Measuring the ROI of Tooling Investments in Manufacturing

Measuring the ROI of Tooling Investments in Manufacturing

Measuring the ROI of Tooling Investments in Manufacturing

Is new tooling worth the investment? Can new tools and equipment pay for itself in the short term? That depends on how you calculate those costs and how you view your total cost of ownership over the long term. This calculation is a valuable asset when it comes to justifying the return on investment to management. It’s also critical to getting the best performance out of your operations.

Deciphering your total cost of ownership (TCO)

When considering a new tooling or equipment purchase, many managers may look to recent spreadsheets and compare the cost of the equipment against their budget constraints. But total cost of ownership goes far beyond improvement costs alone and includes direct and indirect costs as well.

Your tools and equipment can have a significant impact on your operational costs over time. Outdated or inadequate tooling and faulty machinery can slow down production and result in a poor finished product — costing your company additional time, labor and material. By considering your total cost of ownership, your operation can benefit from data-driven decisions designed to improve efficiency and productivity while reducing waste in previously overlooked areas.

To reach optimum ROI on new tools and equipment, consider these TCO variables when deciding on a new purchase:

  • Operating costs
  • Cycle time and run time
  • Scrap rate percentage
  • Feed/speed rates
  • Equipment run time
  • Labor hours
  • Cost-per-part
  • Tool and machinery life
  • Downtime for maintenance and repair
  • Carrying costs

See how one M&M Sales & Equipment customer experienced shorter production run times, longer tool life and reduced machine downtime with better tooling.

The Problem: One customer runs a machine shop that manufactures turned and milled machine parts for various industries. They were looking for a way to achieve faster run times while getting more life out of their tooling. After a full evaluation of their current machines and processes, we recommended a solid carbide high feed side mill from Sandvik Coromant. The new tooling enabled them to reduce the number of runs required in each batch and increase their product rate to five times the feed rate of the previous tooling.

The result: By investing in new tooling options, our customer was able to shave 1,000 production hours, save $100,000 per batch and gain improved customer stickiness with lower cost-per-runs while achieving better tool life and increased machine uptime.

Read the entire case study here. 

If you would like assistance on new tooling and equipment to get your shop running at peak performance, reach out to your local M&M Sales & Equipment rep or call 800-592-4516.

Why Some Companies Hesitate to Invest in New Cutting Tools and Equipment

In manufacturing, process is everything. So, it can be hard to shift gears and try something new. Many times, this resistance can be blamed on habit, especially when faced with “selling” a new idea to upper management or the purchasing department. Common objections include:

We’ve always done it this way.

We don’t have time to try something new.

Our current supplier doesn’t support new technology.

We need readily available parts and service for maintenance.

We don’t want to change.

What if it doesn’t work? 

The Value of Investing in New Cutting Tools and Technology

The fact is, new cutting tool technology and programming has paved the way for faster and more accurate processing, longer tool life and reduced cycle time, and is well worth the investment. Today’s innovative cutting tool technology, programming processes, insert and grade compositions have set new standards to deliver higher performance than yesterday’s tools. Plus, many are available with quick change systems that minimize downtime from tooling replacement. Adapting to a new way of doing things is never easy. But with the right tooling, it’s always worth it.

Better tooling can help you:

  1. Reduce scrap percentage
  2. Create a better maintenance plan
  3. Shorten set-up times and decrease machine downtime
  4. Improve cycle times and shorten run time
  5. Attain a better finished product

Related: Making the Case for CNC Robotics in Machine Shop Automation 

Tool Package Assessment: No Risk, All Reward

M&M Sales & Equipment takes the uncertainty out of tool investment. Along with our team of engineers and highly trained metal cutting and fabrication specialists, we offer a performance guarantee. Let us assess your current equipment and processes and make tool package recommendations that improve your operations from day one for faster payback. If it doesn’t work, we take it back and help you find a better option.

M&M Sales & Equipment is here to be your partner in success, with advice and suggestions on how you can improve operations, increase production and increase your profitability. From cutting tools, abrasives and cutting fluid to safety and MRO supplies, we are your full-line distributor. If you have questions on how M&M Sales & Equipment can help you, please call one of our four Texas locations.

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