Fortech solutions business_cases_evaluation_additive_manufacturing_en_20180714

©2018byFortechSolutionsGmbH,Munich,Germanywww.fortechsolutions.de,Author:Dr.AndreasRennet
WE ENABLE INNOVATION
Business case assessment for additive
manufacturing of metal parts
FORTECH Solutions GmbH
WORKSHOP (SHORTVERSION)
(Author: Dr. Andreas Rennet)
JULI 2018

2
Workshop structure
Introduction
Factors
Cost Levers
Costs
CAPEX (& OPEX)
Life cycle costs
The right reporting
Examples
SummaryFunctional costs
1
2
3
4
5
6
7
8
9
10

3
› German joint venture of the Fortech SRL and Cardo Holding AG
› Access to > 650 developer at Fortech
› Bundling of technical & software expertise in the areas of:
› Digitisation
› Industry 4.0
› Costing & Procurement
› Manufacturing
› Production
› E-Mobility
› Artificial Intelligence (AI)

4
Workshop structure
Introduction
Factors
Cost Levers
Costs
CAPEX (& OPEX)
Life cycle costs
The right reporting
Examples
Functional costs Summary

5
Introduction
› The additive manufacturing of metallic components is beyond the stage of the hype. However, the
market is still in a rapid growth phase. In many areas, the use of technology will lead to major
changes. In any application business cases will have to be used for the decision whether the AM
technology make sense or not.
› Especially in applications where the material and manufacturing cost are the leading cost factors,
the justification for additive manufacturing is often complex and demanding.
› The evaluation of whether a component can be produced additive or not must in any case go
beyond the usual ways of looking at the cost analysis.The magic word here is the life-time cost
analysis* and thus the extended business case consideration.
› The purpose of this workshop document is to describe the methodology of the business case
evaluation for additive components in the basic concepts and to provide participants with some
targeted approaches for direct implementation.
* Also as a life cycle Cost = LCC known; Cf. EU 2014/024 and DIN 60300-3-3)

6
Workshop structure
Introduction
Factors
Cost Levers
Costs
CAPEX (& OPEX)
Life cycle costs
The right reporting
Examples

7
Challenges of additive manufacturing
› Additive manufacturing is not comparable to classical methods of manufacturing processes.This
applies not only to the material properties and process chains for production, but also to the
costs.
› In principle, process times and materials (powder) will remain major cost drivers even with
further scaling due to industrialisation. In fact this cost and be multiples higher then, for example,
thos forging or casting.
› Despite the significant influence, the optimisation of process design and print preparation will not
be able to bring the cost level into the region of traditional series production.
› The economic added value of the additive-produced metallic components is regularly determined
by economic and timing advantages in the process chain from the product definition to the end
of use ("CradledTo Grave ").This means that the cost and business case assessment approach
must even go beyond the usual life cycle approach that ignores the product definition.

8
Influencing factors on the business case
Product definition
• Functional room of the
component
• Functional room of the
entire relevant system
• Weight
• Manufacturability
• Part positions and
connections
• Functional surfaces and area
• Requirement and
specification profile
• Material requirements
Manufacturing process
• Component position
• Nesting
• Support structures
• Hatching Strategy
• Surfaces
• Machine parameters
• Process temperatures
• Tool and Device concepts
• Postprocessing
Product use
• Assembly and Mounting
process steps
• Time of Use
• ProductVariance
• Spare parts
• Supplier availability
• Reproducibility
• Life time
• Traceability

9
Cost components
Everything counts!
• In the past, the business case of
traditionally manufactured
components was principle
made up by the material and
costs of the procurement.
• For AM part these are generally
significantly higher in than in
the case of comparable parts
e.g. from casting or forging
processes.
• Only if considering all cost
components of the life cycle,
the potential advantage of
additive manufacturing can be
demonstrated compared to
conventional production.
Schematic representation

10
3 Steps to Evaluation
• The evaluation of all cost levers for each component in detail is
highly complex and is not practical when it comes to business case
considerations for the decision additive or conventional production
in a early concept stage.
• A somewhat reduced approach, which takes into consideration the
major cost drivers, allows the business case assessment to be done
in 3 steps.
The reduced approach leads to delta analysis. Because only the differences to the conventional part are
represented.This means that some minor costs are neglected, but for an initial evaluation this is often sufficient.

