Demonstrating and documenting cost savings has become essential for today’s industrial suppliers and distributors as part of proving their solution offerings to customers. This is especially important in the highly commoditized abrasive products category, where most manufacturers don’t fully understand what separates one brand from the next. They typically focus on cost per unit rather than on total units used or how those costs can tie up time in labor-intensive operations.
Even when customers accept the value proposition that time equals money, they may need hard numbers to be able to make the best decision. They can find this information in structured documented cost savings (DCS) programs, which compare the abrasive or tooling costs, time and shop labor rate related to a variety of abrasive products. DCS programs show conclusive evidence that superior products, which may have higher initial costs, can actually result in overall cost savings when all operational costs are taken into account.
Firm estimates, based on real data, help manufacturers see the bigger picture, including labor costs, instead of simply relying on the cost of the consumables alone. The approach also focuses on safety improvements that result from using higher quality abrasives, which also affects the productivity and bottom line.
DCS programs should be backed by comparative tests, including those conducted in a laboratory setting as well as in-field tests on the customer’s equipment. Additionally, the process should be administered by experts trained to differentiate between cutting, grinding and rust removal applications to ensure that test results are meaningful while remaining customized for the specific application.
Documenting Value
DCS programs are part of a larger movement toward providing value-added services. The notion is that manufacturers are willing to acquire more expensive products and solutions when they recognize the long-term value of what is offered. The idea behind documenting value is proving that the products and services are providing savings, while at the same time developing more of a partnership with the distributor and end user. [1]
More value-documentation processes are being implemented by distributors and suppliers, and as more customers are demanding them. Those that aren’t providing this kind of documentation may be at a disadvantage. In today’s competitive environment, distributors and suppliers need to implement a much more formal process, documenting the value they provide to customers.
From the point of view of distributors and suppliers, documented cost savings cover far more than just price – they include delivery times, availability of products and specialty resources that can help customers. This moves away from the cost of an individual item, say a grinding wheel, to the overall savings.
Walter Surface Technologies long ago recognized the need to document its products’ cost savings. The earliest productivity analysis program started more than 30 years ago. It was originally designed as a simple method to demonstrate why a grinding wheel priced at $3 was more cost effective than a competitive model priced at $2.
The approach relied on a live demonstration comparing removal rates, using the going labor rate to show labor savings from the use of the Walter grinding wheel. Written documentation was negligible; results were noted on a piece of paper and given to the customer.
The DCS movement has evolved quite a bit since then. Walter has developed a three-step program to provide information relevant to the end user and specific to their plant or shop.
Step 1: The Bucket Program
Five years ago, the informal productivity analysis transitioned into the bucket program, a deceptively simple but formalized, documented cost-savings approach. Rather than simply taking the word of a company representative on typical or average savings that could be made, a bucket is placed on the shop floor where operators are asked to discard their used abrasives.
After a month, an expert performs a site analysis to determine how the customer is using its abrasive products, note the challenges and evaluate ways of saving the customer money. Recommendations are based on what is actually in the bucket – evaluators are able to explain where customers are literally throwing away money.
The analysis typically uncovers issues such as flap discs that show evidence of improper wear or 5-in. grinding wheels discarded when they are only worn to about 4 in. rather than the allowable 3 in. Glazed-up, cut-up or broken wheels could be indicative of the wrong product being used for a particular application or could reveal that operators are engaging in unsafe work practices.
The bucket program offers a way to show customers equipment changes that could save them money. Savings could come in the form of abrasive and tooling costs, wasted labor time and even lost man hours due to workplace accidents and injuries that are entirely preventable.
Step 2: Safety Seminars
Safety seminars are offered to encourage a safer work environment, especially when the visual analysis shows a great deal of broken product in the bucket.
With grinding wheels spinning about 180 miles an hour right in front of an operator’s face, they could be considered the most dangerous product in the plant.
In particular, cut-off wheels are prone to breakage, which poses serious safety issues. Some plants even forbid cut-off wheels because they’re perceived as too dangerous when used improperly.
A safety seminar, therefore, is a necessity and should include operator training on the proper use of cut-off wheels. By offering these seminars, companies are given another way to increase productivity and save money due to the associated health and legal costs in addition to lost man-hours.
Step 3: Productivity Program
Customers want and need specific validation that new products will work in their shop, with their grinders and their personnel. This need has led
to the third aspect of the approach, known as the productivity program. The productivity program is a personalized performance analysis of a new abrasive product versus the customer’s incumbent product.
With a database of brands available, Walter’s productivity program begins with an analysis of the removal rate of the current brand versus a new product. Information is based on
the use of a Walter grinder and the pressure/amperage draw put on the grinder. The grinding wheel, cutting wheel or wire brush’s performance is measured, as is the time taken for the task to be completed, against the incumbent product.
This data can be used in conjunction with laboratory testing to show savings when all other operation costs are taken into consideration. For example, if the Walter product is priced 10 percent higher but lasts twice as long, cost savings are usually achieved. Similarly, if a process takes 15 min. to complete with the incumbent grinding wheel and 10 min. with a Walter wheel, labor savings are achieved.
A customer that receives a lab test with results of one product and one operator typically is not going to be convinced to make the change when they have 30 operators and a variety of equipment.
In these situations, the customer can also conduct their own broader scale tests. This is especially important with grinding wheels and abrasives where the type of grinder can change results dramatically. The more powerful the grinder, the more pressure an operator may put on the wheel, so customers typically want to do their own tests to see how different grinders and different operators affect the testing process.
Numbers Don’t Lie
Surface finishing products and solutions cover a diverse array of industries and applications, from tanks for microbreweries to automobile assembly lines to food processing. Every distributor and supplier that wants to have staying power and be competitive has to do whatever it can to remove costs out of the customer’s operation while maintaining and even improving quality and productivity. Looking for savings is part of everyone’s DNA, and companies are far more sensitive to supply costs than in days gone by.
Shown in Figures 1 through 5 are four examples that represent the range of companies and industries participating in the partnership for productivity. Each example is unique to that company, but the results are typical.
One of the world’s largest heating, ventilation and air conditioning (HVAC) companies was looking for a better aluminum grinding solution for its Colorado plant – one that would allow it to work faster and save money. As shown in Figure 1, the productivity analysis revealed that Walter’s Flexcut flexible grinding wheel removed almost 350 percent more material over the same time period as the customer’s incumbent product. This allowed the company to work faster, reduce its inventory and ultimately cut grinding costs by 57 percent.
Another example is a prominent boat manufacturer located in Wisconsin, which had been using sanding discs from another brand. In Figure 2, the comparative test shows the Walter product provided 60 percent more material removal and lasted 50 percent longer. This resulted in decreased inventory, quicker work process and total process savings of nearly 40 percent. The customer achieved an annual savings of more than $119,000.
A third example, shown in Figure 3, is Illinois-based Chicago Metal Rolled Products, which discovered an overall product and labor savings of 30 percent, or more than $11,000 in annual savings.
Figures 4 and 5 come from a productivity program report for LCL-Bridge Products Technology Inc., based in Québec, Canada, which specializes in new and retrofit precision products for bridges, viaducts, stadiums, dams, off-shore platforms and high rise buildings. The analysis revealed more than 45 percent savings in overall grinding costs.
As these examples show, rather than focusing only on energy savings or reducing costs associated with large equipment, manufacturers looking for potential savings should take the time to investigate just how much money they could save by switching out an abrasive. In doing so, it would also demonstrate how labor costs tie into the equation.
[1] Modern Distribution Management, How to Get Customers to Fight for You, by Lindsay Konzak, March 10, 2013.
