Costs And Consequences

How good is your shop at connecting its purchasing decisions to the operations that those decisions affect?

An article this month (Cutting Costs With Cutting Tools: Instead Of Life Or Price, Look To Capability) offers some representative cost figures to illustrate a straightforward point. Namely, tool life and tool price generally do not have a large impact on the cost of machining, but tool capability does. The best thing a tool can do to cut costs is to let the process run faster.

And yet, even a shop whose costs are well in line with the figures offered to support this idea may still be powerless to put the idea into effect. The reason can relate to nothing more than the organization chart. Those who program and oversee the machine tools may not belong to the same group as the one who makes purchasing decisions for tooling. As a result, the tool buyer may lack a clear vision for how to optimize machining efficiency, and may even lack an incentive to do so. But what that buyer does not lack is oversight. If he started buying more expensive cutters one day, that change in his expenses would be noted.

It would be nice if there were a kanban-style system that could manage hidden costs in the elegant way that kanban manages inventory through the use of bins. Anyone about to make a purchasing choice that would affect the small parts turning area, for example, would be prevented from making that choice as soon as he saw that that area’s bin for unanticipated costs was already full.

But no such system exists, so that leaves rigorous analysis as the one option available. A manufacturer that really wants to control its costs has to be able to link the decisions made in one area to the trade-offs made in another . . . and then act on those discoveries. For example, to convert one department’s information system may be expensive, but how much time is lost on re-entering data in another department? Or, if scrap and labor are involved in running a complex part on both a machining center and a lathe, then how do these costs compare with the price of a multitasking machine that could run the job in a single handling?

Today many aggressive manufacturers are striving for greater integration with the customer. They seek to serve the customer through deeper and more numerous connections into the customer’s process that let them play a more critical role. The hope is to secure a more stable supply of work. But when it comes time to actually run that work, the manufacturer’s ability to integrate with itself is what’s key.