Everyone is concerned about costs these days. Whether that is labor rates, tooling costs, machine prices, utility rates, real estate taxes, each affects the final cost of any part that is manufactured. The basic equation is simple:
Part Cost = Material Cost + Processing Cost
Some companies try to reduce costs by buying materials at the lowest possible price. They will negotiate global supply contracts, conduct blind auctions, and basically do everything they can to hammer their material suppliers for the lowest possible price per pound.
Other companies pursue cost reduction through implementation of a set of processes called Lean Manufacturing. There are some basic ideas that govern these processes: reduce the number of parts, make part each easier to manufacture, simplify the assembly steps, integrate discrete parts into robust sub-assemblies, reduce waste at each and every opportunity, etc. They often go by names such as Design for Assembly, Design for Manufacture, or some other type of Design for X (often designated as DfX). Most Lean Manufacturing methods focus on processing costs, which is a key aspect of mass production.
| Process Cost (per part) |
= | Cost of Process (per unit of time) |
x | Process Time (per part) |
For plastic parts, the process steps typically include molding, handling, and assembly, but can also involve printing, painting, plating, sterilizing, etc. The cost of each step depends on a number of factors, including many of the items mentioned above.
As a design engineer, I am often constrained in my choice of materials by the specific requirements of the project. (Did I say often? I meant to say almost always). But I usually do have a say about what material(s) can be used in my design. And if I can recommend a material that reduces the time involved in any given process – effectively reducing the cost of the parts – I am saving my client money.
To help with this, I find it useful to translate abstract numbers about processing costs into simple, common sense things everyone can relate to – usually involving dollars and cents (or as my mother used to say, dollars and sense).
As an example, consider the following hourly rates as translated into common cents:
$3.60 / hr = a penny every ten seconds
$36 / hr = a penny per second
$360 / hr = a dime a second
$60 / hr = a dollar per minute
$120 / hr = 2 dollars a minute
Using the above numbers, if I can choose a material for my design that processes three seconds faster than another material – saving three cents per part (or more, depending on the number of parts per cycle) – I will save my client money – even if the raw material costs two cents more.
So, the next time you are about to choose a material, consider the processing costs.
It only makes sense.
This article is based on content from a paper presented at the Society of Plastics Engineers 2014 Annual Technical Conference. That paper was also used to formulate a chapter in Eric’s newest book, Thermoplastic Material Selection: A Practical Guide, which was published in May of 2105 by Elsevier, and is available from Amazon.
Part Cost = Material Cost + Processing Cost
I think you ignore the tooling cost. Specially, if the mass production isn’t so many, the tooling cost will take a big part of the part cost.
You are correct, I did not specifically address tooling costs in this article (which was a synopsis of a technical paper I presented at the Society of Plastics Engineers Annual Technical Conference). Tooling costs are an important aspect of the process, but companies account for them in different ways. Some include them as non-recurring engineering expenses (NRE), others as capital expense, others as a cost to be amortized over the production run. I firmly believe that design can have a huge impact on tooling cost, but material selection not as much.