How to estimate the true cost-per-part of industrial cutting tools

Peter Sutherland explains the reasoning behind estimating the cost-per-part of cutting tools – including some of the hidden costs that can add up in terms of manufacturing productivity and cycle times.

How many times do we hear, “You get what you pay for!” in our personal and business lives? This saying comes up all the time, and there’s a reason: the value of the item is usually determined by its price. Engineering cutting tools are no different. You’d be amazed at how many engineering companies spend hundreds of thousands of dollars on machinery and complex software, then neglect to consider the true value of the cutting tools actually performing the work!

The Good, Better, Best of Cutting Tools

At Sutton Tools, we employ a ‘Good, Better, Best’ principle to help you decide on the best tool for each application:

• Should you go for the cheapest (Good) option to cut costs?
• Will the Better option successfully and efficiently carry out the work it’s needed for?
• And what about the Best tool – should you invest in a high performance, high-quality tool that will give you the best results, but costs more to replace?

Your decision in choosing a tool will depend on many factors, including overhead and labour costs – are you paying $25 per hour for machine time in a developing country, or $150 per hour in Australia or Europe? Regardless, we suggest always going with the Best option, simply because the outcome value of high performance versus standard is better, and tool life is extended.

Cost-per-part is a simple and effective comparison benchmark used by Tooling Engineers and Estimators around the world, and can help you decide which tool is best for your business. After all, your machines are only as good as the tools they use.

What is cost-per-part?

Typically, cost accounting uses the sum of all the manufacturing inputs to determine a final number: we look at statutory costs, capital equipment financing, labour, raw materials, fixed overheads such as energy, and tooling (sometimes called ‘consumable’ costs).

When you wrap up the total sum of these costs against the total production output of a given period, you are able to produce a globally recognised business measure: your hourly rate. If you exclude the material and other costs, you can estimate the time taken to manufacture each component and then cost the component in time.

However, the big problem for many companies is the cost of the consumables used to make the part! This puts the focus on achieving the most machining time out of each and every tool, day-in and day-out. This is why it is important to establish the cost-per-part.

The cutting tool in cost-per-manufactured component

Engineering cutting tools are the consumable percentage of the overall picture. Depending on the type of work and materials being machined, they can considerably influence the output in nearly every machining application.

If we instead look at just the number of parts used in any given time frame, the simple equation is the amount of machining time one tool can deliver. The elephant in the room, so to speak, is the cost of the consumables in manufacturing operations.

Key factors that influence tool life are:

Material being machined
Low Carbon Steels and Aluminium are soft and easily machined compared to Super Alloys used in the aerospace componentry manufacturing industry, such as Titanium and INCONEL. They’re very hard and therefore more difficult to machine.

Tool holding and part clamping
When high quality low TIR precision tool holders are used, and they are firmly clamped or held during the machining process, the chance of unwanted movement and harmonic vibrations are eliminated. The cutting edge on your tool is less likely to suffer premature damage.

Machine tool condition
Machines that have precision high-quality slideways and spindles with Optimised CNC Software offer infinite control on the tool path and this can influence tool life.

Part quality and surface finish requirements
The dimensional tolerance expectation in aerospace parts is specified in hundredths of millimetres, and mirror surface finishes are regularly required. Combination of machine tool movement, ambient temperatures in manufacturing and cutting tool wear resistance are for critical factors in achieving specifications.

Cutting tool specification
Here at Sutton Tools, we pride ourselves in being at the forefront of cutting tool technology. Our Product Engineering team combines tool materials, geometry, micro finishing and PVD coating to every application tool we supply, to give you a long lasting tool. We focus of the ability of the tool material to withstand wear, abrasion and impact resistance, along with the cutting geometry and grinding process to produce what we call an ‘application-specific high performance tool’ that may incorporate pre and post PVD coat and micro finishing processes.

Beware of hidden tooling costs

It’s easy to buy a ‘good enough’ tool because the initial investment cost is significantly lower. However, hidden costs can easily add up to more than purchasing one high performance tool:

• Machining downtime
The need to change tools frequently increases labour costs and the length of process cycles.

• Tool failure
Tools with an unpredictable tool life can fail unexpectedly mid-process, potentially incurring damage to raw materials or semi-processed components in addition to machining downtime.

Replacement tools
Sub-optimal cutting tools with shorter tool life must be replaced more often, especially in mass production – which leads to the need for further costs

Remember, you get what you pay for. The value of a high performance tool – that can be reground and recoated to extend its useful life – versus a standard tool will be a large factor in your ability to cut costs, produce high quality components and improve your processes and cycle times.

If you’d like us to help you assess the true cost-per-part of your industrial cutting tools, just contact us or ask your Account Manager.

About the Author

Peter Sutherland

Peter Sutherland is a 40-year veteran with experience in the automotive manufacturing industry in Australia and Southeast Asia. He also has extensive experience in cutting tool design and manufacture for the transport, mining strata control, Oil and Gas, and aerospace sectors. Principally responsible for Sutton Tools specialty ‘made to order’ tools, he collaborates with a close-knit team of Product Engineers.