Tooling Corner: How to establish a tooling budgetTooling Corner: How to establish a tooling budget

By Bill Tobin, president of WJT Associates.

Ben Franklin is reported to have said: ?A project not adequately funded, isn?t a project.? This thought begs a question: How does a part get financing in the first place? To restate the obvious: businesses are there to make a profit, therefore have a way in mind to go about doing it. Establishing a tooling budget is one necessity. This is how you get your tooling budget: Your business is only concerned with the price it gets for molded widgets. Prices charged by distributors, wholesalers, or retailers are not your problem. Assume all freight is paid by the purchaser.

Think of lifetime sales of your widget as a chest of money generated from market introduction to the end of the product?s lifespan. This chest of money is being cut up by pirates, each wanting what they consider to be their fair share. The first fair share is what the business wants as profit. This pays the owners and finances new business. Chomp. A huge bite is the cost of manufacture?all materials and labor from the raw plastic to the decorated box yielded up to an actual cost per 1000 parts neatly put into the master carton on the shipping dock, completely burdened with overhead paying for the front office, quality and engineering support, future profits, and the boss?s parking spot nearest to the door. Chomp, chomp.

The marketing department is also proud to announce it was their efforts in advertising, direct marketing, and commission sales that launched this current version of the widget and their continued efforts to keep the product?s name in front of the customer to flow money back to the company until the product?s lifespan is over. Naturally they are polite enough to chomp their piece of the pie. The crumbs left from this feeding frenzy are the tooling budget.

How It Really Works

Oops, I said it backwards. Here?s how it actually works. Members of the marketing department, glassy-eyed with their vast wisdom and experience, come up with numbers for a project?s lifetime volume, widget price point, corporate profit, and their bonus. They then go back to the designer and, without disclosing their numbers, ask for the cost of manufacture and the tooling budget.

The tooling budget is the total cost of tools, jigs, and fixtures required to make the widget, tempered by the market introduction date that may require going to the quickest delivery and not the lowest cost vendor. Right, dream on. Management will probably veto any bid that doesn?t show lowest cost.

Because cavity count determines the cost of the widget (out of pocket as opposed to fully absorbing its portion of overhead), the designer does a budgetary quote to all the approved vendors to establish the budget for the tooling and all the other machinery, labor, and magic things that assemble, decorate, and package.

Let?s give the designer the benefit of the doubt. The designer can consult with the manufacturing department to come up with yield losses and quality concerns, but estimating tools with any degree of reasonableness isn?t in the job description of a designer. With the designer seeking refuge in the company?s vendor base, the vendor?s estimators don?t know if this is a real job or a ?for budgetary purposes only? quote. Sometimes there are tooling specs, sometimes there are none. Sometimes the designer asks for ?an eight-cavity tool? and sometimes ?tooling capable of supporting XYZ millions of widgets per year shipping, in lots of ABC thousands.? Sometimes the designs are good, sometimes horribly corrupted, and sometimes they come in as ones and zeros in an unknown electronic design language.

While it doesn?t mean their quotes are not competitive, many molders and moldmakers will freely admit a 5% to 10% quote-to-job-placement ratio because their customer base is perpetually developing budgets for various projects. Buyers and designers see this behavior as the ?cost of doing business? or the ?privilege of doing business with us.? Molders and moldmakers see this as an expensive use of their time and talent with little return.

Software Options

The answer is to have the designer and the buyer do their own budgetary quotes. There are several free programs on the Internet: www.iplas.com/moldcoster.htm from IPLAS, and www.ufeinc.com/mold/estimator.html from UFE. Progressive Components offers www.procomps.com/resource/MoldQuoter/index.cfm, and it has a free 14-page ?coster? that requires you know a lot of information before it will render a quote.

Some sites are subscription services and some ask you to call the salesmen to install the program for you. With some you get your answer online almost immediately because you have filled in all their input blanks. With others, you submit your design to the company and get a quote back in a brief period of time. If you are soliciting quotes from companies you have no intent of using, you?ll quickly begin to get ?courtesy quotes? that have long delivery times and high prices and take less than 30 seconds to generate. Using a free program gets you a ballpark estimate. Using a company you?ve never used before gets you a phone call from the company sales force.

Sending or receiving e-files for quotation has the liability of using the wrong language as mentioned above. While STL is a common language, it isn?t the only one used by designers. This generates an arrogant assumption by many buyers that a vendor should be fully fluent in all design languages. While not an endorsement, www.actify.com has developed the ?Spinfire Pro? program that allows the user to open most any graphics file. It sells for $500 to $1500 depending on the options chosen. It has a two-week evaluation version. This allows the drawing to be viewed, but it will not translate the CAD file into a CAM machine language.

Using a program of your own gets you the budgetary answer quicker than anyone else. With the help of a moldmaker/molder, about 300 hours of work, and a spreadsheet program, you can write your own program (don?t plan on help from these guys?they have their own jobs to do unless you are paying the shop rate of $45 to $100/hr). Two programs are available as shareware?you get a two week trial then you either abandon it or buy it.

Schouenberg and Partners from the Netherlands have ?Calcmaster? www.schouenberg.demon.nl. The cost, depending on the options and the value of the U.S. dollar, goes anywhere from $3500 to $7000 for one seat because the program is protected with a dongle that plugs into your computer as a security key. WJT Associates (owned by the author) has ?Quicksight,? a program that costs $400 at www.wjtassociates.com. One per company, please. Both give very good mold costs in various cavity sizes and the associated molded part costs.

If the designer uses any program, it must be taken in the context that this is establishing a budget only. Improving the design with engineering changes always causes mold and part costs to change proportionately. If someone goes offshore, while not a particularly bad decision in itself, the considerations of tooling quality, consequences of a reject on an international freight-container?s worth of product, and the bet of what you?ll get when you ask for an equivalent resin or tool steel should not be blinded by being able to fit these low costs into a budget that cannot afford local production. But, I contradict myself?the horror stories abound, but people still go for the cheapest cost as opposed to the least expensive.

The designer can easily do all the work faster and better by not shipping it out versus wondering why the reply loop takes so long. Remember the Ben Franklin quote. Going off half-funded will get you what you pay for.