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resource allocation

Three Questions Fabricators Should Ask About Their Inventory Management System

August 10, 2016 / , , , , , ,


For any industrial metal-cutting operation, inventory management is an ongoing challenge. Ensuring the right amount of inventory in-house while simultaneously working to reduce overall operating costs is not an easy task.

This has been especially true in recent years. As we reported here in our annual industry outlook, high inventory levels were a major challenge for fabricators in 2015.

As a result, many fabricators are now re-evaluating their inventory management tactics, and more and more shops are moving away from holding large amounts of inventory. According to  industry survey results published by The Fabricator, a little more than half (54 percent) of the respondents said they hold less finished-goods inventory today than they did three years ago. “Custom fabricators don’t want to drown in inventory,” states an article from thefabricator.com. “In fact, for fabricators having customers requiring them to hold finished-goods inventory, those inventory requirements aren’t as high as they once were.”

Many metal-cutting shops are also starting to use more remnants, a strategy often known as “pick for clean.” As explained in the white paper, The Top 5 Operating Challenges Facing Fabricators’ Metal-Cutting Operations, this tactic “promotes a cleaner inventory, which makes shops safer, more productive, and profitable.”

Of course, there are many strategies  shops can use to better manage their inventory. In fact, supply chain expert Lisa Anderson says she could write 100 articles on the subject because there are so many ingredients to an effective inventory management system. However, Anderson does say there are three key questions every manager should address when it comes to inventory:

1. Do you have the right talent? “It is surprising how often this question is overlooked, yet it is #1 to achieving bottom line results,” Anderson writes. “Although inventory could be considered a ‘basic’ fundamental skill and is often on the resume of every supply chain and operations job applicant, all talent is not created equal.”

She also says there is vast confusion surrounding inventory skills and which skills are needed for which job functions. For example, do you need inventory control? Inventory accuracy? Inventory planning? Supply chain planning? Inventory tracking? “Most of these roles require far more than inventory expertise,” Anderson explains. “They require the right combination of analytical skills and communication skills.”

2. Is your system working? This question, Anderson notes, should cover both process and system. “The second most common mistake is to try to put a square peg in a round hole,” she writes. “Instead of dictating the process or system based on whatever worked in a previous life or what your ERP system says is ‘best practice,’ I’ve found the key to success is to understand what works for each particular situation (unique combination of people, processes and systems).”

3. Have you eliminated complexity? “I gain tremendous traction in delivering bottom line results solely from eliminating complexity,” Anderson writes. “I find that complexity is enticing – the more complexity, the more people feel valued and indispensable. So, instead of getting lost in complexity, encourage and reward simplicity.”

Anderson suggests getting a team together to brainstorm ways to unscramble the complexity. In what ways can you categorize your inventory in order to prioritize? Can you start with one machine? One commodity? One location? One customer? One supplier?

In the end, taking a close and honest look at your inventory management system can have real, bottom-line results. As Anderson explains, if you improve inventory accuracy by 10%, you can end up with anywhere from 10 to 100+% improvement in on-time delivery and/or efficiency. If you improve inventory turns by 10%, you could end up with more cash and increased efficiency. Put simply—it pays to evaluate your inventory management system. How does yours stack up?

resource allocation

Industrial Metal-Cutting Companies Sustain Success with Innovation

March 15, 2016 / , , , , , , ,


In today’s competitive marketplace, a successful business is an agile business—one that can adapt to changing factors and provide a product deemed valuable by the buyer. An unsuccessful business, on the other hand, is one that refuses to evolve and innovate.

Take, for example, the Blockbuster video rental chain, which met its demise after it refused to partner with Netflix, or Blackberry, the smart phone pioneer that ended up failing miserably once Apple released iPhone. Both are prime examples of companies that failed to adapt to the times, but they are definitely not the only ones. In fact, only 57 companies have made the Fortune 500 list every year since the list’s inception in 1955.

