Costing At No Cost

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Costing At No Cost Powered By Docstoc
					by: Luca Vignando

Cost estimation is always a crucial topic in many industries. For converters, it may be one of the
keys to success or to failure.

The estimation comes into play for several reasons: to prepare production budgets, for cost
management and to define the prices and to make offers to customers.

Here we want to concentrate our attention on the problem of cost estimation in the cutting

We must make distinct considerations according to the material type to be cut.

Materials can be divided into two big categories, man-made and natural. It would be possible to
make further classifications but these two are enough for our purposes.

The problem with man-made materials

As a first case, we deal with man-made materials, for which apparently the cost estimate of
cutting is easy: the material is usually defect-free and comes in regular shapes, typically sheets or
rolls of a standard size.

It may be simple to make a rough estimate of the quantity (and therefore the cost) of material
needed to fulfil an order but it is important to consider a couple of factors:

      The final products (the cut parts) are hardly differentiated, so, for a given material, the
       distinguishing points of an offer for a cutting job can only be price and delivery time.
       Delivery time can be managed, since each company has a known average throughput and
       on the market there are many software products that can manage the production schedule
       to provide in time the parts to be shipped to the customers.
      Price is a much harder question since it is often the point on which the customers
       decisions are based. For this reason it is extremely important to have a sound basis to
       make a price, knowing exactly which is the cost of the material needed.

The problem with natural materials

Natural materials, such as leather or wood, are a completely different story. They come in a wide
variety of sizes and shapes and can have defects and holes. Moreover, the parts to be cut often
have placing constraints (orientation, quality and so on) that make much harder to figure out how
they can fit on the available piece of material.

There is no way to make a reliable estimate of the quantities to be used on natural materials.

All the available methods are based on mid- and long-term statistics, that can be helpful only as
far as the main features of the material are similar across different batches and the parts to be cut
are similar across different articles.
But in a real production environment these conditions are rarely respected and the estimates are
always prone to errors and, of course, the offers based on these estimates are wrong.

The only way to obtain a perfect estimate is to place the parts on the actual material to be cut and
then calculate the actual consumption.

The ultimate question

How to make an accurate and reliable estimate, quickly and at a reasonable cost?

We propose the ultimate answer to this question: do not estimate the material consumption: get
the actual cost before cutting!

And the only way to get the data of the actual placements of parts is to perform the nesting for
the whole order on the actual material batch to be cut.

This was almost impossible in the recent past, because it was a time-consuming process and
required the availability of a high-performance computer with a (expensive) nesting software. In
a few words, the automatic nesting for costing purposes was too expensive to be an option.

This is no more true for those companies who use the innovative technology of CUTWEB.

CUTWEB is a web-based application that allows the management and sharing of all the data
related to nesting and cutting and provides the access to an on-line nesting service that uses high-
performance nesting strategies, fine-tuned for different scenarios.

A web-based application like Cutweb can be used from any (cheap) internet-connected PC and a
nesting server deals with all the calculations, getting rid of the need of a in-house dedicated
workstation and of the need to buy a software license for each PC that access to nesting and
cutting data.

Costing with CUTWEB becomes a breeze:

   1.   upload the parts and the material data
   2.   upload the order
   3.   start the nesting.
   4.   See the actual material cost

All this can be done quickly and at a negligible cost, just a few eurocents for each test so it
becomes possible to run as many tests as you need.

In a few minutes the layouts will be calculated, and you will see exactly how and where the parts
will be eventually cut and get a detailed (and of course customisable) report about the nesting.
You can keep the nesting on CUTWEB as long as you wish, and when the order is confirmed by
the customer, then (and only then) you download it and cut at once, since the CUTWEB setup
ensures that the downloaded data are compatible with your cutting machine.

The nesting cost is just a few Eurocents, you actually pay the nesting service when you
download the data needed for the cutting.

There are many benefits that you can achieve organising the work on this way can be
summarised in some key points:

      you pay for the nesting service only when the order is confirmed and you download the
       data for actual cutting
      there is no risk to waste your money on nestings that you will not use in production
      you can prepare precise offers based upon actual material cost not estimations
      you will spend less time and money in the costing and offering process
      higher chance to gain orders owing to the more accurate offerings
      improved overall production efficiency and throughput

The advantages for the control over the material cost

The cost of material plays a capital role in the cutting business and it is crucial to keep it under
strict control.

This is especially difficult when dealing with natural and irregular materials, because even the
basic operations such as the measurement of the area are subject to errors.

The use of an automatic nesting service requires a tool to digitise the materials. These tools are
usually a table with one or more digital cameras placed upon it. A specialised software
application automatically recognises the contour points and the holes in the material and
calculates the actual area and uses the data collected to feed the automatic nesting system.

The advantages of this technology are several:

      It is possible to check if the material billed by the supplier matches the supplied one
      The data of placement yield are accurate
      It is possible to keep under control the material used to cut the orders.
      The advantages for a company with cutting subcontractors.

A company that delegates the cutting to subcontractors can greatly benefit from the CUTWEB
technology for many reasons:

      It is possible to have a single interface to manage the communication and data
      The control over the material quantities to be used for cutting is accurate and therefore it
       is possible to supply to the subcontractors with exactly the materials needed for the parts
       they must cut and there is no need to rely (or bet) on the efficiency that they can achieve:
       everything is clear and precise.

Contact information

String Srl Sraffa, 4
20136 Milano - Italy
tel: 39 02 58327335
fax: 39 02 58309890

This article was posted on May 27, 2004