Using Cutting Tools To Boost Profits

Dec. 21, 2006
Do you spend as much time planning to purchase cutting tools as you do when you plan to buy a new machine?
Do you spend as much time planning to purchase cutting tools as you do when you plan to buy a new machine? The decision to get a new machine—making a big, capital acquisition— has a way of focusing attention on itself. There is a lot of money involved, you're going to live with that new equipment for a long time, and you have to choose and compare specifications, make decisions on options and add-ons, and dicker on prices. Then you might have to choose between making an outright purchase or leasing the equipment, and arrange the financing or lease agreement.

It can be a long, tiring process, and many shops use a team of their best people to consider all of the factors involved before making such an important decision. Smaller purchases, however, can be passed off as unimportant because they don't require as much time or study.

Buying cutting tools can be among those less demanding purchases. Cutting tools are consumables that cost a fraction of a shop's machines, but they can have a dramatic effect on profitability.

The 2006 American Machinist Benchmark Survey of the U.S. machine shop industry showed that the leading machine shops, on average, spend twice as much for tooling as all other shops, and yet are more profitable and more competitive.

Those shops keep their productivity high and extend machine use in part because they extend tool life, keeping a cutting edge on a workpiece for more hours.

Not all jobs require premium tooling, but all jobs deserve careful consideration that the tools used to get them done are the best suited for the task at hand. Determining the best tool for the job should be done by a team that is as expert as the team that makes capital decisions.

We have two reports on tooling in this issue that talk about issues related to tooling and the costs of tooling.

In the first on page 40, Associate Editor Larry Haftl talks about how cutting tool suppliers are providing process engineering assistance, based on their in-house expertise, to help machine shops increase their productivity, cut costs and cycle times, and keep machines cutting. The services are typically provided free-of-charge, but the cutting tool makers report seeing their own profits increase when their customers do well.

In the second report, Associate Editor Jim Benes talks about ways to drive down the costs of buying cutting tools. Shops are using creative programs to reduce their spending on cutting tools, and many of those programs—whether it's consolidating vendors, purchasing turn-key tooling packages, or integrating purchasing plans—can be applied to any shop.

Cutting tool expenditures typically represent a mere 3 percent to 4 percent of a shop's expenditures for a given job, but careful and skillful attention to the what, how and when of tool purchasing can translate into a much wider profit margin.

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