chemquest_bticostmodelarticle_sep05

7/26/2019 ChemQuest_BTICostModelArticle_Sep05

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COST MODELING AS A DESIGN AND DEVELOPMENT TOOL

FOR ADHESIVES AND SEALANTS

INTRODUCTON

The ChemQuest Group has developed a new mathematical tool designed to assess theeconomic costs of using adhesives in place of alternative fastener types. This innovativetool is designed to benefit the managerial decision making process and provide betterfocus for the product development community. Developed exclusively for the Adhesiveand Sealant Councils Building The Industry (BTI) Program, these cost models weremade available to the ASC and its 42 coalition member companies.

BACKGROUND

Intense industrial competitiveness in the global manufacturing arena is placing stringentdemands on R&D and product engineering disciplines. Materials engineers, productionengineers, product designers and scientists must all make key decisions on productdesign, investments, personnel, market development, and pricing against the metric offorecast profitability. These decisions are also constrained by a host of scientific andtechnological boundaries that define the technical feasibility and business potential of agiven project.

Historically, R&D activities have been compartmentalized, especially in large companies,and widely separated from the groups responsible for business development. Generally

R&D groups paid little attention to manufacturability and cost, which has rendered muchof the fundamental research quite remote from the long-range strategic goals of thebusiness. Such disconnected research has often fallen prey to cost-cutting measures.Likewise, engineers have learned primarily on the job, as institutionalized knowledge hasbeen passed down from one generation to the next. Design tools to assist engineers inselecting adhesives over other incumbent fasteners are scarce. These developments aretaking place in the face of key innovations increasingly utilizing the computer to providequick answers in a more cost effective manner.

Therefore, in conjunction with the Adhesive and Sealant Councils Building The Industry(BTI) ProgramThe ChemQuest Group has developed a comprehensive comparative cost

model to compare the total value in use cost of joining components or their sub-assemblies by structural adhesives, mechanical fasteners, or welding. The models outputis expressed in both $/per bond/joint assembled and also in aggregate on an annual basis.In addition to the model a user manual gives detailed instructions on how to use themodel and provides detailed descriptions of all of the design components andassumptions that make up the model.

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THE COST MODEL

In its current form the model is designed to capture costs in a production lineenvironment, but it can be used for other production environments. Once a user has abasic understanding of how the model works, it is somewhat intuitive as to how to

manipulate the definition of a bonding application to capture different non-productionenvironments, such as on site construction. As an example, The ChemQuest Group usedthe model to estimate the value in use for numerous joining applications in the residentialremodeling market segments where production takes place on site. By defining thenumber of bonding applications per year as the number of housing units where aremodeling activity took place we could scale our inputs to the housing units acrossdifferent remodeling activities (decks, crown molding, drywall bonding, etc.) but had tomake sure to keep measuring units consistent through the activities.

The model can be used at either the strategic level to understand the cost of a particulartechnique throughout an industry application, or at the customer level, as a way to show

how adhesives compare to either mechanical fastening or welding in use now.

A real appeal of using this model is that in gathering the necessary inputs for the model towork it forces manufacturers and customers to examine and think through cost drivers ofcompeting joining/bonding processes, something that few customers currently measure orunderstand.

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HOW THE COST MODEL WORKS

The model is constructed in Microsoft Excel with a number of macros that allow it tofunction properly. The cost model exists as an Excel workbook made up of fourworksheets,Read Me, Input Table, Assumption Table, and Cost Summary.

The models workbook takes the user inputs from the Input Table worksheet andcalculates a cost summary displayed on the Cost Summary worksheet. The costsummary is based on user inputs and underlying assumptions from theAssumption Tableworksheet. Each of the worksheets, Input Table, Assumption Table, and CostSummary, contains sections in the user guide that describe their contents. Additionally,the sheets have embedded comments in column headings to help guide the user.

The Input Table is the engine that drives the cost model. It is comprised of numerousinput columns into which the user must input data. These user input columns aresegmented into the following sections:

1 Descriptive and number/type of joining applications

Joining technique, Segment, Sub-Segment, Component, Number ofapplications, Substrate, etc.

2 Part/Surface preparation

Cutting, Folding, Shaping, Cleaning, Coating Removal, etc.3 Joining Process

Vary depending on type of joining process selected4 Post Joining Processes

Autoclave, clamping, etc. (specific to adhesives)5 Other Costs

Overhead, Square feet required, Annual Capex, Energy usage, etc.

To make the model manageable the input columns a user sees depends upon which buttonis selected. Each button runs a macro that hides rows and columns that are not needed forthe type of bonding/joining method chosen.

Also, where possible the user input choices are from drop down boxes that allow theuser to choose from among a list of inputs. For example, one the of the user inputcolumns under the Adhesive & Sealant view is Technology. By choosing from the list offormulations, the model fills in a specific gravity column from the assumption table. Thespecific gravity value in turn is an input for calculating the grams of adhesive used perbond, which in turn is used in calculating the cost of adhesive material used per bond.

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CHEMQUESTS EXPERIENCE

As the ChemQuest Group conducted a cost analysis of the scores of joining applicationsin seventeen market segments examined for ASCsBuilding The Industry (BTI) Program,it became apparent that adhesives were rarely the cheapest bonding application in total

applied cost. The primary reason for this turned out to be the element of labor timeneeded. Invariably, the amount of time to join a component through the use of adhesiveswas longer than that of mechanical fasteners and had by far the largest impact on totalapplied cost of any variable in the model. One of the few applications that turned out tobe considerably cheaper on an applied cost basis with adhesives was in bonding deckflooring using adhesives versus the incumbent fastening technique with screws.

But, the value proposition for adhesives and sealants go well beyond applied cost.Therefore, it is important for users to understand that the constraints of the model arelimited to existing processes. ChemQuest interviewed over 1000 participants in itsmarket research and conducted eight focus groups in three different industries

(transportation, construction, and product assembly) and amongst university academics.We learned that adhesives and sealants provided a number of benefits that are difficult tocapture in a cost model.

Those benefits include:

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Therefore, the value proposition for moving from mechanical fasteners to adhesives inthe structural markets evaluated is through value add opportunities, where new value isenabled by adhesives and sealants that the customer will pay more for, as opposed to costreductions through the elimination of mechanical fasteners.

Authors:Mr. Todd Muhleman- Sr. AnalystMr. Daniel Murad- President and CEOThe ChemQuest Group, Inc.8150 Corporate Park Dr. Suite 250Cincinnati, OH 45242(513) 469-7555

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chemquest_bticostmodelarticle_sep05

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