Background
In 2004, The ChemQuest Group, a leading consultant to the adhesives and sealants industry, developed a new mathematical tool designed to assess the economic costs of using adhesives in place of alternative fastener types. This innovative tool is designed to benefit the managerial decision making process and provide better focus for the product development community. Developed exclusively for the Adhesive and Sealant Council's Building the Industry (BTI) Program, these cost models were made available to members who participated in the program.
Intense industrial competitiveness in the global manufacturing arena is placing stringent demands on R&D and product engineering disciplines. Materials engineers, production engineers, product designers and scientists must all make key decisions on product design, investments, personnel, market development, and pricing against the metric of forecast profitability. These decisions are also constrained by a host of scientific and technological boundaries that define the technical feasibility and business potential of a given 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 much of the fundamental research quite remote from the long-range strategic goals of the business. Such disconnected research has often fallen prey to cost-cutting measures. Likewise, engineers have learned primarily on the job, as institutionalized knowledge has been passed down from one generation to the next. Design tools to assist engineers in selecting adhesives over other incumbent fasteners are scarce. These developments are taking place in the face of key innovations increasingly utilizing the computer to provide quick answers in a more cost effective manner.
Therefore, in conjunction with the BTI Program, ChemQuest 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 model’s output is 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 the model and provides detailed descriptions of all of the design components and assumptions that make up the model.
The Cost Model
In its current form the model is designed to capture costs in a production line environment, but it can be used for other production environments. Once a user has a basic 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-production environments, such as on site construction. As an example, ChemQuest used the model to estimate the value in use for numerous joining applications in the residential remodeling market segments where production takes place on site. By defining the number of bonding applications per year as the number of housing units where a remodeling activity took place we could scale our inputs to the housing units across different remodeling activities (decks, crown molding, drywall bonding, etc.) but had to make 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 particular technique 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 to work it forces manufacturers and customers to examine and think through cost drivers of competing joining/bonding processes, something that few customers currently measure or understand.
As ChemQuest conducted a cost analysis of the scores of joining applications in seventeen market segments examined for ASC’s 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 time needed. Invariably, the amount of time to join a component through the use of adhesives was longer than that of mechanical fasteners and had by far the largest impact on total applied cost of any variable in the model. One of the few applications that turned out to be considerably cheaper on an applied cost basis with adhesives was in bonding deck flooring 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 are limited to existing processes. ChemQuest interviewed over 1,000 participants in its market research and conducted eight focus groups in three different industries (transportation, construction, and product assembly) and amongst university academics. They learned that adhesives and sealants provided a number of benefits that are difficult to capture in a cost model.
Those benefits include:
Therefore, the value proposition for moving from mechanical fasteners to adhesives in the structural markets evaluated is through “value add” opportunities, where new value is enabled by adhesives and sealants that the customer will pay more for, as opposed to cost reductions through the elimination of mechanical fasteners.