The industrial metal-cutting industry is no exception and has certainly seen its fair share of fallen companies in recent years. Fluctuating demand and volatile market conditions have proved that success requires adaptation, innovation, and continuous improvement. Market survival has required metal-cutting companies to find new ways to gain productivity and run more efficiently with fewer resources. It’s also required them to focus on product and manufacturing innovation by streamlining production, maximizing efficiencies, and adopting new manufacturing equipment and technologies.

As explained by an article from IndustryWeek, this type of “manufacturing innovation” is fairly common in today’s market as manufacturers seek to gain a competitive edge through reduced costs and speed to market. However, one form of innovation that many companies fail to embrace is what IndustryWeek defines as “business model innovation.”

“Probably the most difficult type of innovation for manufacturing CEOs, however, will be in catalyzing business model innovation,” the article states. “The fact is that traditional business models are coming under increasing pressure as new, more nimble competitors take advantage of their agility to create and dominate new market segments and sales channels.”

The article goes on to explain that today’s demanding business environment requires manufacturing executives and their management teams to think more holistically about innovation, their operating models, and even how their products and services  meet their end customers’ needs. Put simply: Innovation needs to touch every aspect of your industrial metal-cutting operation.

What does that look like? IndustryWeek lists five fundamental ways manufacturers can be innovative and successful:

  1. Run at multiple speeds. The rate at which typically you invest and at which you may need to invest in the future can be dramatically different. Allow yourself to invest, and take advantage of new technologies, when you need to by integrating flexibility into your business plan.
  2. Recognize the inflection point. Stay on top of industry developments to ensure you don’t miss the point where an emerging trend becomes the next big thing. Missing out could mean the difference between expanding and shutting down.
  3. Create an innovative culture. Encourage employees to try new things. Motivate and reward breakthrough innovation while keeping in mind the risks and outcomes. Balance that culture with day-to-day operations.
  4. Adapt the business model. Change is imperative  for survival. Whether you need to defend the company against a new competitor, respond to customer demands or seize an opportunity, be ready to adapt your existing business model and create new ones. The Internet of Things (IoT), data and analytics can dramatically evolve operations.
  5. Have a long-term vision. Develop a clear vision of how your innovation investments align to your long-term business goals. Share that vision with employees, suppliers, customers and shareholders.

This concept is certainly applicable to the metals industry. Aluminum producer Alcoa, for example, recently revamped its product portfolio to meet changing market conditions. As reported by Modern Metals, Alcoa has announced plans to close or curtail its refinery and smelting operations to focus on its rolled sheet products for the aerospace and automotive industries, for which products have more than doubled compared to the prior year.

Another example is Jett Cutting Service, Inc., a 30-year old shop featured here in a case study from the LENOX Institute of Technology. Starting out with just band saws, the industrial metal-cutting company has grown over the years to better serve its customers, acquiring new companies and expanding its capabilities to become a multi-faceted cutting service. From precision circular saw cutting to a lathe cut-off on round tubing, Jett Cutting has evolved into a whole processor that serves steel service centers, machine shops, and some producing mills.

As both examples illustrate, innovation within the metal and metal-cutting industries has more to do with adaptation and strategic planning than with ground-breaking “disruptive” innovation. In other words, no one expects your industrial metal-cutting organization to be the next Google, but the fact remains: Success requires innovation and evolution. Today’s industrial metal-cutting companies need to remain innovative in both their manufacturing operations and business models to meet changing demands and, more importantly, to achieve long-term success.

Is innovation part of your company’s strategic plan? What strategies can you implement to ensure long-term success?

resource allocation

Choosing the Right Blade for Your Fabrication Shop’s Band Saw Operations

March 10, 2016 / , , , , , , ,


In band-sawing, fabricators and other industrial metal-cutting companies typically rely on two types of blades—bi-metal and carbide-tipped blades. Both blade technologies offer more performance and life expectancy than carbon steel blades, and choosing between the two types used to be fairly straightforward. However, advancements in both technologies have made it a little more difficult for companies to make the best blade choice for their operations.

