Interview with Alan Stimac on a Real Life Story
on the Hidden Cost of Die Screws
[dropcap]H[/dropcap]ere we share a real story from one of our Technical Product Managers (TPM), who saw a toolshop owner gather screws from his tool-shop floor, amounting in value to over $20,000! How can screws cost so much? In this article our expert Alan Stimac breaks down the cost.
It all started with a question during an internal training event. Gathered around a box of screws a participant asked: ‘How can a single screw used in assembling dies cost $25.00 each and more? After all, that isn’t what they cost at the hardware store.’ Alan Stimac, TPM for Planning and Bidding Solution at AutoForm, understands the deeper costs at work and shares the calculation factors behind this jaw-dropping sum, and relates what occurred that day when that particular box of screws appeared on the table.
When the workers arrived to their tool-shop there was a large steel box of screws set upon their workbench. The company owner declared ‘These screws are worth $20,000 and I found them lying around on the shop floor!’
The night before the owner had started collecting screws from the shop floor. They were lying about loose under tables, under dies, besides the press and loose in storage. First he started out having just a small box of screws he had gathered. But quickly the box grew. He was a man on a mission, fully realizing the business he was up to. The box grew larger still; so much that it now required a forklift to move. Concerned with money wasted he collected those screws not set aside as ‘spares.’
Alan Stimac was present that day. His team had been called in to work on six new dies, sized medium to big, each requiring a lot of screws which had set the event in motion. Arriving to the foreman’s table, there was the box. The owner proudly declared their cost. Some present were disbelieving. But others knew better. These screws had been discarded entirely. Now they stood in a box one meter wide and 40 cm high. Fortunately our experts could answer the question:
‘That isn’t the price at the hardware store. But $25.00 each? REALLY?!’
‘The hidden cost are not immediately perceivable’ says Alan. ‘But the owner was right. The Budget Planners at any OEM make use of our CostEstimator software and therefore are well informed. One needs to understand how those results are being calculated and how realistic they really are. Here we need to surgically dissect the associated cost related to any component.’
According to Alan ‘Our system uses its database of rules for calculating cost, which literally utilizes thousands of formulae. Those formulae incorporate factors from the market, so that not only is a price list of products provided, but also associated cost. Part prices are something OEMs can change, seeing the user has the ability to build in their specific quotations on supplies. Yet while part prices are visible this does not mean that pricing calculations are transparent. Prices are drawn from the totality of hidden cost, which is what the $25.00 screw story is all about.’
Alan explains it clearly, ‘The hidden cost include many factors, starting with the quality of the screws. These are not your average hardware store screws we are dealing with. They have undergone quality assurance test, and had to meet safety standards through stringent durability and heat treatment test, and must comply with European ISO standards.’
‘The second factor is that of requiring spare screws, seeing that during tryout several will be bent or outright broken. The screws are used for dies, to screw the die components, to mount plates into the die and they are used for wear plates etc. Tryout workers also use screws and dowels to align everything. Then lastly I have to add; screws get lost during transportation and tryout. One cannot simply quantify an exact amount of screws required for any project merely based on design diagrams alone. When AutoForm developed its formula they accounted for human error and such factors. What’s more the formula incorporates real statistical values for lost and damaged screws.’
Now comes the interesting part, Alan tells us ‘In my experience everyone attempts to reduce the cost. Users are cost aware and desire to make a higher profit. Where we have gained the trust of OEMs however is through demonstrations and comparisons with real projects that have been already completed. Because everything in our calculations is meaningful and draws upon detailed industry examinations the formula produces astounding results. Once the user clicks ‘automatic plan’ the cost calculation is performed very quickly. The most astounding aspect here is the accuracy of the calculations. During our demos with OEMs of our software vs. real projects undertaken – the AutoForm Cost Estimator only had a variation of 2 to 5% from reality.’
‘As to the story,’ says Alan, ‘when that box of screws stood there on the foreman’s table the immediate reaction was astonishment from some, but all those present understood. They knew this was the case. Tool and die makers know that screws are expensive, even adding up to $20,000. The screws used for connecting two blocks of steel alone for example cost up to $250 each.’
‘We owe it to the end user to explain how this all works’ ends Alan. ‘We do this through manuals, training, and by demonstrating the intelligence we have set up within the system. Even though users are not aware of the details of the formula used, they start realizing during demonstrations that AutoForm has broken down every minute detail of cost. What we have done is given Budget Planners and OEMs a cost overview in such a way that even the price of a single screw found lying on the floor is known, so sometimes doing a little spring cleaning on the shop floor really does pay off.’
Cost Estimator Plus – a feature of Planning & Bidding from AutoForm