11
3 Steps to Evaluation
Step 1
• Evaluation of the
component definition
and determination of the
relevant cost levers for
the specific consideration
• Cost analysis for the
relevant cost levers
• Evaluation of total cost
of manufacturing
• Definition of cost risks
and opportunities
Step 2
• Assessment of the
relevant investments and
determination of the
scope of consideration
• Cost Assessment of
investments
• Allocated cost
calculation for the part
based on the project and
part life time
Step 3
• Definition of the relevant
cost drivers along the
product usage (life cycle)
• Definition of relevant
secondary cost effects
• Cost evaluation of the
relevant cost drivers and
allocation to the single
part cost

12
Workshop structure
Introduction
Factors
Cost Levers
Costs
CAPEX (& OPEX)
Life cycle costs
The right reporting
Examples

13
Cost Levers
• The cost levers in additive manufacturing have to be evaluated differently depending on the
application.
• The knowledge of the influenceable cost levers is necessary for the consideration of the business
case in order to be able to evaluate the possible optimum.
• The following rules can be used to limit the cost analysis and cost optimization effort to the main
Cost levers:
The Cost Levers must be influencable
The Cost Levers must represent at least 5% of
the total cost

14
Typical Cost levers for AM
Product definition
• Functional integration
• Production-oriented
design
• Complexity
• Weight
• Finish
• Material
Manufacturing
• Print parameters
• Support structures
• Position minima
• Component position
• Overhangs
• Up skin/down skin ratio
• Quality assurance
• Rework
• Follow-up processes
Product use
• Total number of pieces
• Variance
• Assembly
• Spare parts

15
Workshop structure
Introduction
Factors
Cost Levers
Costs
CAPEX (& OPEX)
Life cycle costs
The right reporting
Examples

16
Components of production costs (AM)
• At the manufacturing cost, all direct and indirect costs directly related
to the manufacturing process must be counted to the finished
component according to specification.
• This means that the cost can include both generative and conventional
process steps. For better transparency, it is advisable to separate these
cost blocks.
• The following simplified formula can be used for cost analysis (yellow
deposited: influencable):
QK Production costs per component
TPp Preparation time (data, process, program)
Lk1 Labor cost engineer
Pz1 Number of technicians
NL Components Total life cycle
NB Part Pro Bath (Build)
MP Part Mass
MS Mass of supporting structures
Ng Level of Use powder
MK Materials
TTr Setup Time
Lk2 Labor cost Machine operators
Pz2 Number of machine operators
Mss1 Machine hour set 3d printer
TV Venting/Vacuum time
VP Volume parts/Per Batch
VS Volume support structures per batch
Bro Baud rate
Nl Laser Utilization Level
TOf Time Optional Surface Smoothing
Tb Powder Coating Time
HG Overall height
SD Thickness
TK Cooling time
TE Picking time
TS Purge time
TSr Time distance support structures
HT Cost Heat Treatment
QM Cost Quality Processes
bn cost of mechanical post-processing
of cost surface finish
𝑭𝑭𝑲𝑲
=
𝑡𝑡𝑃𝑃𝑃𝑃 ∗ 𝑙𝑙𝑙𝑙1 ∗ 𝑝𝑝𝑝𝑝1
𝑛𝑛𝑙𝑙
+ (𝑚𝑚𝑝𝑝+𝑚𝑚𝑠𝑠) ∗ 1 + 𝑛𝑛𝑛𝑛 ∗ 𝑀𝑀𝐾𝐾 +
𝑡𝑡𝑡𝑡𝑡𝑡 ∗ 𝑙𝑙𝑙𝑙2 ∗ 𝑝𝑝𝑝𝑝2 + 𝑀𝑀𝑀𝑀𝑀𝑀1
𝑛𝑛𝐵𝐵
+
𝑡𝑡𝑣𝑣 +
𝑉𝑉𝑝𝑝 + 𝑉𝑉𝑠𝑠
𝑏𝑏𝑏𝑏 ∗ 𝑛𝑛𝑛𝑛
+ 𝑡𝑡𝑂𝑂𝑂𝑂 + (𝑡𝑡𝑏𝑏∗
ℎ𝑔𝑔
𝑠𝑠𝑠𝑠
+ 𝑡𝑡𝑘𝑘) ∗ 𝑀𝑀𝑀𝑀𝑀𝑀1
𝑛𝑛𝐵𝐵
+
𝑡𝑡𝑒𝑒 ∗ 𝑙𝑙𝑙𝑙2 ∗ 𝑝𝑝𝑝𝑝2 + 𝑀𝑀𝑀𝑀𝑀𝑀1
𝑛𝑛𝐵𝐵
+
𝑡𝑡𝑠𝑠 ∗ 𝑙𝑙𝑙𝑙2 ∗ 𝑝𝑝𝑝𝑝2
𝑛𝑛𝐵𝐵
+
𝑡𝑡𝑠𝑠𝑠𝑠 ∗ 𝑙𝑙𝑙𝑙2 ∗ 𝑝𝑝𝑝𝑝2 + 𝑀𝑀𝑀𝑀𝑀𝑀2
𝑛𝑛𝐵𝐵
+ 𝐻𝐻𝐻𝐻 + 𝑄𝑄𝑄𝑄 + 𝑀𝑀𝑀𝑀 + [𝑂𝑂𝑂𝑂]
Costing: Standard process cost calculation