For example, bi-metal band saw blades have been traditionally used for easier-to-cut metals such as aluminum and non-ferrous metals, carbon and structural steels, and some alloy steels. However, as featured here in Modern Metals, a new carbide-tipped band saw blade has been introduced by LENOX that has been designed specifically to cut aluminum and non-ferrous alloys. The new blade has a range of features that optimize it for aluminum cutting applications, including a specialized grade of carbide on the tip, a multi-chip tooth pattern, and a high rake angle.

To help metal fabricators make the best decision about the “right” blade type for their band-sawing operations, below is a brief overview on both blade types from the white paper, Selecting the Right Cutting Tools for the Job.

Bi-Metal Blades
Bi-metal blades are a common choice for most metal-cutting applications, especially since they are more affordable than carbide-tipped blades.

Generally speaking, bi-metal blades are sub-divided as either general-purpose blades or production-sawing blades:

Carbide-Tipped Blades
Although carbide-tipped blades are more expensive, machine shops may elect to trade up to a carbide-tipped blade for three key reasons:

The various choices of carbide-tipped blades will cover the machinability spectrum, but they are most often used for hard-to-cut materials like super alloys. High-performance carbide-tipped blades work especially well with hard tool steel that needs to be cut fast. Some high-performance carbide-tipped blades—especially coated versions—can offer extreme cutting rates, while others can perform exceptionally well when cutting super alloys.

Making the Right Choice
Of course, there are instances when the “right” blade choice won’t be clear cut and will require managers to strategically choose between a “good,” “better” and “best” option. For example, as this article from Canadian Industrial Machinery (CIM) explains, bi-metal blades can be used to cut superalloys. However, cutting speeds will need to be slower and blades will wear out faster than when using carbide blades. “An experienced operator can adjust parameters to cut the occasional superalloy with a bimetal blade, but carbide is the choice to cost-effectively cut large quantities of hard materials,” the article states. “Blade choice comes down to a cost-per-cut situation and what fits with a shop’s operation.”

Blade selection also needs to take into account the total operational costs of running the blade, including maintenance costs and equipment requirements. Case in point: While carbide-tipped blades are more advanced in the right application, they do not perform well with a lot of vibration. Therefore, they can only be used with certain saws. Metal-cutting operations using carbide-tipped blades need to make sure they are using a saw that can run the blade speeds that are required. In other words, the saw must have a motor that can push the blade fast enough and one that has a more rigid construction with better vibration dampening to accommodate these types of blades.

In the end, the “right” blade choice requires fabricators to weigh the following:

By understanding some of the basic features of each blade type and then strategically assessing operational needs and goals, managers can make informed purchasing decisions that will help their metal-cutting operations reach their full potential and, ultimately, achieve market success.

resource allocation

Automation Options for Low-Volume Machine Shops

February 20, 2016 / , , , , , , ,


The question of whether or not to automate is a difficult decision for any operations manager. As we covered here a previously published blog, the challenge is not only ensuring a good return on investment, but also figuring out how to effectively balance the allocation of technology and process automation with shop floor personnel.

In most cases, deciding whether or not to automate is neither a simple nor straight forward process and requires strategy, careful consideration, and a little bit of risk. This is especially true for low-volume/high-mix machine shops. While research has shown that many small manufacturers still believe that automation is reserved for mass production operations, more and more low-volume shops are finding that automation can work for them as well.

According to an article from Canadian Industrial Machinery, just-in-time manufacturing has made automation in low-volume/high-mix a growing trend. “Automation is suitable even for job shops, where the shop owner often doesn’t know what jobs will be running from week to week until an order request arrives,” CIM reports. The key, the article states, is investing in a flexible automation system that can be set up and changed over quickly.

As listed in the white paper, The Top 5 Operating Challenges Facing Today’s Machine Shop Metal Cutting Operations, today’s shops have at their disposal a number of automated metal-cutting options, including:

Another more advanced automation trend that is starting to show up in low-volume shops is collaborative robotics. In fact, ABI Research estimates that the collaborative robotics sector will increase roughly tenfold between 2015 and 2020. The robotic systems, which are designed to work safely in close proximity and cooperatively with human coworkers, are said to save space and money, as well as permit more flexible manufacturing practices.

