Have you ever thought deeply…I mean really deeply…about hydraulic filters?
Chances are you probably haven’t, so I’ll walk you through what one is and what it does.
Put plainly, hydraulic filters (or oil filters), are just strainers. As the oil circulates through machinery, it will pass through a filter. The job of the filter is to catch dirt and other contaminants that tend to make their way into the otherwise clean oil stream. The oil stays clean, you don’t have grit in your lubrication system, and your machinery lasts a lot longer. Pretty common knowledge.
Looking closer, we’ll focus in on a particular kind of filter…what’s known as a tangential flow filter or crossflow filter. It’s kind of like a porous tube. This kind of filter allows oil to pass through it’s main central channel under pressure. As it does so, some of the oil is pressed through a fabric which is generally known as “filtration medium”, or just “media” (boring name…I know). The oil oozes through the fabric, from inside the filter to outside the filter due to the pressure gradient, dropping off dirt in the fabric as it does so.
They look like this:
Looking closer still, we can see that these things are made up of a bunch of parts. Let’s look at another one that has been cut open so you can see what’s there.
So, each of these things is going to have two end caps and two o-rings (one of each on either end). In between those end caps, you have four layers of fabic (screen, Reemay, media, and another screen). The filtration medium is the fabric that traps the dirt and other small particles. The screen on either side and the Reemay (which is a specialty fabric), help to provide support for the filtration medium. These are folded together in a tubular fan-like structure that we call a “pleat pack”. The reason why it gets folded so much is to increase the surface area of the filter, which allows more oil to pass through with less of a pressure drop. Often, you will have a steel tubular core in the middle of the pleat pack to provide some structure (not shown in the second image, but you can see it if you look closely in the first).
Now, after all that preamble, we get to your task.
Design a supply chain to make these hydraulic filters. For each part, I want you to consider where you are going to get these parts. Are you going to buy them, or make them yourself? If you choose to buy them, which supplier will you choose? Why? What are the risks associated with buying these parts? What are the upsides and downsides of each of the suppliers? If you choose to make them yourself, what are the risks associated with bringing these operations in house? What are the advantages? What are the disadvantages?
You’ll find some relevant data in the table below. Each group will have a different set of data. Please use the data corresponding to your group number.
Addtionally, you’ll want to know how these things are made. Let’s pretend that your end caps are stainless steel. In this particular model you are making, there is no core. The end caps would be stamped and then formed from sheet metal. The core would be saw cut from stainless steel tube and drilled. The o-rings would be molded from rubber. There is an end cap and an o-ring on each end of the filter. As for the different fabrics (screen, reemay, media)…let’s just assume that those basic materials are bought in rolls from suppliers. The four layers of fabric are rolled out on top of one another and then folded to form pleats. the pleats are cut to a certain size, and then the ends are glued along the seam to form tubes. Those tubes are what we call the pleat packs. At that point, you have all of your basic parts, and you are ready for final assembly. you take a pleat pack and glue and end cap on either end. You put the filter in a cardboard box for shipping, and add two o-rings to the box to be fitted during installation. We will exclude the box in this analysis, and just focus on the core product.
You have decided that you are going to purchase the equipment and do the pleat pack making and the finall assembly operations in house.
- For each of the parts, calculate your cost of production for the various options, assuming that your volumes were 10,000, 20,000, 30,000, etc, all the way up to 100,000. Assume no price breaks for buying in bulk. At each of these increments, would you make or buy the part? If you were to buy, from whom, based solely on a cost basis?
- Create a chart of minimum production cost at the volumes listed above.
- Now let’s pretend that your market is highly volatile, and you need to stay agile in order to meet customer demand. In such a situation, lead time might be more important than cost. Who would you pick as your supplier for each of your parts?
- Consider when you would have selected to outsource your parts. What would be the risks of doing so? Give me 3 good examples and explain.
- Consider when you would have made your parts in house. What would be the pros and cons of doing so? Give me 2 sound reasons for and 2 sound reasons against, and explain them.
- Listed below are the costs associated with production. What are the other associated costs that should be considered when looking at total supply chain cost?
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