Nigel Smith joined TWI in 1994 and has participated in many large collaborative projects involving automated processing technology in both Europe and the USA. These projects have given him broad knowledge and experience of manufacturing processes, design, CIM and automation used within different industry sectors. He recently took up residence in the USA where he is now an Engineering Team Leader for Caterpillar in Illinois.
Innovations and technical developments have led to a wider range of joining processes now deemed mature enough for use by manufacturing businesses seeking a competitive advantage. Consequently there is often a range of alternative joining processes that need to be considered when making a product. As Nigel Smith reports each of these processes must be evaluated on both their technical and economic merits to determine the process that will provide the highest value to both the final product and the business. Often a compromise between cost of manufacture and added value of product to the customer results.
Manufacturing industries produce a vast range of products. Such products are inevitably composed of many components (which in turn are often built from sub-components). These components are required to be attached or joined to each other in some way to form the completed product. The processes and processing technologies used are a great source of innovation and competitive advantage for these industries.
However, the selection procedure for choosing a process can be complex. There are often many joining processes to consider and an even larger range of equipment can be used to perform each process. There are many factors that must first be considered (eg materials, speed, environment, quality, safety), and these can be used to filter out the options that are technically feasible. Once a shortlist of suitable processes is arrived at, it is logical to then examine each process from an economic viewpoint to pinpoint the most valuable process to the company.
There is currently a large amount of technical information relating to the joining of a wide range of materials using a wide range of processes but relatively little information on the relative economics and value of their use.
This project was aimed at increasing our understanding of process economics by developing a software model for comparing process costs and value.
Objective
- Develop a costing methodology and prototype demonstration software to quantify and compare the total manufacturing and business costs, of alternative joining processes, for particular applications.
Scope
A model has been developed to compare the relative costs that are directly associated with 12 different processes:
- Friction stir welding
- Laser welding
- Clinch bonding
- Electron beam welding
- Adhesive bonding
- Weld bonding
- Riv-bonding
- Arc welding
- Clinching
- Laser welding
- Riveting
- Spot welding
The model requests users to enter data about the scenario then manipulates it to provide information that has been normalised into a standard format for direct comparison with other processes. This is not a trivial task for several reasons:
- Companies account for their costs using different structures, measures, and terminology
- Processes often use different measurements and require radically different types of processing equipment.
- Process cost is heavily dependent on the context of the environment it is being operated.
These factors make it difficult to arrive at a set of costs for each process that can be directly compared. This is especially evident when the cost impact of the process on the rest of the business is to be accounted for. This has therefore been excluded from the scope of this project.
Approach
Identification of user needs
Most organisations involved in manufacturing compete in one of two ways; cost or differentiation. Cost strategies have an emphasis on economy and reducing the cost of resources needed for manufacturing (internal focus) whereas differentiation strategies have an emphasis on product effectiveness and meeting the needs of the customer (external focus). Both strategies should have a common theme of efficiency, and reduction of manufacturing waste. Joining processes provide many opportunities for value creation and manufacturers must select a process that provides most value to their strategy.
The question organisations need to answer is 'What is the most valuable joining process for their business?'
To understand the value of a joining process it is useful to think of it as a transformation that uses inputs to create outputs. Value can therefore be influenced in three main areas:
- Reducing the cost of inputs (beneficial to the business).
- Improving efficiency by reducing the time and waste associated with the process (beneficial to business and customer).
- Improving the quality and functionality of outputs relative to competitors (beneficial to customer and business by requesting a premium price).
No matter what generic strategy is followed, each of these three areas must be considered and examined in detail to judge whether a joining process is aligned with the manufacturing and business strategies.
The software model is intended for use by a wide range of manufacturing organisations. Hence, the three main components of the transformation remain unknown and need to be defined by the user: resources needed, joining process to be considered and products to be manufactured. A fourth important component is also unknown, the manufacturing environment the joining process will operate in ( Fig.1).
The model must therefore be flexible enough to cope with a wide range of scenarios, measurements, terminology and products. These features are critical if a direct comparison is to be made. However because there are so many unknowns, certain considerations have been omitted because of their dependence on current market conditions, eg product margins.
Input requirements
The inputs necessary to calculate the relative value of a particular joining process over another can therefore be separated into four distinct categories:
- Scenario (resources, process, product, time period, units).
- Resources and their cost.
- Joining process and its efficiency.
- Cost of resulting waste and added value to products.
Scenario definition
This data remains constant during the evaluation of different scenarios otherwise direct comparisons cannot be made.
This data includes or is used to calculate; the total time available for processing during a fixed time period, the production target during this period, the materials to be joined, the process to be evaluated, the date of the evaluation, and the batch size of the products.