17
Impact on production costs (AM)
The individual influenceable levers of the production costs have some significant effects.The example of a
simple geometry represents the relationship qualitatively:
Tendency to influence in% for sample geometry/qualitative influence
PrintTimeTD) + 65% + 35% + 15% +5 Benchmark
Distance Supports (TSr) + 150% -20 + 10% -5 Benchmark
Rework Surfaces (TOf) 0 + 20% +70 0 Benchmark
Risk of cracks (intrinsic stress) strong increased
Source: Cardo AG

18
Workshop structure
Introduction
Factors
Cost Levers
Costs
CAPEX (& OPEX)
Life cycle costs
The right reporting
Examples

19
Evaluation of functional costs
• The evaluation of functional costs is an essential
aspect of business case considerations for additive-
manufactured components.
• Thanks to the almost unrestricted geometry
degrees of freedom, functions can be integrated
better. Component complexity of systems can be
reduced by merging parts and functions or even
replacing complete components.
• The evaluation of functional costs, however, is a
complex and time-consuming process, especially
for new components to be developed. This can
often not be presented at an early stage of the
evaluation.
• It is recommended that you use a simplified
approach for the business case assessment.
Simplified assessment Approach
› In the case of substitution of components and
systems, the following correlation for the
functional costs can be used in a first rough
approximation:
∆𝐹𝐹𝐹𝐹= �
𝐹𝐹𝑘𝑘𝑘𝑘𝑘𝑘𝑘
𝑛𝑛𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹
+
𝐹𝐹𝑘𝑘𝑘𝑘𝑘𝑘2
𝑛𝑛𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹2
+ ⋯
𝐹𝐹𝑘𝑘𝑘𝑘𝑘𝑘𝑥𝑥
𝑛𝑛𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝑥𝑥
∶ 𝑥𝑥 − (
𝐹𝐹𝑘𝑘𝑘𝑘𝑘𝑘𝑘𝑘𝑘𝑘𝑘𝑘
𝑛𝑛𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹
)
∆QQ Cost Advantage per function
QKBTx Manufacturing Cost Component X
NFktBTx Number of functions in part X
QCame Production costs on the component
NFktAM Number of functions in the part

20
Workshop structure
Introduction
Factors
Cost Levers
Costs
CAPEX (& OPEX)
Life cycle costs
The right reporting
Examples

21
Capex
• The reduction of investment costs in the manufacturing and assembly process is one of the main
factors for the economy of additive manufacturing of metal parts.
• Therefore it is advisable to have as complete a picture of all necessary tools, devices, special
machines etc. To look at.
• Due to the complexity of the cost calculation of tools, a first approximation can also be used to
work with parameterized approaches.
Assembly, CommissioningConventional production Use
Assembly, Commissioningadditive manufacturing Use
Casting Tools
Cores
Tools for primary
shapging
Matrices
Jigs
Measuring gauges
Editing tools
....
Jigs
Mounting fixtures
Carriers
....
Mounting fixtures for
Service
Jigs
Measuring gauges
Editing tools
....
Jigs
Mounting fixtures
Carriers
....
Mounting fixtures for
Service

22
OPEX (relevant development costs)
Product definition and development
• Product Planning and Conception
• Component development
• Cost of Changes (engineering changes)
• Simulation
• Prototype development
• Prototyping
• Hedge
• Industrialisation (process planning)
Tool and device development
• Tool and fixture construction
• Simulation
• Production planning
• Building
• Commissioning
• Change loops
• Decrease

23
CAPEX & OPEX: Impact on marginal costs
• The influence of CAPEX and OPEX costs on
component costs depends on the number of
components over the life cycle.
• The marginal costs shifting to higher number
of parts especially for safety-relevant
components or parts with extensive
prototype phases.
• Another positive influence on the business
case of the AM components are conventional
manufactured parts with high geometrical
complexity.This leads to disproportionately
expensive tools.
€0,00
€20.000,00
€40.000,00
€60.000,00
€80.000,00
€100.000,00
€120.000,00
€140.000,00
€160.000,00
10 100 1000 10000 100000 1000000
Einfluss Umlage CAPEX & OPEX
1 (Einfach) 2 (Sicherheitsrelevant) 3 (Komplex)
Schematic representation
for typical components.
Source: FS/Cardo, component calculations 2018

24
Workshop structure
Introduction
Factors
Cost Levers
Costs
CAPEX (& OPEX)
Life cycle costs
The right reporting
Examples

