How to Better Your Machine Tool ROI

The justification of purchasing a new machine tool is becoming more and more difficult, particularly with today’s technology and global competitive economy. Return on investment (ROI) strategies based on past inefficient manufacturing performance does not represent today’s machine tool technologies. With competitive pressures the way they are, exotic materials and more complex designs, manufacturers need to be smarter, leaner and more profitable. Above all, the challenge of maintaining your competitive edge and generating the fastest possible return of your investment is crucial.

When we apply manufacturing economics thinking to the machine investment process, a couple of questions come to mind: what do we want to manufacture and how quickly can we turn our investment into profit.

The more time and effort you spend in the beginning, the quicker your returns can be. Tooling up your machine from the start will give you better productivity, better return on investment and quick machine payback.

1. Faster payback
Typical machine investments call for a three- to five-year payback. By tooling up right from the start, you can take a full 12 months out of that schedule while lowering debt costs and increasing your rate of return for your business.

2. Faster throughput
The right tools will maximize your new machine’s potential, help you optimize your metal removal rates and you will get more parts per hour, right from the start.

3. Optimum efficiency
Having tooling companies and machine tool companies involved from the start and utilizing their resources will ensure you are getting the most recent developments and solutions—keeping you cutting edge.

4. Reduced downtime
Standardized tooling systems will help you with your day-to-day needs. You will spend less time on changeovers, keeping metal to metal times to an absolute minimum.

By looking at the real numbers, you will quickly see a whole new world of opportunities. On the surface, tooling accounts for a mere 3 percent of total production costs. But there is another more important set of numbers.

The right tooling can provide you with the capability of running your new machine to its optimum potential. Increasing your cutting data by 20 percent can give you 15 percent reduction in total component cost. This means paying off your new machine faster, up to 12 to15 months. It is all about reducing your return on investment and reducing the time it takes for your new machine to make you money.

Look for suppliers that offer payback calculators to help you with your investment. A calculator will give you instant access to the direct and indirect benefits of smart machine tooling—such as increased productivity, a higher rate of return and increased machine utilization.

The calculator has two modes: a guided mode for new users and an expert mode for those who are more experienced. After customers input the cost for a new machine and an estimate of how long it will take to recoup their investment, they are taken through several steps that evaluate everything from required man hours and delays in machining to levels of fixed machine costs and preferred production times. The calculator then draws conclusions from the analysis and offers instant feedback to the direct and indirect benefits of making smart choices.

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