High-mix/low-volume electronics manufacturer Scott Fetzer Electrical Group (SFEG), for example, has benefited from collaborative robotics. According to a recent article from Fabricating & Metalworking, the robots helped the manufacturer optimize production by 20 percent. SFEG used the robots to take over monotonous and potentially hazardous tasks from employees, who were then reallocated to more rewarding jobs.

“One of our biggest challenges is that we’re a high mix-low volume producer, most of our lines don’t run all the time, so trying to find a way to put robots on the line in the traditional sense was a very big challenge,” Matthew Bush, SFEG’s director of operations, tells Fabricating & Metalworking. “We wanted to build a mobile, flexible robot force. The only way we would accomplish this was with a collaborative robot.” (You can read the full article here.)

Of course, shops don’t have to invest in high-tech robotics to automate their metal-cutting operations. Thanks to software advancements, there are plenty of other tasks that can be automated as well.

As described in another white paper from the LENOX Institute of Technology, one metal-cutting company developed a software system that connects the sawing equipment to  its order-tracking system. Historically, employees would input order information into the company’s system, print out a report, and deliver it to the operator. The operator would then have to reenter the data into the sawing equipment. By creating a communication bridge between the saw and the computer system, the company no longer needs to enter the same data twice. This has not only reduced the chance of human error, it has also eliminated an unnecessary production step.

Is automation a good option for your machine shop? That is a question only you can answer, but the good news is there is a growing number of options available for low-volume operations. In the end, the deciding factor should really boil down to one key question: Will it help you better serve your customers?

resource allocation

Industrial Vending Machines Help Metal Service Centers Improve Productivity, Save Costs

February 5, 2016 / , , , , , , , , ,


Many technologies have helped advance the manufacturing industry to where it stands today. From the Industrial Revolution in the late 17th Century and Ford’s assembly line for its Model T to robotic automation and the Industrial Internet of Things, new applications and advanced software solutions enable the manufacturing industry to adapt. One such technology—the industrial vending machine—is currently helping the industrial metal cutting industry adapt as well.

Industrial vending machines are based on the traditional machines you know and love, but instead of providing a quick snack, they distribute metal cutting parts, tools, and other consumable supplies (e.g., safety gloves, goggles, metal-cutting blades). The key benefit is streamlined inventory control—the machines keep track of the person or department requesting the part and the time and frequency of requests, in addition to monitoring inventory levels. This can eliminate the need for storage rooms or tool “cribs,” as well as the necessary staff needed to manage them.

With metal cutting companies facing diverse economic conditions and shifting shipment levels, industrial vending machines can help service centers increase operational efficiency and productivity. As reported in this white paper by the LENOX Institute of Technology, resource allocation and efficiency are top operating challenges for metal service centers. Industrial vending machines can help resolve both, while also saving costs.

Below are a few benefits of industrial vending:

Several metal-cutting companies are already reaping the rewards of what industrial vending can bring first-hand. The following are just two examples:

As service centers and other manufacturing operations look to save money and improve efficiency, industrial vending machines are quickly gaining popularity. While they have been more common in larger manufacturing operations over the last few years, smaller shops and service centers are starting to realize that automated inventory control is a fairly simple way to eliminate paperwork, save floor space, streamline purchasing, improve workflow, and, ultimately, save costs.

Could industrial vending machines be an option for your metal service center?

resource allocation

Reallocating Resources in Your Fabrication Shop

September 10, 2015 / , , , , , , , ,


If there is one operational pain point that every manufacturing executive faces, it’s resource allocation. From a strategic standpoint, it would be ideal for managers to make continuous changes within their operations, both in terms of equipment assets and human capital. However, budget and time constraints, an unstable market, and labor shortages are making it more difficult than ever for managers to gauge if and when resources should be reallocated.

In fact, according to research from McKinsley Quarterly, most companies rarely shift resources at all, even during times of financial crisis. Instead of making adjustments, many executives tend to “play it safe,” resist change, and, as a result, often limit their company’s growth potential.