25
Life cycle Calculation Cost
In addition to one-time costs and manufacturing costs, the additional costs along the life of the
product are particulary important. However, these are often complex in the derivation and
evaluation. For the production of metallic components, the following simplified approach for business
case analysis can be applied to the "life cycle Cost"(without residual value consideration):
KRef = Reference Cost
QGk = Manufacturing costs (GK = Total cost)
CGk = Total CAPEX (investments)
OGk = Sum OPEX (development, prototypes, etc.)
EGk = operating costs from the life cycle
NL = Number of components life cycle without spare pa
∆ = only cost and expense difference
Between the component and the conventional
Part
Full
Viewing
Delta costs
Viewing
𝐾𝐾𝑟𝑟𝑟𝑟𝑟𝑟 = 𝐹𝐹𝐺𝐺𝐺𝐺 +
𝐶𝐶𝐺𝐺𝐺𝐺 + 𝑂𝑂𝐺𝐺𝐺𝐺
𝑛𝑛𝐿𝐿
+ 𝐸𝐸𝐺𝐺𝐺𝐺
∆𝐾𝐾𝑟𝑟𝑟𝑟𝑟𝑟 = ∆𝐹𝐹𝐺𝐺𝐺𝐺 +
∆𝐶𝐶𝐺𝐺𝐺𝐺 + ∆𝑂𝑂𝐺𝐺𝐺𝐺
𝑛𝑛𝐿𝐿
+ ∆𝐸𝐸𝐺𝐺𝐺𝐺

26
Workshop structure
Introduction
Factors
Cost Levers
Costs
CAPEX (& OPEX)
Life cycle costs
The right reporting
Examples

27
The right reporting
• The cost analysis of components with a focus
on production and material costs is generally
not sufficient for the business case
consideration of additive manufacturing.
• Even in the consideration of possible
optimization lever, a mere consideration of
the production costs is not conclusive
enough.
• In order to decide on the business case, a
combination of different information must be
combined in a decision report.
Necessary contents of a report
› Presentation of all individual costs
› Presentation of all cost allocations
› Direct comparison to the conventional
component via delta cost analysis
› Cost driver representation
› Presentation of opportunities and risks
› Decision Panel

28
Example of a report

29
Workshop structure
Introduction
Factors
Cost Levers
Costs
CAPEX (& OPEX)
Life cycle costs
The right reporting
Examples

30
implementation example
Component: Oxygen burner
Support Base: External
Building Components/job: 2*
Construction Time/job: 66h*
Machine: EOS M290
Material Inconel In 718
Post process steps Support removal
Shot Blasting for Cleaning
* Number for workshop example onlyWith the kind support and of EOS GmbH

31
Implementation example
* Number for workshop example onlyWith the kind support and of EOS GmbH

32
Implementation example in AM COST
Through a defined evaluation process, the user is guided by
different inputs.The necessary data is usually also available at
an early stage of the product conception. In doing so, the
direct comparison between the costs of the conventional
component and those of the additive produced by
approximations helps to derive a valid statement.
Features:
• Evaluation of production costs for 3d printing (e.g. selective
laser sintering)
• Evaluation of costs for follow-up processes such as
removal of support structures, mechanical post-processing
• Consideration of CAPEX (project-or component-related
investments)
• Consideration of OPEX (project-or component-related
operational expenditure)
• Consideration of relevant life-cycle influences and
functional cost changes
• Evaluation of delta costs to conventional manufacturing
compared to additive manufacturing
• Cost driver analysis with assessment of opportunities
• Creation of an evaluation report on the suitability of the
component for an additive manufacturing.
Interest in At cost? Am-cost@fortech-solutions.de

33
Workshop structure
Introduction
Factors
Cost Levers
Costs
CAPEX (& OPEX)
Life cycle costs
The right reporting
Examples

34
Summary
• The valuation of the business case for additive manufactured metallic parts and components
depends on much more parameters than the cost analysis for conventional material and
manufacturing usually covers.
• A buy-in or technology decision must therefore be made on the basis of life-cycle costs and not
only on the basis of production and material costs
• The exact evaluation of all possible influencing parameters and costs is in the early concept
phase or development stage of a component or a assembly is challenging.
• In order to be able to carry out a valid and decision-making business case evaluation for additive-
manufactured components, the presented mix is recommended for qualitative and quantitative
analysis.
• In a delta cost evaluation, minor or non-influencing cost of conventional and additive components
can be taken out of the consideration, without reducing the quality of the decision base.

Fortech Solutions GmbH
Konrad-Zuse-Platz 8
81829 Munich, Germany
Www.fortechsolutions.de
Contact@fortechsolutions.de+ 49 89 1250 102-75
Interest in At cost? Am-cost@fortechsolutions.de

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