Tooling Spend Analysis

3rd Apr 2024

Tooling Spend Analysis

Performing a cutting tool spend analysis can help you identify areas to save money and optimize your manufacturing processes. Here's a breakdown of the key steps involved:

1. Gather Data:

  • Identify Sources: Start by pinpointing where your cutting tool data resides. This could be purchasing records, inventory management systems, or data directly from suppliers.
  • Consolidate Information: Compile all relevant data points into a central location. This might involve exporting data from various systems or manually collecting information. Key data points include:
    • Tool type (drill bits, milling cutters, etc.)
    • Supplier
    • Unit cost
    • Quantity purchased
    • Total spend per tool type and supplier

2. Choose Your Analysis Tool:

  • Spreadsheets: A basic option for smaller datasets. Spreadsheets allow you to organize and manipulate data using formulas and pivot tables.
  • Spend Analysis Software: For larger datasets or complex analysis, consider dedicated spend analysis software. These tools offer advanced features for data visualization, categorization, and cost modeling.

3. Analyze the Data:

  • Spend by Category: Analyze your overall cutting tool spend by category (drilling, milling, turning, etc.). This helps identify which processes consume the most resources.
  • Top Suppliers: Identify your top suppliers for cutting tools. Analyze your spend with each to see if there are opportunities for consolidation or negotiation.
  • Cost per Unit: Look for outliers in terms of cost per unit for specific tool types. Investigate these to determine if there are alternative tool options or if you're paying a premium for a particular supplier.

4. Identify Opportunities for Improvement:

  • Standardization: Look for opportunities to standardize tool types across similar applications. This can simplify procurement and potentially lead to volume discounts.
  • Negotiation: Armed with your spend analysis, consider negotiating better pricing with key suppliers.
  • Tool Life Optimization: Analyze tool life data (if available) to see if there are ways to improve tool performance and reduce overall spend. This could involve optimizing cutting parameters or exploring new tool materials.

5. Implement and Track Results:

  • Develop Action Plan: Based on your analysis, create an action plan to address opportunities for improvement. This could involve supplier negotiations, implementing standardization procedures, or trialing new tool types.
  • Track and Monitor: Continuously monitor your cutting tool spend after implementing changes. Track if your actions are leading to cost reductions and adjust your strategies as needed.

By following these steps, you can gain valuable insights into your cutting tool spend and identify areas to optimize your manufacturing processes and save money.