If this sounds familiar, perhaps it is time to take a closer look at how you are distributing resources within your fabrication shop. Do you find yourself using the same strategies you have used for years, or are your tailoring your strategy to today’s market trends? For example, are you allocating more resources to your human capital to prepare (or respond) to the widening skills gap? What about technology? Are you considering new investments in software, automation, or other metal-cutting advancements to increase productivity or expand your market reach? Today’s leaders need to be sure they are making strategic choices that benefit both the company and employees, while avoiding the trap of making allocation decisions because “that’s the way they’ve always been done.”

Of course, the challenge is figuring out which investments will generate the best return. While there is always an element of risk to any strategic decision, the following are a few best practices today’s managers should consider when reallocating resources in their fabrication shops:

 

 

resource allocation

Becoming a Top Metal Service Center

September 5, 2015 / , , , , , , , , , , ,


Staying ahead of the competition can often seem like an impossible task, especially in today’s marketplace. Continuous improvement is now the expectation, lean manufacturing is fairly commonplace, and uncertainty about market conditions makes it hard to gauge investments and risk.

So how do you get ahead in the current landscape? While it would be near impossible to truly answer that question, the LENOX Institute of Technology (LIT) gathered a few examples of high-performing service centers and outlined some of their key traits below. How does your service center stack up against these leaders?

Reliance Steel & Aluminum
Los Angeles, CA-based Reliance was ranked number one in Metal Center News’ (MCN) annual survey, “Top 50 Service Center Industry Giants.” The industry leader, which operates more than 290 locations in 29 states and 11 countries, continues to expand its reach. According to Reliance’s profile in MCN, the service center shines in three key areas:

A.M. Castle & Co.
In addition to distributing a wide range of metal and plastic materials, the leading metal service center also performs simple sawing operations at several of its locations, including its main distribution center in Franklin Park, IL. A case study, published here by LIT, describes the company’s three areas of focus:

Klein Steel Service Inc.
In May 2015, American Metal Market (AMM) magazine named Klein Steel one of its service centers of the year. According to the magazine, the Rochester, NY-based company experienced its largest year ever in 2014 in terms of weight shipped and revenue generated. The following are just a few notable attributes of the service center:

resource allocation

Using Predictive Maintenance in Your Machine Shop

August 20, 2015 / , , , , , , , , , , ,


With changing customer requirements and an increasingly competitive marketplace, leading manufacturers are finding it pays to be proactive—not reactive—in their strategic approaches. Instead of simply measuring performance, many companies are taking the next step and using measurement to anticipate and prevent future challenges—a concept known as predictive operations management.

This trend has found its way into industrial metal cutting. According the LENOX Institute of Technology’s benchmark study of more than 100 machine shops and other industrial metal-cutting organizations, companies can gain additional productivity and efficiency on the shop floor by “investing in smarter, more predictive and more agile operations management approaches.”

One such approach is predictive maintenance. Not to be confused with preventative maintenance, which uses planned maintenance activities to prevent possible failures, predictive maintenance (also known as condition based maintenance) uses tools to predict failures just before they happen.

Reliable Plant defines predictive maintenance as “the application of condition-based monitoring technologies, statistical process control or equipment performance for the purpose of early detection and elimination of equipment defects that could lead to unplanned downtime or unnecessary expenditures.” By using tools to predict and then correct possible failures, operators can keep machines running while eliminating unnecessary preventative maintenance downtime and reducing reactive maintenance downtime.

Monitoring tools typically include vibration analysis, infrared thermography, motor circuit analysis, sonic and ultrasonic analysis and other technologies that can find defects while the machine is in normal operation. In most cases, condition-based monitoring won’t interfere with production schedules—a huge plus for any manufacturer.

If predictive maintenance is effective, maintenance is only performed on machines before failure is likely to occur. According to www.maintenanceassistant.com, this brings several cost savings, including:

While this can translate into less maintenance downtime compared to preventative maintenance, predictive maintenance also has some drawbacks, including:

According to an article from Life Cycle Engineering, creating an effective predictive maintenance program is a bit more complicated than it appears. The magazine poses four questions managers need to address before implementing a predictive maintenance program:

  1. Can predictive maintenance technologies provide real value to your preventive maintenance program?
  2. What is the most effective predictive technology for your plant?
  3. Can you provide the right training?
  4. Will you actually use the information?

