain can become very complex and overwhelming to manage. This thesis will analyze this situation from the perspective of one manufacturer, American Axle and Manufacturing, Inc. (AAM). AAM's Metal Formed Products (MFP) Division currently has a number of challenges: rising steel prices, fixed labor costs and declining sales. All these factors have significantly impacted profitability, forcing senior management to take a comprehensive look at the division and consider developing a plan to improve divisional operations. As a part of this plan, MFP Division's senior management asked for a thorough look into all of the manufacturing processes performed by the division both internally and by outside suppliers. In addition to identifying the processes and suppliers, senior management sought to highlight opportunities for improving the process flow through the re-sourcing of manufacturing processes. This project develops a framework to analyze and evaluate these re-sourcing decisions. This framework employs a five-step approach and incorporates a number of diverse analytical tools. Process flow mapping provided a tool to visually highlight the best opportunities to resource. In addition to a visual representation, process flow mapping also provided the data to financially evaluate alternatives. Strategic and market factors were identified in order to target and prioritize re-sourcing efforts.

(cont.) This framework provides a structure for sourcing decisions that balances the financial and strategic concerns. The project concluded in a $2M investment to re-source heat treating to AAM facilities.