How to Boost Tooling Utilization and Reduce Costs

Updated: Jun 19, 2020

Optimization of tooling utilization in your manufacturing process can save tremendous costs. But surprisingly, most OEMs fail to monitor and improve their tooling utilization.

Imagine you're holding a light bulb in your hands.

All light bulbs, like the one you have right now, have a set lifespan. How would you know when to switch it out?

The answer is, obviously, when the bulb reaches the end of its life and cannot light up anymore. It makes perfect sense to use the light bulb to its fullest extent and then purchase a new one.

The same logic goes for tooling.

Tooling should be fully utilized and switched out at the end of its life. And yet, wasteful under-utilization is common in manufacturing -- particularly in external, contract manufacturing. This phenomenon is referred to as the “Black Box.”

It is difficult for OEMs to monitor their tooling assets once they've been outsourced to external suppliers. The 'black box' surrounding these assets prevents OEMs from keeping track of crucial KPIs.

Of these KPIs, perhaps the most relevant to the current topic is 'utilization rate'.

Are your toolings being under-utilized?

Since both OEMs and suppliers lack clear knowledge of the utilization rates of their tooling, OEMs regularly retire their tooling prematurely.

Premature retirement is like throwing away a perfectly functioning light bulb just so you can spend money on a new one. Likewise, inefficient tooling management and not knowing tooling utilization rates will lead to significant tooling costs in the long run.

A similar real-world instance is the early retirement of tooling placed in inventories. A world-class cosmetic OEM manufactures its seasonal products for only a few months every year. After this period of time, the tooling used for the seasonal products are stashed away in inventory.

Learn how Samsung improved their tooling utilization and slashed costs by 50%.

The problem occurs when the OEM resumes the manufacturing process of that seasonal product. When the tooling is brought back to production, no one can truly identify which tooling can be used further and which tooling should be retired.

Since no one is able to accurately track the utilization rates of these tooling, premature retirement of tooling placed in inventory continues to occur for OEMs.

This is referred to as the “Black Box”. And naturally, it is the cause of high tooling costs.

How can OEMs overcome this?

However, what if you can automate your reception of tooling data? More specifically, what would happen if you can process the data with algorithms and visualize them into KPIs for clearer understanding?

In other words, the solution to the ‘Black Box’ situation is the automation of data collection systems through which OEMs can automatically collect, process, and analyze the data of their tooling worldwide rather than depending on suppliers to provide such data. This practice will allow OEMs to know which tooling has been underutilized and develop justification for the purchase of a new tooling.

In fact, by maximizing tooling utilization, not only will OEMs reduce the total number of tooling, but also cut annual tooling costs by an average of 5% year-over-year.

Don't throw out your light bulbs before they're finished. Don't waste your costly tooling assets.

Click here to learn more about the ‘Black Box’ issue or arrange a quick meeting with our experts regarding cost optimization.

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