Trane cut costs with custom transformers from Precision Inc.

Conventional wisdom says that standard, off-the-shelf components cost less than parts that are custom designed and manufactured. But when Terry Baier, an engineer at The Trane Company in La Crosse, Wisconsin, began looking for ways to reduce power distribution costs on several Trane products, he discovered that conventional wisdom was too expensive. A custom-designed and manufactured component from magnetics supplier Precision Inc. actually cost less than using off-the-shelf parts.

“We were reviewing the primary power control transformer on some of our big chillers,” Baier says. (As its name implies, a water chiller creates chilled water for use in large commercial air conditioning applications. Trane is the world’s leading supplier of centrifugal water chillers. Today’s Trane EarthWise™ liquid chiller is the most efficient, lowest-emissions chiller on the market.) “The existing design for step-down power used two transformers. The first one stepped primary line voltages of up to 575 volts down to 120, then the second transformer stepped 120 volts down to 24 volts. Both transformers were standard off-the-shelf components that you could order from several manufacturers’ catalogs. The assumption had always been that this was the lowest-cost method, even if it did use two components and consumed valuable panel space.”

Baier wasn’t convinced that the existing design was the most cost-efficient, so he called his engineering team at Precision Inc. Precision studied the existing design and told Baier that the second transformer was redundant.

“We knew from experience that we could replace the two standard transformers with a single component,” says Dave Anderson, Precision’s president and chief engineer. “We could adapt a Precision single-transformer design for Trane that would satisfy the requirement for two step-downs while reducing their component count and costs.”

Anderson, and Precision customer service rep Peggy Maus, convinced Baier and Trane project team leader Ron Okoren that a single, custom-manufactured, primary control transformer from Precision would cost less than the two off-the-shelf transformers. Okoren says that the Precision proposal actually went beyond simply replacing two transformers.

“One other advantage that the combined transformer design had, that an off-the-shelf transformer could not have had, was that Precision designed in the transformer’s integral terminal blocks and replaceable fuses,” Okoren explains. “Precision added these features knowing how the transformer was to be used and wired into the end product. It avoided the extra terminal blocks and fuse holders as separate components, saved panel space, and simplified the wiring in the control panel.  The extra terminals on the transformer actually cost less than the additional panel-mounted terminal blocks, without even considering our labor savings in installation and wiring.”

In fact, the custom transformer from Precision now saves Trane about 37% per unit, compared to the cost of the two separate transformers, terminal blocks and fuse holders. The custom transformer could potentially save Trane more than $1,000,000 over the next few years.

“This is why Trane values business relationships with suppliers like Precision,” Baier says. “We know that our team at Precision is always looking out for our best interests. It’s a key reason why Trane is number one in commercial air conditioning in the US.”

“We’ve been very happy with Precision,” Okoren adds. “They’ve been very helpful in new designs, including assisting in and even performing some of the qualification tests that our specs require. Somehow, Precision remains competitive with all of the transformers they supply us. And they manage to appease our very tough supplier development people from a number of separate business units.”

Chris Myers, head of Precision’s customer service department, says that Precision’s business relationship with Trane dates back to 1985. “We share information, discuss needs and problems, and work closely together,” Myers says. “The result is that Precision responds to customers like Trane with components and product improvements that really help contain costs.”

As one of the American Standard companies, Trane practices Demand Flow® Technology, a manufacturing system also used at Precision. Demand Flow helps both Trane and Precision manufacture exactly what their customers want, exactly when they need it, delivered on time every time.

From Precision’s viewpoint, Trane is in reality a network of up to 19 sub-contractors who order the same parts from Precision in varying quantities and according to Demand Flow agreements. Helen Bachhuber, Precision’s planner/buyer responsible for Trane, says that some of Trane’s component manufacturing requirements exceed 50,000 units per year. To manage the situation, Precision set up a Trane Planning Team to plan and manufacture parts to stock to support the customer’s requirements.

“The team meets halfway through a quarter to determine the build rates for the entire next quarter plus the first month of the following quarter,” Bachhuber says. “Team members come from production scheduling, customer service, and purchasing. We also pull in the production supervisor, sales, and engineering people assigned to Trane as needed. We compare the current build rates to the monthly sales average, then factor-in history, current stock position, new customer input, and annual trends. Out of this meeting, the production scheduler places the new work orders, and purchasing reviews and orders the needed materials.”

Innovative thinking, strategic relationships, and manufacturing methods are all part of the corporate culture at Trane. “Switching to the custom-build primary power control transformer just shows how important it is to keep an open mind,” Terry Baier says. “A non-traditional method can out-perform the status quo and still save costs. It’s a good example of working with your vendors to the fullest.”