How tool cost allocation works
Why different cost methods exist and how categories let you configure them once for many items.
Tooling cost typically represents 3–5% of total manufacturing cost, but its impact on productivity and quality is far larger. Most shops know their total tooling spend, but few can answer questions like “what did this job actually cost in tooling?” or “which machine consumes the most tooling?” Without per-pick cost tracking, these questions require manual calculations. Tooling Metrics builds the answer automatically into every item movement.
Two ways tools wear, four methods
Section titled “Two ways tools wear, four methods”Different tool types depreciate in fundamentally different ways, which is why a single cost formula does not fit all items. The four available methods split into two families.
Per-pick methods charge each time an item is picked for machine use. They fit items where each use consumes a predictable amount — inserts and cutting edges, for example. An insert gets used for one or two operations before it is discarded, regardless of how long it runs.
- Fixed Rate posts a flat amount per pick — effectively the amortized purchase cost divided by the expected number of uses.
- Unit Cost x Usage Rate in Percentage posts a fraction of the item’s current value per pick. Charging a small fraction (e.g., 2% of unit cost) builds up total depreciation over a realistic service life.
- Purchase Price x Usage Rate in Percentage does the same but anchors to the purchase price instead of the current book value — useful when contract pricing, not depreciated value, should drive the charge. The posted amount never exceeds the unit cost.
The time-based method charges per hour instead of per pick. Usage Time x Usage Rate per Hour suits durable items that wear with running time rather than handling — holders, solid tools, precision instruments. A CAT40 holder is not consumed in one use; what depletes it is hours on the spindle. The system posts the hourly charge automatically for as long as the item stays on a machine.
The choice between methods is a judgement about how the item actually wears, not a technical constraint. Some shops use a fixed rate for solid tools because they prefer the predictability; others use percentage depreciation because they track replacement cost closely. Both are valid.
Why categories
Section titled “Why categories”Configuring a cost method per item would require touching every single item individually — hundreds of records for any real shop. Internal Categories exist to avoid this: each category carries a cost method and usage rate (set on every root category, inherited or overridden below it), and any item assigned to that category inherits it automatically unless the item sets its own override.
Inheritance follows the category tree. Only a root category must have its own method and usage rate; a child category can leave either one blank and take the value from its nearest ancestor that sets it. An item without its own override uses the value its category resolves to. In practice this means a well-organized category tree (e.g., “Inserts” and “Holders” as separate branches with different costing behavior) needs the method set once per branch, and a child category only when it should differ — and every item you add to that branch picks up the right method with no further configuration. See Internal Categories Reference for the exact inheritance mechanics.
Item-level settings always win over category settings, so you can always override individual items that genuinely need different treatment.
How cost posts
Section titled “How cost posts”Usage cost is posted automatically — there is no manual step. Per-pick methods post at the moment an item is transferred to a machine via a Tool Transfer or Pick List. The hourly method posts once per day for every item still on a machine. This automatic posting means that usage cost reports are always current and reflect actual shopfloor activity, not end-of-month reconciliation estimates.
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