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The Challenge Making the Case Justification Strategies Expense Calculation Measuring Return
TODAY’S TOPIC
Justifying a 3D Printer Investment For Rapid Prototyping 1 TODAYS - - PowerPoint PPT Presentation
Justifying a 3D Printer Investment For Rapid Prototyping 1 TODAYS - - PowerPoint PPT Presentation
Justifying a 3D Printer Investment For Rapid Prototyping 1 TODAYS TOPIC The Challenge Making the Case Justification Strategies Expense Calculation Measuring Return 2 OUR SPEAKER TODD GRIMM | president T.A. Grimm & Associates,
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OUR SPEAKER
TODD GRIMM | president T.A. Grimm & Associates, additive manufacturing consulting and communications
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Justifying a 3D Printer Investment for Rapid Prototyping
Todd Grimm
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Value Obvious | Justification Unclear
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The Challenge
- Make value real
- Benefits undermined
- Outcome: justify on weakest
advantage
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Example: Medical Device
- Primary gain: acceleration
- 42 days saved
- Justifiable gain: part cost reduction
- $58K saved
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Making the Case
- Executive Summary
- Situational Analysis
- Financial Justification
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Justification Strategies
- Tiered Approach
- Substitution
- Augmentation
- Extension
- Target
- Cost reduction
- Current problems
- Leverage
- Shared budgets
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Financial Justification
- Value delivered
- Investment required
- Performance metrics expected
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Value: Substitution
- As alternative to:
- In-house/outsourced
- Additive, subtractive, formative
- Collect historical data
- Project near-term demand
- Suggestion: buckets
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Value: Substitution
- Calculate cost
- Outsourced
- Tally invoices
- Consider labor
- In-house
- Tally internal cross charges
- Estimate with guidance
- Enter results
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Value: Substitution
- Calculate cost
- Outsourced
- Tally invoices
- Consider labor
- In-house
- Tally internal cross charges
- Estimate with guidance
- Enter results
Year 0 Year 1 Year 2
Capital Equipment Operating Expense Total Investment Ongoing Expense Return
$75,000 $75,000
Total
$75,000 $75,000
Cumulative Total
$75,000 $150,000
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Value: Augmentation
- Value of doing more
- Examples:
- Reduce rework
- Accelerate product development
- Reduce manufacturing cost
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Example: Wood Group Pressure Control
- Primary gain: increased sales
- More sales communication models
- Replace prints
- Alternative to aluminum
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Value: Extension
- Value of doing something new
- Examples:
- Different stages
- Different product types
- Different applications
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Example: Instrumentation Laboratory
- Reengineering for manufacturing
- Lower production cost
- $600K/year
- $7.2M/product life
- No rework
- $50K on project
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Expense Calculation: Initial
- All cost to acquire
- All cost to become operational
- From CAD to finished prototype
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Expense Calculation: Ongoing
- Estimate build cost
- Estimate run time
- Estimate labor
- Estimate maintenance & repair
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Expense Calculation: Ongoing
- Estimate build cost
- Estimate run time
- Estimate labor
- Estimate maintenance & repair
Year 0 Year 1 Year 2
Capital Equipment
<$50,000>
Operating Expense
<$5,000>
Total Investment
<$55,000>
Ongoing Expense
<$34,000> <$34,000>
Return
$75,000 $75,000
Total
<$55,000> $41,000 $41,000
Cumulative Total
<$55,000> <$14,000> $27,000
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- Get guidance
- Run the numbers
- Revise to meet hurdle rates
Return Calculation
Year 0 Year 1 Year 2
Capital Equipment
<$50,000>
Operating Expense
<$5,000>
Total Investment
<$55,000>
Ongoing Expense
<$34,000> <$34,000>
Return
$75,000 $75,000
Total
<$55,000> $41,000 $41,000
Cumulative Total
<$55,000> <$14,000> $27,000
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Time is Money
Strategy 1: Past consequences Strategy 2: $/day Strategy 3: Bonus benefit
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Wrap Up
Tiered approach Solve current problems Make it your own Make it real
Todd Grimm | Todd.Grimm@TAGrimm.com
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Questions?
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Keep the conversation going…
http://www.stratasys.com/justifycost
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