MSC.SuperForge: Simulating for Profitability Controlling costs in the forging industry Today’s forging simulation software may be more valuable to the forging company’s finance department than to its design group. 0 Table of Contents The Incredible Shrinking Margin Firing for Effect Cliché du Jour : Time is Money Cleaning Out the Attic Putting Your Forgings on a Diet Don’t Use an Elephant Gun to Shoot a Butterfly Doing the ROI Math How Do You Catch a Cloud and Pin It Down? The Bottom Line Might Be the Top Line regulation, “negatively impact the viability The Incredible Shrinking Margin of several domestic forging operations…”4 The margin pressures on forging Like gravity itself, a universal truth operations are not limited to North in all manufacturing operations is the America. A survey of the economic constant and unrelenting downward conditions in several European countries pressure on prices, and, by extension, predicts forging selling prices will fall margins. Unfortunately, the forging between 1% and 3.5% in most European industry is no exception. Even in good nations5. At the same time, energy costs times, price pressure seems as much a are expected to rise upwards of 80% in part of the industry landscape as a 500- Europe, while forging labor costs continue ton screw press, but market realities both to increase as much as 8% in the coming within and external to the forging industry quarters.6 are accelerating that pressure. Custom forging shipments from North American Even experienced managers might suppliers decreased between 7% and 8% view these storm clouds as strong reason between 1998 and 1999 - the first time to consider substantial decreases in that’s occurred since the early 1990s1. capital investment, drafting retrenchment Further, an impending end to the nearly plans to weather the coming storm. The unprecedented economic expansion of opposite view, however, may be more the 90’s2, higher oil prices, and other fitting when viewed with an open mind and factors have the potential to exacerbate longer horizon. It’s true that the typical that trend in the coming quarters. forging business is unable to affect the Meanwhile, operational and personnel global market factors that dictate prices costs continue to rise, as the price for an and demand for forging products. On the ever-shrinking skilled labor pool other hand, controlling internal costs, increases3. Even pro-active efforts by the increasing the operation’s differentiation US Government may contribute to the through time-to-market and manufacturing cost pressure on America’s forging flexibility, and improving the utilization of companies, as OSHA’s proposed expensive equipment are all very much Ergonomics Program Standard would, in within the control sphere of each forging the words of the Forging Industry company. Moreover, the increases in Association’s reply to the proposed maturity and user-friendliness of state-of- the-art computer simulation software products render them a highly attractive investment option. Forging operations 1 Forging Industry Association press release; May that have made those investments in 19, 2000; “1999 Annual Forging Industry Sales simulation software are reporting Released by Forging Industry Association.”. 2 As this paper was written, for example, Ford Motor unambiguous reductions in operational Company announced an earnings shortfall and plans costs, decreases in time to market and to cut production in 2001. (CBS Marketwatch, December 22, 2000). 3 Respondents to the Forging Magazine 1999 4 Forging Magazine; Jan/Feb 2000; Page 30. Business Outlook Survey ranked the cost of medical 5 Exceptions to this prediction are the Czech Republic insurance, foreign competition, and the “general and Belgium where forging selling prices are labor shortage” as the top three problems facing expected to rise 2% and 1.5%, respectively. forging operations in the coming quarters. 6 Euroforge Economic Report, October 2000. improved operational flexibility and “firing for effect”, or aiming directly at the competitiveness. target with the most potent shells. At times, it seems like the process of From an advanced technology developing the die and tooling for a new perspective, few doubt that simulation forged part can be equally as iterative, software will be a key element in the often requiring the initial die design to be modernization of forging industry reworked 2 and even 3 or 4 times before operations in years to come, but the the final production die is finalized. industry has yet to fully embrace the Needless to say, eliminating any of those compelling story of computer simulation iterations can not only save cost, but also software’s financial value in the forging greatly improve time to market, and with it industry, especially in light of its never- the competitive advantage of a superior ending battle to control costs and maintain forging operation. its margins. As of late 1999, for example, only about 1/3 of the respondents to German forger Otto Fuchs