The Growing Need For
Value Added Services in
Manufacturing
Mike Verkamp
Business Development Manager
Sandvik Coromant
1
Mike Verkamp
 Married & Father of 3 daughters
 Education:
 BS Industrial Management/Industrial
Engineering from Purdue University, West
Lafayette, IN
 MBA from IU, Bloomington, IN
 Current Position:
 Business Development Manager, Sandvik
Coromant MAA
 Hobbies:
 Triathlons, Home Improvement Projects,
Leadership Training, Coaching
2
Can we really predict the future?
 “The horse is here to stay but the automobile is only a novelty, a fad.”
– President of the Michigan Savings Bank advising Henry Ford's lawyer not to invest in the Ford Motor
Co., 1903.
 “The wireless music box has no imaginable commercial value. Who would pay
for a message sent to no one in particular?”
– Associates of David Sarnoff responding to the latter's call for investment in the radio in 1921
 “Who the hell wants to hear actors talk?”
– H. M. Warner, co-founder of Warner Brothers, 1927.
 “Dear Mr. President: The canal system of this country is being threatened by a
new form of transportation known as 'railroads'... As you may well know, Mr.
President, 'railroad' carriages are pulled at the enormous speed of 15 miles per
hour by 'engines' which, in addition to endangering life and limb of passengers,
roar and snort their way through the countryside, setting fire to crops, scaring the
livestock and frightening women and children. The Almighty certainly never
intended that people should travel at such breakneck speed.”
– Martin Van Buren, Governor of New York, 1830(?).
3
Industrial megatrends 2012
1.
IT organizations will make foundational investments to deliver both IT
productivity and business value.
2. Manufacturers will focus on clock-speed alignment across the supply
and demand sides of their supply chains.
3. The requirement for speed and the ubiquity of information creates a new
landscape for IT support of the supply chain.
4. The factory of the future will be driven by capabilities to fulfill customer
demand rather than pure production capacity.
5. Manufacturers will shine the environmental sustainability spotlight on
the factory as a means of getting to the product.
4
Source: Association for Manufacturing Excellence, www.ame.org
What does it all mean?
We’re moving from a world of mass production to a world of mass
production AND mass customization…agility based
manufacturing.
5
The Value Chain
Challenges
Components
Purchasing
Systems
Capacity
Inventory
Administration
Scrap rate
Reconditioning
Recycling
Material
Machinability
Shipping
Capital purchase
planning
Processes
Product Marking
Competencies
Quality
Machines
Product Packing
Virtual
Machining
Competence
Programming
6
Asset
Utilization
How to find a sustainable solution to
communicate tool data ?
1,000,000
Manufacturing units
50
CAM suppliers
200
Machine tool builders
100
Tool Suppliers
7
Solution
Standardization with
ISO 13399
ISO13399
The Information Carrier
• “Plug & Play” interface for cutting tool information:
– Designed for system to system communication.
 High demand on information quality:
– International standard. One language for communication.
One translation is more reliable than multiple translations.
 Possibility to communicate also new cutting tool
concepts
– Standardizing how to handle the information – not the cutting tool itself.
8
The Value Chain
Challenges
Components
Purchasing
Systems
Capacity
Inventory
Administration
Scrap rate
Reconditioning
Recycling
Material
Machinability
Shipping
Capital purchase
planning
Processes
Product Marking
Competencies
Quality
Machines
Product Packing
Virtual
Machining
Competence
Programming
9
Asset
Utilization
Metal removal = Adding value
Cutting time
80%
50%
Machining time
Production time
(planned)
20%
60%
25 %
Tool change Set-up & Gauge
Machine stopped
10 %
Work piece change
10 %
Other
5%
40 %
Non-cutting &
Tool change time
Breakdowns
Other time
Cutting time = 60% x 50% x 80% = 24%
10
Impact on cost per part
Value
100
Before
Cost per part: 80
(2 805 + 1 275) / 51
After
Cost per part: 70
(2 805 + 1 275 + 275) / 62
80
Fixed costs
2 805
12% Reduction in Cost/Part
25
Add.
v costs
Variable costs
1 275
275
51
11
62
Production
quantity
Impact on Gross Profit
Before
Value
100
1 020
Gross profit margin:
1 020 / (51 x 100)
20%
Gross profit
1 020
After
80
Fixed costs
2 805
Gross
profit
825
Gross profit:
1 845
Gross profit margin:
30%
(1 020 + 825) / (62 x 100)
50% Increase in GP margin
81% Increase in total GP
25
Add.
v costs
Variable costs
1 275
275
51
12
Gross profit:
62
Production
quantity
Financial impact summary
Cost Per Part
80
Gross Profit
1 845
Reduction: 12%
Increase: 81%
75
70
13
1 020
The Value Chain
Challenges
Components
Purchasing
Systems
Capacity
Inventory
Administration
Scrap rate
Reconditioning
Recycling
Material
Machinability
Shipping
Capital purchase
planning
Processes
Product Marking
Competencies
Quality
Machines
Product Packing
Virtual
Machining
Competence
Programming
14
Asset
Utilization
15
Source: www.visualcapitalist.com/portfolio/tungsten-an-industrial-metal-with-unstable-supply
16
Source: www.visualcapitalist.com/portfolio/tungsten-an-industrial-metal-with-unstable-supply
Financially, it makes sense…
 Prices paid for used carbide have
ranged from $12 to $16 per
pound recently
 Recycling programs are easier
than ever to implement
 Modern recycling processes yield
90% usable carbide
17
But, the best reason to
implement a carbide
recycling program
might be because it is
just the right thing to
do…
/18
18
Sandvik Coromant
Carbide Recycling
Here's how it works:
1. Call 1-800-SANDVIK (1-800-726-3845) to order your
free carbide-recycling container.
2. When full, return your container with packing slip to:
Sandvik Coromant Recycling Program
C/O DHL
2151 South Park Drive, Suite 1
Hebron, KY 41048
3. Sandvik Coromant pays you the current rate per pound
for your recycled carbide.
Sandvik Coromant sends all carbide inserts and round
tools to ISO 14001/OHSAS 18001-certified plants, to
ensure that all carbide is recycled using approved,
environmentally friendly methods. Together, we can do
our part to promote more sustainable manufacturing
processes.
/19
19
20
21