Precision auto parts · Automotive and auto components
Re-cost every running auto part on today's cycle time, scrap and tooling
A precision auto-part supplier quotes a part once and makes it for five years or more. Cycle times, tool life, scrap and price-downs all change underneath it. We re-cost running parts on current evidence and measure the dedicated lines they run on. We also price the service parts that outlive the programme.
In one paragraph
High-volume machining, turning, grinding and gear-making suppliers make the same part for years on equipment bought for it. They produce shafts, gears, pins, fuel-system and transmission parts for vehicle makers and tier-1s. Most turn over ₹50–1,000 crore, with dedicated lines for major part numbers. Unlike job-shop precision engineering, the questions are drift, line efficiency and capital payback rather than quote accuracy. The managing director usually leads the work, often with the plant head.
Managing director, often with the plant head
The economics
How the money moves in this trade
A high-volume auto part is quoted at nomination on an assumed cycle time, tool life, scrap rate and programme volume. Dedicated machines or lines are often bought to make it. Over the following years the OEM takes annual price-downs and volumes follow the vehicle's fortunes. Tool and consumable prices move and the process is adjusted. Very few suppliers re-cost a running part from current data, so the price drifts down while the cost drifts up.
When the vehicle goes out of production, the part does not. It moves to service supply in small, irregular batches for years, frequently at prices set for volume production. Capital invested for a programme is recovered only if the programme reaches its volume. An early end or a volume cut can leave a dedicated line part-idle with years of depreciation remaining.
The problem
Where the numbers usually break down
Running parts are never re-costed
Standard costs from the original quotation are still in use years later, after several price-downs and process changes.
Line efficiency is measured, not costed
OEE is tracked by production, but losses in availability, speed and quality are never translated into cost per part.
Tool cost per part is unknown
Inserts, grinding wheels and special tools are bought in bulk and expensed, so tool life by part is never compared with the quote.
Service parts are priced like production parts
Small post-production batches carry full set-up cost but are billed at the volume price.
Programme capital is not tracked to payback
Machines bought for a programme are depreciated with the rest of the plant, so a volume shortfall against nomination is not measured.
What we do
The work, and the result each part produces
Annual re-costing of running parts
Each significant part number re-costed on current cycle time, scrap, tool life, material and price.
Drift between price and cost is seen part by part.
OEE losses converted to cost
Availability, performance and quality losses on dedicated lines valued per part.
Improvement projects are ranked by cost recovered.
Tool cost per part
Tool consumption tracked by part and operation and compared with the life assumed in the quote.
Tooling cost becomes controllable.
Service-part pricing
Post-production batches costed with their full set-up and handling, and a service price basis proposed.
Service supply stops being a loss-making obligation.
Programme capital payback tracking
Dedicated capital tracked against nominated and actual programme volume, with the unrecovered amount reported.
Volume shortfalls become a commercial point.
Price-down impact testing
Each requested reduction tested against current part cost and line capacity.
Annual negotiations start from today's cost, not the original quote.
Where we start
The first steps of an engagement
Standard costs and line data
We ask for the standard cost and quotation for the main running parts, cycle-time and OEE records by line, tool consumption, the price-down history and the capital bought for each programme.
Re-cost the top running parts
The highest-volume parts are re-costed on current cycle time, scrap, tool life and material, and set against today's selling price.
Tool issues booked by part
Insert, wheel and special-tool issues start being recorded by part and operation, and dedicated capital is tagged to its programme.
A running-part drift report
The first report shows current cost against selling price for each part reviewed, with OEE losses valued by line.
How it is measured
The reports the work is judged on
Each is recorded as a baseline before the work starts, so later reports have an honest comparison.
- Current cost against selling price, by running part
- OEE losses in value, by line
- Tool cost per part, against quoted
- Service-part margin
- Programme volume and capital recovered against nomination
- Contribution by part number
Who it suits
Written for, and not the right fit for
- You are a job shop quoting many different drawings in small batches — our precision engineering page under manufacturing is the closer fit.
- You want manufacturing-engineering consultancy on cycle-time reduction; we cost the losses, and process improvement stays with your engineers.
- High-volume machining, turning, grinding and gear-making suppliers to vehicle makers.
- Suppliers with dedicated lines bought for specific programmes.
- Firms carrying growing service-part obligations for models no longer produced.
Services
Services this work draws on
Costing and profitability
What each product, line and customer really contributes.
Explore service ↗MIS and financial planning
Reporting built around the questions you actually need answered.
Explore service ↗Internal controls and risk
Controls sized to your business, documented and actually tested.
Explore service ↗Outsourced accounting
Your books kept current and reconciled, closed to a published calendar.
Explore service ↗Every other service, also available in this trade
Common questions
Questions owners in this trade ask
Why put a cost on OEE losses?
Because a percentage doesn't tell you where the money is. Converting each loss into cost per part shows which line and which loss are worth fixing first.
Can service-part prices be revised after end of production?
Many agreements set service pricing at nomination, but some allow review after end of production, and many OEMs accept a revised basis when the cost evidence is clear. Either way, you need to know the real cost first.
How often should running auto parts be re-costed?
At least once a year, before the annual price review, and whenever a process or material change happens. The high-volume parts matter most, so it's usually a manageable list.
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