In the competitive die casting industry, throughput and cost control are the keys to keeping production costs competitive. Shops want to increase productivity while maintaining profitable margins on their die casting operations. Part of management’s strategy is often the inclusion of new equipment and technology. Investing in technology is as important to global competitiveness as optimizing asset ownership.
The TCO Analysis of die casting operations
The Total Cost of Ownership (TCO) model and analysis is commonly used to make decisions when purchasing new equipment. Part of this evaluation process should include an audit: an evaluation of current equipment and manufacturing operations to determine the capacity or capability for meeting present and future operational requirements.
An audit is used to do the following:
- Compare actual performance versus benchmark performance of the equipment
- Examine areas to improve productivity
- Optimize the product and people flow-chart of the workshop
- Look at lost revenue due to inability to quote desired new business
- Check all energy losses or check where energy recuperation is possible
- Evaluate slow production and inability to meet deadlines
- Check scrap rates due to out-of-tolerance parts or with quality issues
- Track servicing and maintenance of out-of-warranty equipment
- Analyze economics of upgrading, refurbishing or disposing of existing equipment as opposed to replacement
The main cost elements are purchase, energy, maintenance and repair. Secondary costs that have a bearing on the overall value are productivity, risk and disposal. A value assessment reflects all costs associated with a capital purchase, including owning and operating, over a given period. This information is a useful tool in optimizing asset ownership and determining the best value between several alternatives.
A good TCO analysis should fit the business plan and identify the best solution to match the business goals. For example, adding capabilities to service new customers or expand into different markets. Using new technology can often eliminate some of the process and take a fresh approach to jobs. Additional capacity and improved machine performance are often the drivers in the decision to look at equipment changes.
The TCO model can be used in two ways. The first would be as an estimation model. This method allows the input of data derived from several resources available that indicate an estimation of die casting performances at varying machine parameters.
The second and most exact approach to the accuracy of the TCO model would be to record the performance of a controlled test or an actual die cast application. This bypasses any estimation of performance and assesses the true data input on the performance experienced.
Regardless if an estimation or actual data is used for the TCO model, die cast shop owners must at some point review their die casting operations to fully determine if the equipment is running to full capacity and the die casting process has been optimized to provide maximum efficiency and profitability. The time spent conducting a TCO audit often discovers areas where significant process improvements can be achieved, and increased competitiveness is realized.