Becoming an international group with tool management solutions

Do not buy tools, only pay for each use – that is the concept of TCM International Tool Consulting & Management.

When Manfred and Anna Kainz took over a tool shop in Graz in 1986, no one could have imagined that in less than four decades the small business would become an international group in the field of cutting tools – including drills, milling cutters and grinding wheels. Today, the company is based in Stainz, Styria, and with more than 400 employees at 41 locations, it is one of the world’s leading suppliers of tool management solutions. The formula for success is simple: Customers no longer buy the drill but pay for each hole drilled. In 2022, Markus Temmel took over from founder Kainz. The CEO explains how TCM helps its customers save money.

You took over the TCM Group in 2022. Was it difficult to follow in the footsteps of founder Manfred Kainz?
Markus Temmel: We had prepared everything very well. We worked together very intensively for years, and the smooth transition was very important to Manfred. He always said that the company had to be set up in such a way that he was dispensable. That was an important goal for him and in this respect, I have to tip my hat for the way he prepared this handover of the company. We have done it really well. But, of course, that everyone has their own styl

Were there any business areas that you had to significantly restructure or how do you deal with the entrepreneurial ‘legacy’?
Temmel: In terms of content, we were very well coordinated and had set up our corporate strategy. What is special right now, is the environment in which we live. We have a very dynamic market environment. Of course, this affects our most important core industries, such as the automotive sector. Electrification has a huge impact on machining. Additionally, geopolitical developments that have been triggered in the past few years and that we all didn’t have on our radar are still causing disruptions in the supply chain. The result is extremely increased material prices and a currently still uncertain development in China, an important market. This creates enough challenges every day. We have to manage all this without limiting our business development and product development at the same time. We are also pushing digitisation projects massively and merging them more and more with our core business, machining. Of course, this must not fall by the wayside despite all the challenges.

What exactly is tool management?
Temmel: Tool management at TCM means the manufacturer-neutral provision and optimisation of cutting tools. Our business models guarantee annual cost savings and productivity advantages. The idea for tool management was born from the idea that the customer no longer buys the drill, but pays per drill hole, to name one example. Tool management concerns all areas of machining and everything that goes with it, such as the procurement of tools, the preparation and the provision of tools in production at the machines. Our customers no longer pay for the tool, but per component produced. This is a cost per unit approach. We guarantee year after year that the defined price will be lower. That is our cost guarantee and the guarantee of annual savings. Tool Management is a revolutionary business model with a very efficient process in the background.

We are talking about tools for drilling, grinding, milling?
Temmel: Wherever a metal chip is lifted, you need tools. Milling tools, drilling tools, turning tools, grinding tools and gear-cutting tools are a market worth billions. Machining is a high-tech industry for which we supply solutions.

From which sectors do your customers mainly come?
Temmel: Our business activities are now well diversified and divided. The automotive sector is still very important, but increasingly our customers also come from the aerospace and general mechanical and plant engineering sectors. And there are first projects in the medical sector. We have customers of all sizes, from smaller entities to global corporations.

How do you control invoicing according to cost per unit?
Temmel: At TCM we work with a very efficient system in tool management that ensures a high degree of transparency. This has been the case since our beginnings, although the technical possibilities and means of communication were quite different back then. In all our projects and locations, we know the tool costs per machining operation, per component or per machine on a daily basis. Of course, this has become easier in the past few years because there are reliable internet connections and system support is getting better and better. In addition to our services, we use hardware that secures our processes and provides precisely this data and information – i.e. our dispensing system.

What is the Toolbase software?
Temmel: The Toolbase brand stands for our dispensing systems. I like to compare it with vending machines in airports or train stations from which you can get a snack. These systems also exist in the industrial environment with much more logic in the background. We store machining tools, spare parts or safety equipment in these dispensing systems. They can be used in many different ways. The advantage is that they are available 24/7, never go on holiday and never get sick. You place these systems relatively close to production and thus consumption. After authentication, employees can remove articles they need for production in a controlled manner. In the background, the withdrawals are transparently logged, the costs are allocated and new procurement is automatically triggered necessary. We manage this with our Toolbase product and there is a great demand for it on the market.

So, you always know which machine is using which tool and what it is doing with it?
Temmel: Exactly, we are very closely linked to the customer. For larger projects, our employees really do sit permanently on site at our customers’ production and work like a department of the customer. These teams consist of technologists and employees who take care of procurement and assemble, measure and provide tools on the shop floor. We are talking about precision machining with a tolerance range of one μ (Mu), which is a fraction of the thickness of a human hair. Understanding the customer’s manufacturing situation correctly and aligning our processes to it is what sets us apart.

But you not only analyse your customers’ needs, you also equip them with hardware
Temmel: We supply our customers and their machines with tools that we procure and partly design ourselves. We do not produce any machines ourselves.

Has the area of remanufacturing, repair and grinding gained in importance due to the need for sustainability?
Temmel: We have been working in this cycle for years and know of the value of a cutting tool and the material used. That is why we have also been operating tool grinding centres for many, many years, where tools are reconditioned. I don’t have to throw the drill away, but it is reground several times. That saves a lot of material and thus costs. For our customers, the topic of sustainability will become increasingly important, as we are faced with a multitude of regulations in this area

Why is it important for you to offer products from different manufacturers?
Temmel: We see that no manufacturer is ahead in all applications – the subject of machining is too extensive, too complex and there are far too many fields of application. Our goal is to work out cost savings for our customers. Therefore we need the best solution for exactly the specific task at the customer’s site. That’s why we have to be free in our choice of products and tools. We demand of ourselves and our technologists to have a very broad, good and solid knowledge of tool technology and to constantly know what innovations are available. Of course, to secure supply chains, it doesn’t hurt to have several channels open.

What role will AI play at TCM in the future?
Temmel: People like to use terms that I am very much in awe of. It is the cutting edge of technology that we like to talk about. But what makes a good tool technologist at TCM? We have come to the conclusion that humans learn very much through experience. Our best technicians have learned through a wide variety of application experiences over time. The limiting factor is that we as humans can only have a certain number of experiences in a given time. The latest technologies are enabling us to get better and better at collecting process data on an ongoing basis, condensing it in a meaningful way and learning from it. Sooner or later, these systems will be able to learn faster and better. But we are not there yet. We have learned that many companies do not have the basis for applying this cutting-edge technology, have not prepared it, or are criminally neglecting it. We do it the other way round and have been working intensively on the topic of master data and master data quality for years. This is the basic prerequisite if you want to network systems. That’s how we are working our way up, step by step.

Which of the current uncertainties worries you the most?
Temmel: If we look back over the past two or three years, there is still the huge issue of the supply chain from the Covid pandemic, although it has become more settled in the meantime. The increased energy costs due to the Ukraine war led to an expected price spiral and we are still struggling with this to this day – i.e. inflation. This is an enormous challenge. The energy price increase has hit our customers and production. We are talking about metalworking and machinery, a lot of energy is needed in that. There have been huge cost increases from one day to the next. This has triggered another tsunami wave, because the increased energy prices have also increased material prices and employee costs. We are trying with all our might to dampen this spiral and have pronounced price stability for this year for our customers in Austria.