In the end, predictive maintenance may not be an option for every shop or every piece of equipment, but many manufacturers find it worth the investment for machines that have a critical operational function and have failure modes that can be cost-effectively predicted with regular monitoring.

For more information on predictive maintenance, read the full Life Cycle Engineering article here or click here for dates of upcoming training seminars.

resource allocation

Five Tips for Using Metal Cutting Coolants in Ball and Roller Bearing Production

July 30, 2015 / , , , , , , , ,


As any machining expert will tell you, coolants are a critical part of the metal-cutting process. While they are an added cost and an added step in the production process, the long-term cost benefits of coolants are worth every dime and every minute spent. This is especially true if your goal is optimization. As an article from Production Machining states, manufacturers should view coolants as an asset or, better yet, a “liquid tool.”

Unfortunately, many managers and operators fail to understand the importance of  proper lubrication during the metal-cutting process. According to Modern Machine Shop, most manufacturers see lubricant as “the least important factor in the total cost of machining and the last place to look for process improvements.” In fact, it is common for companies to often “cheat” on the proper concentration levels of metal-cutting fluids in order to save money. This may reduce coolant costs in the short term, but the high costs of machine wear and tooling replacement make this a poor management choice.

As explained in the white paper, Understanding the Cut: Factors that Affect the Cost of Cutting, coolants provide lubrication, which is essential for long blade life and economical cutting. Properly applied to the shear zone, lubricant substantially reduces heat and produces good chip flow up the face of the tooth. Without lubrication, excessive friction can produce heat; high enough to weld the chip to the tooth. This slows down the cutting action, requires more energy to shear the material, and can cause tooth chipping or stripping, which can destroy the blade.

Like any manufacturing tool, proper use and coolant management is essential if you want to get the most out of your investment. To help ball and roller bearing manufacturers ensure proper lubrication management in their metal-cutting operations, the LENOX Institute of Technology offers the following five tips:

  1. Start with a clean machine. As an article from MoldMaking Technology explains, proper metalworking fluid management starts with the draining, cleaning, and recharging of the machine. When changing coolants for any reason, clean and disinfect thoroughly with a fluid advised by the supplier of the coolant.
  2. A proper fluid mix is key. Extending the life of your fluids and achieving the best fluid performance starts with proper fluid preparation. Metal-cutting fluids need to be mixed a certain way in order for their chemical makeup to be correct. Experts recommend pouring the water into the mixing container first and then stirring the coolant concentrate into the water. One way to remember the proper technique is by the acronym O.I.L. (Oil In Last).
  3. Remove tramp oil to extend fluid life. Waste oils, which come from the machine or surfaces of the raw materials, are often picked up by the metalworking fluid and are referred to as “tramp oils.” Regular removal of tramp oil from the manufacturing process helps improve fluid performance and longevity, air quality, bacterial resistance, corrosion resistance, and tool life. Typical methods for tramp oil removal include regular inspection and the use of skimmers, centrifuges, and coalescers.
  4. Monitor fluids regularly. Measure, with a regular frequency, the concentration and quality of your fluids. Testing tools include refractometers, which can quickly determine the total amount of solubles in a solution, or titration kits, which are more extensive and are used to analyze fluid concentration in metal-cutting fluids contaminated with tramp oils. Tests for PH levels and alkalinity can also be useful,  as pH readings outside the acceptable range indicate a need for machine cleaning, concentration adjustment, or the addition of biocide.
  5. Make coolant checks part of everyday maintenance. Instituting regular coolant checks as part of a preventative maintenance program or daily operator checks can eliminate unnecessary tooling costs and maintenance downtime. Low coolant levels on a band saw, for example, can lead to premature and uneven wear of band wheels, which typically cost $1,000 each.

