CNC Machining Production Volume Impact on Cost

I recently visited a friend's small processing plant and saw their newly purchased CNC machine tools "thump thump" producing parts. The boss Lao Wang said to me while holding a cigarette: "The output of this machine has increased, but the numbers on the account book are jumping more excitingly than the speed of the machine tool." Today, let's talk about how the cost will play with your heartbeat when the CNC processing volume increases.

Sweet trap during the production ramp-up period

When the production volume is just starting to increase, the unit cost will indeed drop. The fixed costs such as machine tool depreciation and electricity costs allocated to each part are like pancakes that are spread thinner and thinner. But Lao Wang reminded me: "Don't be happy too early, when the orders are as many as the train station during the Spring Festival, trouble will come."

When the machine starts to "make dumplings"

When the output exceeds a certain critical point, hidden costs begin to emerge. Last month, they received a batch of urgent orders, and three CNC machine tools were running 24 hours a day. As a result, the tool consumption was 40% higher than usual, and this item alone caused the gross profit margin to drop by 5 percentage points. What's even more troublesome is that the overtime pay of night shift workers plus the equipment maintenance fees have forced the saved fixed costs to be vomited back.

Quantitative change caused by qualitative change crisis

The most fatal thing is the quality fluctuation. Once when the output increased sharply, Lao Wang found that the scrap rate jumped from 1% to 7% because the operator did not change the tool according to the standard process in order to rush the work. Later, when the total account was calculated, the extra scrap and rework costs directly ate up the profit margin.

Finding the golden balance point

Now Lao Wang has learned to be smart. He will use software to simulate the cost changes under different outputs before accepting orders. He said: "Just like driving a car, you have to see the tachometer clearly. CNC processing also has to find the lowest point of the cost curve. Blindly pursuing output may end up losing money and not even making back the money for the blades."

New cost gameplay of future factories

I heard that some smart factories can use AI to predict the best production rhythm. I hope that next time I visit, I can see Lao Wang using these new technologies to make CNC machine tools dance accurately on the steel wire of cost and output.

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