In late 2020, I started listening to podcasts. Not because of COVID, but because I bought a car that liked Spotify and my daughter briefly picked up a sport that involved a lot of roadtrips. While she lost interest in archery sharply once she entered her teenage years, my podcast habit continued. One of my favorites is 99% Invisible, and they’ve recently been doing A History of the United States in 100 objects (ironically in partnership with the BBC). The criteria for every one of these episodes must be that their titles sound extremely boring, but I haven’t found one that’s actually dull yet. The episode that inspired this article is #2: The 60-degree Screw (see what I mean by boring titles?).
What does a 60-degree screw have to do with procurement? Standardization. While the engineer side of me constantly wants to design things exactly to the specification needed, efficient, beautiful and fully custom, the procurement side of me wants to purchase something fast, with high-quality, and at a low-cost. Today’s article is about the intersection of those two sides.
The 60-degree Screw
The fact that screws used to have all different thread angles blows my mind. It’s basic physics that you can’t put a screw with 60-degree threads in a 55-degree hole, it’s like trying to unlock your house with someone else’s keys. And yet, if the factories are all set up for either 55- or 60-degree screws, no one wants to change. Changing means scrap inventory, new machines, and the biggest one: tooling changes. Not to mention, if your competitor has the “right” standard screw size while you have to change your factory, it puts you way behind in a competitive market.
A tiny history lesson, skippable if that’s not your jam: Apparently President Hoover in the 1920s, the only US President who was an engineer and also regarded as one of our worst presidents, was a big advocate of standardization. His advocacy managed to get almost all US factories onto the 60-degree screw design by the start of World War II, but British factories used 55-degree screws. When the US started pumping out planes, trucks, tanks, guns, and other wartime equipment and shipping it to Europe, the two systems were incompatible. Because of the US manufacturing juggernaut, Great Britain switched to 60-degree screws shortly after the war and the world became that much more standardized.
What pressured companies to actually adopt a standard? The short answer: Never waste a good crisis. In the case of the 60-degree screw, World War II was the crisis that caused the whole world to adopt a single standard. In today’s world, the “crisis” is often not a war but an industry disruptor or new technology. There’s also a tipping point where if a large percentage of an industry has adopted a standard, the rest of that industry follows.
So if it’s expensive and difficult to change a standard, why do it?
The Argument for Standardization
Type A and organized people like myself tend to love the idea of standardization. That enthusiasm wanes quickly once the reality of the effort required to standardize hits, and the discussion of “who wins” becomes the whole argument. Everyone (especially design engineers) believes their design is the best design, and other designs are inferior. So why would a company go through the effort to standardize?
The first reason to standardize is cost. When a standard design is used across an entire industry, manufacturers quickly find efficiencies. Every company can iterate on the best way to make that design with the least amount of labor, tooling can be mass-produced, there are fewer production line changes, and one training module can serve an entire industry. All of these factors lower the cost to produce a standard design.
The second reason is to lower risk. The great trade-off in procurement is cost vs. risk, but ultimately lowering risk for everyone also lowers costs. A standard design means well-known issues and challenges, more consistent processes, and less institutional knowledge locked in the head of one engineer. All of these factors lower the risk of producing and maintaining the product, which is to everyone’s benefit.
The last reason to standardize is more ephemeral, and it is that standardization is a mark of supply chain and organizational maturity. A more mature organization runs more efficiently and has generally figured out what they do well and which customers they serve. A mature organization has built lasting value, can weather a few economic storms, and is less likely to collapse in a single generation. I’m not saying standardizing will magically make your organization more mature and sustainable overnight. I am saying that mature and sustainable organizations tend to be (at least internally) standardized.
Side Note: Standardization is not just for companies that make materials. Software and processes can absolutely also be standardized, and those efficiencies translate just as well. Having a standard industry programming language means cleaner training, better skilled labor when they’re not learning new languages all the time, and less institutional knowledge. That standardization is just as difficult for services industries as it is for materials industries.
Two Standardization Stories
I’ve worked at a company trying to standardize specifications and have two stories from those efforts: One failure, and one success.
During the 2021 supply chain crisis following COVID, electric utilities were struggling to buy materials at any price. The cost-quality-lead time iron triangle flew out the window and the answer became 100% lead time: get it here so we can keep the lights on. This was true in many industries at the time, but in talking to procurement professionals still working in utilities, they really haven’t recovered from this time the way automotive, retail, and almost every other industry has bounced back. The lead time on large power transformers is still at least two years. The lead time on circuit breakers, previously maybe six months tops, is four years. But in the depths of the crisis, the number one commodity every utility wanted was distribution transformers. These are the boxes or cylinders at the entrance to your neighborhood that turn the high voltage power coming into your neighborhood into your household voltages for your electrical outlets. Every major utility uses its own specification. I was part of a coalition trying to standardize even some of the specifications between the utilities so manufacturers could become more efficient. Despite those efforts, the pervasive attitude in utilities is that each one is different. Different regulatory environments, different climates, different voltages, different engineering teams. We couldn’t even create a common specification for the different utilities in my own parent company. While it’s true some climates are hot or cold or wet or dry (and some are multiple extremes at once), standardization in the utility industry would do a lot to alleviate the shortages. But this effort failed, and we “wasted a good crisis” by not being able to standardize the items we all needed. If I had a magic wand and was told to use it to fix the utility industry, standardization is where I’d start.
