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The Growing Need For Value Added Services in Manufacturing

The Growing Need For Value Added Services in Manufacturing. Mike Verkamp Business Development Manager Sandvik Coromant. Mike Verkamp. Married & Father of 3 daughters Education: BS Industrial Management/Industrial Engineering from Purdue University, West Lafayette, IN

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The Growing Need For Value Added Services in Manufacturing

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  1. The Growing Need For Value Added Services in Manufacturing Mike Verkamp Business Development Manager Sandvik Coromant

  2. Mike Verkamp • Married & Father of 3 daughters • Education: • BS Industrial Management/Industrial Engineering from Purdue University, West Lafayette, IN • MBA from IU, Bloomington, IN • Current Position: • Business Development Manager, Sandvik Coromant MAA • Hobbies: • Triathlons, Home Improvement Projects, Leadership Training, Coaching

  3. Can we really predict the future? • “The horse is here to stay but the automobile is only a novelty, a fad.” • President of the Michigan Savings Bank advising Henry Ford's lawyer not to invest in the Ford Motor Co., 1903. • “The wireless music box has no imaginable commercial value. Who would pay for a message sent to no one in particular?” • Associates of David Sarnoff responding to the latter's call for investment in the radio in 1921 • “Who the hell wants to hear actors talk?” • H. M. Warner, co-founder of Warner Brothers, 1927. • “Dear Mr. President: The canal system of this country is being threatened by a new form of transportation known as 'railroads'... As you may well know, Mr. President, 'railroad' carriages are pulled at the enormous speed of 15 miles per hour by 'engines' which, in addition to endangering life and limb of passengers, roar and snort their way through the countryside, setting fire to crops, scaring the livestock and frightening women and children. The Almighty certainly never intended that people should travel at such breakneck speed.” • Martin Van Buren, Governor of New York, 1830(?).

  4. Industrial megatrends 2012 • IT organizations will make foundational investments to deliver both IT productivity and business value. • Manufacturers will focus on clock-speed alignment across the supply and demand sides of their supply chains. • The requirement for speed and the ubiquity of information creates a new landscape for IT support of the supply chain. • The factory of the future will be driven by capabilities to fulfill customer demand rather than pure production capacity. • Manufacturers will shine the environmental sustainability spotlight on the factory as a means of getting to the product. Source: Association for Manufacturing Excellence, www.ame.org

  5. What does it all mean? We’re moving from a world of mass production to a world of mass production AND mass customization…agility based manufacturing.

  6. The Value Chain Challenges Capacity Capital purchase planning Competencies Virtual Machining Programming Asset Utilization Scrap rate Quality Competence Inventory Administration Reconditioning Recycling Components Material Machinability Processes Machines Purchasing Systems Shipping Product Marking Product Packing

  7. How to find a sustainable solution to communicate tool data ? 1,000,000 Manufacturing units 50 CAM suppliers 200 Machine tool builders Solution 100 Tool Suppliers Standardization with ISO 13399

  8. ISO13399The Information Carrier • “Plug & Play” interface for cutting tool information: • Designed for system to system communication. • High demand on information quality: • International standard. One language for communication. One translation is more reliable than multiple translations. • Possibility to communicate also new cutting tool concepts • Standardizing how to handle the information – not the cutting tool itself.

  9. The Value Chain Challenges Components Material Machinability Processes Machines Capacity Capital purchase planning Competencies Virtual Machining Programming Purchasing Systems Shipping Product Marking Product Packing Asset Utilization Scrap rate Quality Competence Inventory Administration Reconditioning Recycling

  10. Metal removal = Adding value Cutting time 80% Machining time 50% Production time (planned) 20% Non-cutting & Tool change time 60% Tool change Set-up & Gauge Machine stopped 25 % 10 % Work piece change 10 % Other 5 % Breakdowns 40 % Other time Cutting time = 60% x 50% x 80% = 24%

  11. Impact on cost per part Value Before Cost per part: 80(2 805 + 1 275) / 51 After Cost per part: 70(2 805 + 1 275 + 275) / 62 100 80 Fixed costs2 805 12% Reduction in Cost/Part 25 Add.v costs 275 Variable costs1 275 Production quantity 51 62

  12. Impact on Gross Profit Before Gross profit: 1 020 Gross profit margin: 20%1 020 / (51 x 100) Value 100 Gross profit1 020 After Gross profit: 1 845 Gross profit margin: 30%(1 020 + 825) / (62 x 100) 80 Fixed costs2 805 Gross profit825 50% Increase in GP margin 81% Increase in total GP 25 Add.v costs 275 Variable costs1 275 Production quantity 62 51

  13. Financial impact summary Cost Per Part Gross Profit 80 1 845 Reduction: 12% Increase: 81% 75 70 1 020

  14. The Value Chain Challenges Capacity Capital purchase planning Competencies Virtual Machining Programming Components Material Machinability Processes Machines Asset Utilization Scrap rate Quality Competence Purchasing Systems Shipping Product Marking Product Packing Inventory Administration Reconditioning Recycling

  15. Source: www.visualcapitalist.com/portfolio/tungsten-an-industrial-metal-with-unstable-supply

  16. Source: www.visualcapitalist.com/portfolio/tungsten-an-industrial-metal-with-unstable-supply

  17. Financially, it makes sense… • Prices paid for used carbide have ranged from $12 to $16 per pound recently • Recycling programs are easier than ever to implement • Modern recycling processes yield 90% usable carbide

  18. But, the best reason to implement a carbide recycling program might be because it is just the right thing to do… /18

  19. Sandvik Coromant Carbide Recycling Here's how it works:Call 1-800-SANDVIK (1-800-726-3845) to order your free carbide-recycling container.When full, return your container with packing slip to:    Sandvik Coromant Recycling Program    C/O DHL    2151 South Park Drive, Suite 1    Hebron, KY 41048Sandvik Coromant pays you the current rate per pound for your recycled carbide. Sandvik Coromant sends all carbide inserts and round tools to ISO 14001/OHSAS 18001-certified plants, to ensure that all carbide is recycled using approved, environmentally friendly methods. Together, we can do our part to promote more sustainable manufacturing processes. 1. 2. 3. /19

  20. Q & A

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