When it comes to buying in bulk, the old adage “the more you buy, the more you save” holds true across many industries. For cold heading manufacturers, the benefits of bulk ordering are especially significant.
That’s because cold heading is a bulk manufacturing process. But what exactly does that mean? It means we need to produce quantities of about 50,000 (although this can vary between 25,000 and 100,000 pieces, depending on the part size) or more at one time to be cost-effective.
There are two main reasons for this:
The upfront cost of cold heading tooling and development.
Our cold heading tooling averages between $2,000 and $6,000 to initially produce. If you are only making a one-time, low-volume purchase, you may end up paying this cost upfront or amortized over the smaller volume run. If you are ordering in large volumes for long-term jobs, Fastco does not charge for or amortize upfront tooling. The tooling is perishable and wears out over time, so there are ongoing tooling costs over the life of a long-running job. However, this is all part of the expense of manufacturing the part, and is not impacted by lot size or estimated annual usage.
Initial development time is the other piece of the upfront cost. Our engineers have to work through how cold heading progression should work on the machine. This brings us to the next expense.
The machine setup time in cold heading.
While upfront costs are expensive, the biggest reason cold heading is considered a bulk process is the machine setup time. This is an ongoing expense that occurs with every order. True, the initial machine setup time on a brand new part might be longer than the average set up time for an established part. Still, the setup time will always be there.
Machine setup times are typically between 3 and 8 hours. Setup costs per hour, including labor, are between $100 and $120. This means a setup costs between $300 and $1,000 per job. If the job is 250,000 parts, the cost impact is negligible. If the job is only 10,000 parts, the cost of a setup will likely be higher than the cost of material. It could easily double or triple the overall cost of the part.
Beyond cold heading, if a part needs to be thread rolled, the same setup cost factors would apply. In addition, if the part needs to be sent for outside processing, there are typically minimum lot charges. These can range widely, from $50 to $1,250 or more, depending on the process.
For all of these reasons, it’s obvious that bulk ordering is the most cost effective strategy for purchasing cold headed fasteners. So if your company is going to need 50,000 parts over the course of three months, we recommend placing an order for that full 50,000 parts. Don’t have space to hold all 50,000 parts? Let us know! We offer releases on blanket purchase orders. Talk to our sales team and we’ll be happy to help figure out how to get you the most and best product for your money.