My other experience in standardization is for bucket trucks. This was earlier in my career, and one major difference from distribution transformers was that I only had to standardize within the same parent company. We had three major businesses that bought bucket trucks with three completely different specifications. There are only two manufacturers in the bucket truck business, and most companies choose one or the other. After a series of in-person meetings, discussions with manufacturers, and 6-9 months of work, we managed to harmonize the truck spec. There was still one major option one business insisted on (outriggers on every truck, despite the fact that all their work was urban. I still roll my eyes at that one, and #IYKYK), but we were able to get that adder optioned out and suddenly the manufacturer could roll all three truck specs down the line without changing everything out. Prices on those trucks dropped 5-15% from the manufacturing efficiencies, and we still had good trucks built to our spec. Especially with a supplier where you lack leverage from competition, this is the kind of thing that can lower all costs and benefit everyone.
Role of Procurement
Perhaps I’ve persuaded you that standardization is valuable. If you’re a procurement practitioner, you might be thinking, “I can’t affect standardization. Specs are up to the engineers or the sales team.” This simply isn’t true, and standardization absolutely falls in procurement’s domain. Here are some things procurement practitioners can do to improve standardization in their business:
- Guide engineers. Procurement is the liaison between all parts of a business, just like IT or HR. All company departments are constantly asked to do more with less, and your engineers are likely just trying to get designs completed as fast as they can with no time for strategic thought. Yet sometimes even little things can improve standardization. That might mean providing a short list of fasteners so all engineers start using the same default set instead of every engineer having a favorite. Often an engineer can choose an M10, M12 or M14 screw in their design, but if they know the “standard” at your company is M12, they can at least try to design for it. Then you can take your increased volumes to the supplier and leverage a better price for all those M12 screws. When I worked at an equipment manufacturer, we had standardized on 3/8″ flanged hex-head screws to eliminate the need for a washer and drive volumes toward that size. While we could design with other sizes, simply knowing the “default” was a big help in getting my work done faster and increasing our market leverage at the same time.
- Lead a cross-functional team. If your company’s leadership is willing to standardize, the most successful way to accomplish that goal is with a cross-functional team. Procurement is absolutely ideal to lead this team because we can capture the value and drive leverage that comes from standardization with suppliers. On a personal note, leading cross-functional teams well is a great way to increase your own visibility and drive your career. (Consider reviewing my article on thinking like an engineer in supply chain to brush up on your engineer-speak!)
- Be the voice of your suppliers. Your suppliers know what changes you could make in your specifications that would make your product less expensive or less risky to produce. While you may need some of those specs, consider simply asking your suppliers what makes your product difficult or expensive. Famously, Henry Ford used to say a customer could have a Model T in any color as long as that color was black. Even now, if you buy a new Tesla, you pay extra for every color that’s not gray (it used to be white, but I just checked and now the default is dark gray). You pay even more for red because red paint requires more coats to show as red (otherwise it’s kind of pink). When my mother wanted to recarpet our house, she went to the carpet stores in town and found which carpet the biggest developer in town was using, because she knew the volumes would be high and so would the durability. She also knew it would be a good value because they were bringing in so much volume the store could get that carpet at a volume discount. In that case, she “borrowed” the volume from another customer of the supplier to bring her own costs down. If you work for a small company, you might be able to do the same thing and ultimately work toward a standard in the process.
- Determine your competitive advantage. All of this article comes with a major caveat: Don’t destroy your competitive advantage. Standardization is great, but sometimes a company loses its brand identity by standardizing. Work with the marketing and sales teams to know what makes your brand unique and more competitive in the market, and use other methods to lower those costs. Standardize everywhere you can, but keep your competitiveness.
If you’d like to talk about your struggles to standardize, procurement, or anything else, let’s chat. If you’d like to get these articles weekly straight to your inbox and never miss one, sign up for my newsletter.
My book, Transform Procurement: The Value of E-auctions is available in ebook, paperback and even hardcover format: https://www.amazon.com/dp/B0F79T6F25. My chapter in the powerful anthology Femme Led: Hard-Learned Lessons from Women in Leadership is now available in ebook and paperback format: https://a.co/d/0bOzma8F
This post was written entirely by me and not by AI. The article summaries, title, and graphic may all have used AI to assist/generate ideas/edit, but the article content is fully human.