While coolants may feel like just another cost item on your consumables list, they play an important role in keeping maintenance costs down and cutting tool performance high. By following a few best practices, ball and roller bearing manufacturers can ensure that their metal-cutting coolants are not a necessary evil, but an opportunity to improve process efficiencies.

resource allocation

How Fabricators Can Benefit from Tooling Investments

July 10, 2015 / , , , , , , , ,


Most operations managers understand the importance of keeping productivity high and costs low. However, many managers fail to understand that in many cases, spending more in the short term is necessary to achieve the long-term goal of productivity.

This concept is especially true when it comes to metal-cutting tools. Because tools are consumables that need to be purchased and replaced often, it is tempting for managers to focus more on upfront cost. But as the following examples will explain, this strategy does not always offer the best return on investment.

Productivity Pays
At an event held earlier this year, Jacob Harpaz, CEO of Ingersoll Cutting Tools, explained why managers need to look beyond the price tag when investing in a new tool. According to Harpaz, featured here in Modern Machine Shop, a cutting tool can deliver improvement in three ways:

  1. Lower price
  2. Longer tool life
  3. Greater productivity

Although all three can be beneficial, Harpaz says choosing a tool with greater productivity will always offer the most lucrative return. Here’s why: For a representative machined part, Harpaz estimates that the cost of machinery represents 26 percent of the cost of machining a part; overhead represents 21 percent of the unit cost of machining; and  labor and raw material account for 28 and 22 percent, respectively. Meanwhile, the cost of cutting tools accounts for just 3 percent.

The implications of this are significant, according to Harpaz. Using the above estimates, dropping the price of the tool by 20 percent would only deliver a 0.6-percent unit cost reduction. The seemingly even greater change of increasing the life of the tool by a factor of 2 would still only save 1.5 percent. However, increasing productivity would increase the number of pieces the shop can produce in the same period of time, which means the labor cost, overhead cost, and machinery cost per piece would all decrease. Increasing productivity by 20 percent, thus, produces a savings of 15 percent overall, providing the greatest savings opportunity.

Benefits of Upgrading
With the above in mind, managers that want to get the best return out of their tooling need to remain open about investing in upgrades and new technologies In saw blades, advancements in tooth geometry and wear-resistant materials are providing significant improvements for many metal-cutting operations. This article from Canadian Industrial Machinery, for example, explains why the additional cost of a coating on a band saw or circular saw blade can be worth the investment, especially when cutting a challenging material or when higher performance is needed.

There is no question that high-performance blades will cost more. However, because they are able to cut faster and with more accuracy, they improve productivity and save money in the long run. O’Neal Steel, a Birmingham, Alabama-based fabricator featured in a white paper from the LENOX Institute of Technology, found that incurring a significant upfront expense to upgrade some of its blade was worth it. Before the upgrade, O’Neal was spending about $90 per blade, but the fabricator was only getting one day’s worth of cutting. “We had a fair margin, but we were constantly messing up material,” explains Jim Davis, corporate operations services manager. “Most people think it’s costing a lot of money in blades to switch. Well, that’s true, but when you’re cutting really tight tolerances, your blade’s going bad and the material lengths are off, you can add up money really fast and lose all your profits in just an hour or two if you have blade issues.”

For another job in its Knoxville, TN, location, O’Neal was only getting two days of cutting per blade, so they were going through three blades a week. Again, Davis upgraded from a blade costing $280 to one that was $40 more, and immediately his blade-life increased to seven days.. He estimates that in the long run O’Neal saved $600 a week, or an annual total of around $30,000. “That’s a radical change, about a 3:1 ratio on the life of a blade,” said Davis.

The Deciding Factors
Of course, not every upgrade will be worth the cost. The key is for managers to weigh the opportunity cost against the hard cost, considering the true benefits a new tool can offer and whether or not it will contribute positively to the bottom line. To do this effectively, managers need to work closely with their tooling partners to discuss the pros and cons of the different metal-cutting options, while also evaluating all of the factors that contribute to the cost of the cutting process. If the long-term benefit is there, managers need to be sure they aren’t being shortsighted by the price tag. As fabricators like O’Neal are finding, the upfront investment may offer higher productivity, as well as substantial bottom-line savings.

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