Fabricators and welders are likely aware of documented cost savings initiatives for satisfying requests for proposals and purchases. Documented cost savings programs have become increasingly popular in recent years, and are a requirement in some cases by end users and distributors. As an end user, there is a drive to reduce operating costs. Some do this by trying to purchase cheaper products, while others require their distributor to provide them with a cost savings analysis. On the distributor level, it is not uncommon to have documented cost savings as a requirement for compensation by its customers. If you are not already using cost savings programs, it is advantageous to understand what these programs look like and what they can do for you.

Cost Savings Tests

Documented cost savings programs may consider a number of elements. The cost of the product is a primary consideration. The documented cost savings form will have the current product as well as the new product being tested, and you may run each product anywhere from a few minutes each, to a full lifespan test. For example, when calculating the cost savings of a band saw blade, counting the number of cuts in an allotted time frame and running a calculation will provide the estimated cost per cut ratio of each, with an annualized product savings. Some programs, such as the cost savings program offered by The L.S. Starrett Co. take this a step further and consider potential labor savings. This is where the real savings emerge.

For example, in a real world application using bi-metal band saw blades, the user was cutting 19” round steel material. During the cost savings test, Starrett ran the same parameters of 121 ft/min from the previous blade so the change in longevity could be measured. It is imperative that only a single variable is changed at a time so you can accurately measure the performance of the variable you wish to change, whether it is: cutting speed, flatness, roughness average, or longevity. In this case, increasing blade longevity was the goal. Starrett was able to add an additional 2.75 hours of blade life in the application, increasing it from 5.5 hours to 8.25 hours. When factoring in the labor to change blades on an annual basis, the increased blade life, and decreased blade cost, Starrett was able to document savings of $185,000 per year.

Now with an understanding of the anatomy of cost savings tests and what they measure, why do you need to document these programs, rather than simply tryout new products?

Documentation is vital for a few reasons:

1. When a new purchasing manager comes to a company, familiar patterns of product purchases and preferred vendors are also brought to the table. This could be beneficial, but in many cases it is not optimal or based on timely analysis. The same thing happens with operators, where there is a industry-wide struggle to keep skilled talent long-term. Each may come with their own ideas and preferred products, and due to high employee turnover, a manufacturer may find itself with cabinets or tool cribs full of products that are rarely or never used .By documenting the cost savings testing, there will exist files of the best product for the job, and their associated costs. Rather than taking recommendations based on preconceived rationale, each request can be approached systematically and real data can be used to drive decisions.
2. At the end of the fiscal year, when a customer or your company asks for an annual assessment review, you can show them all the savings you are creating. For example, by understanding the importance and gravity of labor costs, you may identify speed of completing a job as the most vital variable to change, even when there may have been an increase in the cost of the product on during the year. By means of documentation, you can show that although you have spent more on equipment, you have increased productivity by a measurable amount, and as result, saved thousands in labor. Using documentation and data to drive effective and meaningful change, it is easier to prove to a purchasing agent or continuous improvement manager how equipment cost may be less important. data. 
3. Finally, when it comes to review time, this is great leverage that demonstrates the important contributions you make to the company!

Remove Guesswork

By systematically running a documented cost savings analysis, a change in technology may be in order rather than continuing to use obsolete or ineffective equipment. An operator may resist change and be hesitant to consider new tools and vendors; however, a cost assessment can provide real data for making the transition.

The L.S. Starrett Company offers documented cost savings programs for a broad range of cutting requirements for fabricators and welders as well as high production sawing jobs. Highly specialized Starrett saw specialists, territory representatives, or product managers can come to your jobsite to do a full evaluation from start to finish. Dedicating some time to run cost savings tests can result in dramatic savings that can protect your company in a virulent market or increase cash on hand for further growth and investments.

Take out the guesswork with supporting data that tells a story of empirical fact, not anecdotal opinions.