How to calculate the return on your CIM investment.

Monitoring the injection molding process across an entire plant has long been recognized as a worthwhile objective. Each year, more molders recognize the savings involved in not having to hunt for "bad" parts after they have already been molded. They feel a sense of security in knowing they will never mistakenly ship their customers another bad part that could result in lost business. CIM users also know they're getting the maximum production out of the machines they have on their shop floor. Yet in spite of these obvious advantages, many molders still find it difficult to justify CIM purchases on paper using ordinary return-on-investment (ROI) calculations.

Some molders may not have to justify every CIM dollar spent. Investment in improved quality and productivity is sometimes seen as a cost of winning orders from demanding customers - especially in the automotive, electronics, and medical markets. In other words, sometimes CIM pays because you simply won't get the job without it. Even so, many molders still have to justify CIM on a ROI basis for their boards, supervisors, or whomever holds the purse strings.

CIM has been notoriously hard to justify in conventional accounting terms because of a common Catch-22: It's difficult to perform ROI calculations without a good idea of what your costs are with and without a CIM system. But it's equally difficult to capture the kind of data you need to establish a cost baseline unless you have a CIM system. Difficulties notwithstanding, you can get a handle on how long your system will take to pay for itself by taking a hard look at your reject rates. Reducing the cost of poor quality is the main payback from process monitoring.

START WITH REJECTS

If implemented with a thoughtful strategy, real-time process monitoring nearly always helps a molder to reduce reject rates. Constant monitoring allows processors to quickly identify the causes of bad parts, and it also points the way toward solutions. Process monitoring [TABULAR DATA OMITTED] also fosters quick reactions to recurring threats to process stability, such as variation in material viscosity.

Lower reject rates do not constitute the entire payback from CIM, but they can be a major portion of it - especially in high-volume operations with lots of rejects. The importance of rejects comes from the huge cost of making and shipping bad parts and from related hidden costs that can include scheduling inefficiencies, delayed customer deliveries, and the cost of "lost" production capacity. That is, if your machine made only good parts, you might be able to support additional business without buying more machines.

Best of all, the savings associated with reject rates are quite easy to calculate (see sidebar). One large user of RJG's DartNET CIM system, a captive injection molder in Ohio, was able to use this strategy to get a good handle on its payback from process monitoring (see table).

One difficulty with payback calculations based on reject rates is getting an accurate count of rejects without CIM. Establishing this baseline without the benefit of process monitoring means relying on machine operators to have the discipline to tally rejects accurately. If you wanted to test how accurate their counts are, you might try turning off the grinders to see how many bad parts actually pile up.

Once you have a successful process-monitoring system in place, tracking reject rates becomes far easier and more accurate. And the first and foremost priority of any successful process-monitoring plan is immediate detection of any process instability or change. Without this capability, some bad parts are still likely to go undetected.

MONITOR JUST WHAT YOU NEED

For process monitoring to be effective, you must know which process parameters to monitor. By default, too many molders collect data on an overwhelming number of variables, resulting in mountains of data that bury the truly useful information they need. Many times, molders ultimately scrub their entire monitoring program since they see little or no return from data they can't make sense of. Molders can do better by simplifying the monitoring task and focusing on a minimum number of variables. (At RJG, we believe that hydraulic pressure and cavity pressure can tell the whole story for the majority of problems.) A simplified approach enables the molder to provide customers with documentation of part quality, to know immediately when something goes wrong, and to sort through problems logically, determining if a problem is caused by the mold, the machine, the material, or the process setup.

LOOKING BEYOND REJECTS

Reject reduction is certainly the big line item when it comes to cost reduction, and it's the one that often pays for the CIM investment all by itself. Still, process monitoring contributes to cost reductions in other quantifiable ways. Chief among them is dollar value of the cycle-time savings that process monitoring fosters when it helps you fine-tune your process. A 10% reduction in cycle time lowers the cost of making the part by 10%. The resulting profit increase can be far more. (To take an example from the RJG course book, cutting the cycle time from 20 to 18 sec on a job that originally cost 80[cents]/part lowers the cost to 72[cents]. The profit, if initially 20[cents]/part, would increase to 28[cents]. That's a 40% increase from a 10% cycle-time reduction.) Consistent cycle-time reduction across the plant floor increases your effective capacity - and the profits you get from it.

Another of process monitoring's well-known benefits, increased uptime, also has a dollar value in the form of increased capacity. The uptime increase results from not keeping a machine out of production while a technician scratches his head, figuring out why the machine is making rejects. Making better use of the machines you have can forestall new machine purchases - another significant savings.

BEYOND THE BOTTOM LINE

Tally up all the cost reductions associated with falling reject rates, shorter cycle times, more uptime, and other cost-saving areas and you will get a rough idea of how long it will take for your system to pay for itself. But that's still far from the whole truth about CIM payback, some of which will continue to elude capture by mere number crunching. How do you put a dollar value on increased customer confidence in your production quality and on-time reliability? Many of today's molders are faced with customers who demand documented proof - supported by statistical process control (SPC) analysis - that parts being shipped are within spec. These customers require parts vendors to provide specific processing data for each finished part (or lot of parts) to indicate that the appropriate molding conditions were in place when the parts were made. In such cases, the CIM investment is the necessary cost of credibility. How do you account for business gained because of that credibility or lost without it?

RELATED ARTICLE: Fewer Rejects Equals Money in the Bank

Once you have a firm understanding of your baseline reject rates, the following calculations show how a process-monitoring system can pay off in terms of increased profit. You could use this method either to calculate payback on a CIM system you already have or to perform "what-if" scenarios before buying one. (A real-world example is shown in the table on p. 32.)

Step 1: Determine the amount of profit/cycle. Divide the total amount of profit on that job by the total number of cycles.

Step 2: Calculate the reject cycles/year. Multiply reject percentage rate by the number of cycles per year.

Step 3: Calculate yearly profit lost to rejects. Multiply your profit/cycle by reject cycles/year. In big jobs, this lost profit alone can often be more than the entire cost of a process-monitoring system.