A multi-step modelling approach has been proposed to identify the tool/workpiece contact parameters (local friction coefficient, thermal contact conductance) and the flank wear for coated cutting tools. Three main steps constitute this approach: (i) the simulation of the machining process using the ALE approach, (ii) the transient thermal analysis of the cutting tool with multi-layer coatings and (iii) the prediction of flank wear. The combination of the XFEM and Level-set techniques has been done to model the thin layer of coatings. The enrichment functions in the XFEM formulation allowed to avoid in one hand the mesh refinement at the coating/substrate interface and on the other hand the mesh distortion during the evolution of the worn tool profile.