Forging Magazine’s Annual Business discovered that the use of state-of-the-art Outlook used computer simulation simulation software could not only reduce software, while, the second most common tool and die iterations, but literally reason for not deploying simulation eliminate them. Using MSC.SuperForge, software was “cost concern”.7 In this they’ve reduced the number of new die paper, we’ll discuss the tangible, iterations from 3 to 1 for certain parts, quantifiable benefits forging operations saving precious resources and time on can achieve when deploying computer expensive presses. In a recent Forging simulation software packages like Magazine interview, Otto Fuchs head of MSC.Software’s MSC.SuperForge design Jorg Ihne explained: product, and we’ll base those benefits on the real-world experiences of forging “In 3 weeks we can do the operations using such products today. In simulation for three different this discussion, the reader will find that geometries of a complex part, state-of-the-art simulation packages are optimizing the final geometry. And no longer expensive toys used by a select by using the same die design for group of designers, but rather key production, development time can elements of the forging “toolbox”, as be reduced by a factor of three critical and potentially financially beneficial times, because the die doesn’t have to a successful operation in the coming to be changed three times and years as a hydraulic press. doesn’t have to be set up on the forging machine three times.”8 Firing for Effect A Japanese forging company using MSC.SuperForge for nearly 4 years has enjoyed similar reductions in design Old artillerymen and fighter pilots iterations and their associated costs. understand the notion of sighting in a strike by firing around the target and adjusting their aim appropriately before 7 Forging Magazine: Nov/Dec 1999; Page 39. 8 Forging Magazine: July/Aug 2000; Page 51. Table 1: Conventional Tooling Development Cost Estimates for Three MSC.SuperForge Customers (man-hours) Development Southeast US European European Phase MSC.Software MSC.Software MSC.Software Customer10 Customer I11 Customer II12 Tool Design13 120 ($3,221) 192 ($5,153) 240 ($6,442) Machining14 80 ($1,527) 2,000 ($38,184) 120 ($2,291) Set-Up/Test15 16 ($304) 400 ($7,616) 32 ($608) Total 216 ($5,052) 2,592 ($50,953) 392 ($9,341) Although one project leader respectively; their estimates provide useful estimated that they typically conduct only outer bounds for typical forging industry one or two tooling cycles for new designs, tooling costs. Their tooling man-hour he has seen that process stretch up to estimates are shown in Table 1, along seven iterations at times. After deploying with translations to dollar figures based on MSC.SuperForge, he describes their industry average salaries in the United revision expenses as being reduced States. “considerably”, with an accompanying improvement in product quality.9 In the case of the US forging operation, typical rework costs for the Certainly no one would argue with initial die cut are an incremental 40% of the assertion that elimination of die the initial cost, or an additional $2,000 per process steps is desirable, and a quick new tool design. The European I forging analysis of potential real savings company highlighted above, however, achievable by eliminating tool/die finds that they typically require two rework iterations demonstrates how compelling iterations for a new tool the quantitative benefits can be. Using generalized estimates for “typical” tool development from three MSC.SuperForge 10 Interview with MSC.SuperForge customer on customers interviewed for this white December 13, 2000. 11 paper, Table 1 provides a window into the Interview with MSC.SuperForge customer on range of man-hours required to develop December 18, 2000. 12 Interveiw with MSC.SuperForge customer on tooling for new forging projects. The December 20, 2000. forging companies noted in Table 1, one 13 Low-end Mechanical Engineer II salary from in the US and two located in Europe, forge www.salary.com used ($55,832); 2,080 work hours per year assumed. turbine blades for jet engines (US), blades 14 for land turbines (Europe I), and primarily Low-end Tool and Die Maker III salary from www.salary.com used ($39,712); 2,080 work hours automotive parts (Europe II) per year assumed. 15 Bureau of Labor and Statisics; Annual median salary for “Forging Machine Setters and Set-Up 9 1/25/01 email interview with MSC.SuperForge Operators, Metals and Plastic”; ($39,600); 2,080 Japanese customer. work hours per year assumed. $3,000,000 $2,500,000 $2,000,000 $1,500,000 Savings $1,000,000 $500,000 Potential Annual Cost $0 10 20 30 40 50 60 New Parts Per Year $2,000 Savings Per Design $10,000 $25,000 $50,000 Figure 1: Potential New Tooling Design Iteration Cost Savings Achievable Using Advanced Forging Simulation Software before it is production ready, and their investment in computer simulation costs for each additional iteration run software.