12.3.1 Introduction
Total in-process costs may be only half the analysis. For new processes, consideration needs to be given to balance capital equipment costs against operating costs.
12.3.2 Automotive Camlobe Grinding Example
An example of this was the introduction in the late 1980s of CBN to grinding camshafts. After the initial installation, which was instigated because it was the only viable method of generating a particular profile on the camlobe, the abrasive cost was found to be 50% higher using CBN. However, the productivity was found to be about 30% higher than a typical alumina wheel-based process. This had a major impact on the number of grinders required on a later new installation even when the profile issues were not present.
An example is shown in Table 12.3. A new installation required six less grinders and each machine was actually less expensive. So, even taking the most negative view of the process by considering abrasive cost only, for an increase in abrasive cost of $90K/annum, a capital equipment cost saving of $5.3M was achieved. Furthermore, since this was a relatively new technology, significant process costs were likely to be recuperated through future process optimization.
Dramatic process improvement was, in fact, proven to be the case. Figure 12.2 illustrates the improvement in abrasive cost alone over 8 years at the first CBN installation for grinding camshafts in North America.
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TABLE 12.3 Capital Equipment Investment Versus Production Abrasive Costs for a High Production Camshaft Manufacturing Linea
‘Production requirements = 750,000 parts/annum. |