CANADA'S LEADING INFORMATION SOURCE FOR THE METALWORKING INDUSTRY

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CANADA'S LEADING INFORMATION SOURCE FOR THE METALWORKING INDUSTRY

CANADA'S LEADING INFORMATION SOURCE FOR THE METALWORKING INDUSTRY

What should you spend on cutting tools?

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by John Mitchell

A common question in many machine shops in Canada is: what per cent of my total expenditure should I be spending on cutting tools?

An International rule of thumb breaks down the costs as follows: manpower: 28%, overhead: 21%, raw materials 22%, machinery: 26% and cutting tools 3%.

Some well-intentioned managers look to try to reduce their cutting tool costs. Although the 3% spent on cutting tools is a very small portion of the over-all costs, it is a very important one.

Assume a shop is able to negotiate a 50% discount on its cutting tool purchases; everything else remains the same. For this example rather than using percentages, let’s assume the original total cost is $100. Therefore, manpower would remain $28, overhead would remain $21, raw material would remain $22, machinery would remain $26 and cutting tools would be reduced to $1.50. You would save $1.50 on the total job.

Conversely, let’s assume you purchased really great cutting tools and you were able to cut your cycle time in half. Therefore overhead would be half, material would remain the same, cutting tools would remain the same, machine cost would be half and manpower would be half, a total saving of $37.50. Even a 10% reduction in cycle time results in a $7.50 saving.

Now let’s assume brand A can reduce cycle time by 10% and brand B can’t. Brand A would save you $7.50 per part. Assume brand B gave you the all of the tools and the inserts were free. You would save only $3.00. Paying for more productive cutting tools will save you more than if slower operating inserts were offered for free.

Therefore, look for productivity, not price, in a cutting tool. It will save you a lot more.

Many customers try to extend tool life to save money. Here again, it’s well-intentioned but could be costly. It’s common knowledge that slowing the speed down will extend tool life. However, as in the example above, doubling tool life will save you $1.50. Whereas doubling the speed will save you $37.50. Perhaps you will use even more inserts at the elevated speeds, but the payoff is higher. Even if the tool life is cut in half and the expense reaches $6.00 instead of $3.00, it saves you $37.50 and your overall saving would be $31.50 per part.

John Mitchell is general manager of Tungaloy America


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