When items are bought in larger quantities, the machining and fabrication manufacturer may offer quantity discounts. These discounts typically reflect savings that the manufacturer realizes when making a larger quantity of parts, sharing those savings with the customer. Examples of quantity related efficiencies and savings the machine and fabrication shop may see include:
- Engineering and setup time – It takes the same amount of time to engineer or setup a machine to make 1 part as it does to make 100 parts. The setup time needs to be compensated for in the price, so that time, which may be as much as an hour, is spread across the price of the number of parts being produced. More parts, the lower cost per part.
- Material dimensions – When one buys a piece of plywood in Lowes or Home Depot, the store will offer one free cut of the piece of plywood in case the customer needs a smaller piece. If one asks the store to cut the 4 x 8 down to a 4 x 6 or similar size, the employee will ask the customer whether they want the scrap piece of wood. This is because, even though the customer may only take a 4 x 6 piece of plywood, they will pay for the whole 4 x 8. The same is true when it comes to manufacturing. One may order 100 pieces from a manufacturer, but the manufacturer can manufacture 122 pieces from a single piece of material. The extra material, if not used to produce the last 22 pieces, may be treated as scrap. The cost of that piece of material may be divided by 100 pieces or 122 pieces, dependent upon how many pieces are produced.
- Lot Charges – Metal parts frequently require finishing, whether plating, painting, or powder coating. These processes also require set up time, and other time factors that are independent of the number of pieces being processed. Plating takes so much time for the parts in a basket to be submerged in solution; doesn’t matter if it’s 7 parts or50 parts. Powder coating requires so much time in the oven to cure. The amount of time to heat up the oven, cure and cool down is relatively the same, whether there are 3 pieces or 20 pieces. Lot sizes are dependent upon the size of the parts, and for small parts, a lot may be a large quantity, 100 or more sometimes. One could pay pennies or dollars for finishing the same part if not considering possible lot fees.
This is just 3 examples of potential quantity discounts. Maximizing these discounts makes sense, especially on parts that are ordered on a regular basis. Keddie Enterprises works to optimize orders for customers by advising them of potential price breaks. When a lot charge applies, Keddie Enterprises tries to maximize the number of parts in the lot in order to reduce the cost/part to our customers. We also notify our customers of the potential savings per part by adjusting the quantity ordered. We believe it is part of building a good relationship with our customers and looking out for their interest. If you are looking for that kind of commitment from your metal fabrication, machining or waterjet provider, please give Keddie Enterprises a call at (214)337-5387 or email us at Sales@Keddieco.com .