Definition of process inputs
This includes data on resources required to perform continually the specific process selected for evaluation in the above scenario.
- Cost and payment terms of capital equipment.
- Lifetime and cost of equipment spares.
- Rate of use and cost of consumable, gases, electricity, and cooling liquids.
- Cost of process operators.
Definition of joining process
This is the data used to describe the chosen joining process.
It includes the process rate, a measure of the required joining activity required in each part and any surplus time required for manipulation, unloading and loading of the parts. The cycle time per part can therefore be calculated.
Definition of process outputs
This data describes the waste and added value resulting from the process.
It includes the cost of poor quality (rework and scrap) and the other non-value adding activities such as maintenance.
All the above inputs can be entered into the model using a variety of appropriate units. These also need to be selected so that the software can make a correct calculation. The user interface for these inputs is shown in Fig.2.
Process cost calculations
The software model was developed using Microsoft Excel and Visual Basic. The outputs are calculated using the same methodology ( Fig.3). Essentially each value is entered in terms of a quantity (number) and a metric (units). This data is then normalised by converting it to standard units and then used to calculate the outputs by combining it with other inputted data. This intermediate data is then converted back to outputted information when the user defines output units.
Output requirements
The software model provides a cost breakdown in both numeric and graphical format ( Fig.4 shows a screen dump of the chart). Costs are categorised as fixed and variable. Some joining processes will be characterised by high fixed and low variable costs, as they will require expensive processing equipment (capital intensive). Justification is therefore closely linked to economies of scale (high volume sales and processing). Conversely there are joining processes that will be characterised by low fixed and high variable costs, as they are labour intensive. Justification is typically linked to economies of scope (flexibility to make a wide range of products and responsiveness to change).
Fixed costs
The model calculates three types of fixed costs:
- Depreciation
- Interest payments
- Maintenance
It does not calculate other fixed costs such as floor space, process administrative costs associated with managing procedure documentation, consumable storage, and training of operators.
Variable costs
The model calculates seven types of variable costs:
- Operator
- Continuous consumable
- Discrete consumable
- Utility consumable
- Equipment consumable
- Re-work
- Scrap
It does not account for variable costs associated with pollution of the environment, and pre and post processing to achieve the required quality.
It is important to note that the overall value of a joining process is also related to selling price of the final product. This is dependent on market conditions, and the willingness of the customer to pay a premium price for a more valuable product. The final product may be more valuable because:
- More dimensionally accurate
- Improved fatigue life
- More resistant to defects
- Lighter weight
- Faster to manufacture
- Improved functionality
Conclusion
The lack of knowledge in the area of joining process economics appears to be due to several factors:
- Differing cost structures of organisations
- Lack of activity-based cost information in organisations
- Complexity of the manufacturing value chain
- Dynamics of the changing business environment
- Different units of measurement used in different processes
- Difficulties in quantifying certain aspects of value
Nevertheless, it is possible to develop a simplified generic cost model that overcomes the above issues. However, because the scenario of the user is unknown (product, environment, resources, systems) it was decided to limit the model to compare only the costs directly associated with different joining processes.
Despite the generality and flexibility of the economic selection model, there are several drawbacks and limitations in its use:
- The costing model does not take into account how the joining process affects costs elsewhere in the manufacturing value chain - it only examines costs directly related to the process. It is important to realise the added value throughout the manufacturing value chain. This is because different processes may eliminate/add other processes in the value chain, produce the need for more/less documentation, require more/less storage space, impose the need for special environment conditions, or use more/less resources.
- In addition to knowledge of the particular product and manufacturing scenario, expert knowledge about the joining process is also required. The use of the model is therefore limited to people with a knowledge of both joining processes and the scenario to be evaluated.
- Data that is difficult to quantify is also omitted, eg cost of floor space, possible increased margins, cost of environmental pollution.
Future work
It is suggested that the work carried out can be further developed and enhanced in three areas:
- Adaptation of the model to a web-based toolkit for use by JoinIT ® users.
- Expansion of the model to include costs arising in the wider manufacturing value chain.
- Integration of the costing model with existing technical selection software.
An on-line model could be continuously updated and disseminated to a wider audience. The above improvements would also deliver a more comprehensive decision making tool by including technical data and costing data from the entire value chain.
References
| N° | Author | Title |
| 1 | Creese R C: | 'Estimating and costing for the metal manufacturing industries'. Marcel Dekkar Inc, New York, 1992. |
| 2 | Primrose P L: | 'Investment in manufacturing technology'. Chapman and Hall, London, 1991. |
