Uncertain Economies Require Defensive Action of Cost Reduction
The manufacturing community in most sectors is very busy with customer business, which has been the strongest in recent memory. However, uncertainty of what next year will bring businesswise is surfacing with an expected slowing in the economy, tariff/trade war impacts, workforce shortages, and wage increases, to name a few. Manufacturers have little control over these issues, but one area manufacturers can control is cost within a manufacturer’s four walls, both in the production area and in the office.
How can manufacturers manage cost to help mute the impact of those issues that one has little control of? Listed below are five basic “blocking and tackling” tools that every company should have the capability to do that reduce cost.
- Reduce Cycle and Changeover Time (Set-up Reduction):Think of a race car pit crew that wants to minimize the time the car is in for a pit stop – that is what we want to do with changeover from one part/product to another. Also called SMED (Singe minute exchange of dies) can dramatically reduce change over time providing more capacity to produce parts. Every step in the changeover process is determined to be a step that can be done while the previous job is still running or can only be done when the previous job has been completed. This analysis alone can dramatically reduce changeover time. The essence of the SMED system is to convert as many changeover steps as possible to “external” (performed while the equipment is running), and to simplify and streamline the remaining steps. The name Single-Minute Exchange of Dies comes from the goal of reducing changeover times to the “single” digits (i.e. less than 10 minutes).
- Value Stream Mapping:Value stream mapping (VSM) is an incredible tool you can use to identify opportunities to reduce lead time, reduce cost, and poor quality. VSM includes mapping out a product’s production path from beginning to end, drawing a visual representation of every process in the material and information flows, and then drawing a map – a future state – that illustrates how the value should flow. Following these steps will then enable you to develop a prioritized list of improvement items that you and your team can address. A value stream map can be used for an entire process – customer order to delivery or for a segment of an entire process – one of the most powerful tools available to manufacturers and for service businesses as well. This is a tool every company should have several members of their team trained to do.
- Cellular/Flow Manufacturing:Establishing proper flow in your manufacturing process is essential to meeting customer demand and producing in the most efficient manner. Cellular manufacturing can enable your business to balance operations that reduces cost by eliminating bottlenecks in the process and fulfilling customer demand by linking manual and machine operations in the most efficient combination to maximize value-added content and minimize waste.
- Kanban Pull Systems:A Kanban Pull system, as opposed to a Push system, attempts to control and improve the flow of work by allocating resources only when there is demand and when capacity is available, not based on forecasted demand. The primary benefit from pull scheduling is cost reduction by avoiding excess inventory and waste, along with the overhead required to manage that excess inventory.
- 5S Program:5S is a system comprised of five steps to create sustainable, visual process control. When implemented, 5S will create standardization and improve your workplace organization, safety and reduce cost. The five steps include:
1. Sort: when in doubt, throw it out
2. Set In Order: A place for everything, and everything in its place
3. Shine: Inspect through cleaning
4. Standardize: Everyone follows the same processes and procedures
5. Sustain: Make 5S a part of your company’s daily work procedure
Now is the time to fix your bottlenecks to effectively utilize your resources. DVIRC can help!
Through its consulting services and training courses, DVIRC has worked with firms of varying sizes and functions on Lean and Continuous Improvement strategies.
Since 1988, DVIRC has helped 2300 manufacturers complete over 6800 projects. We have helped our clients generate substantial value-added impact, including:
$1.8 billion in new and retained sales
$383 million in cost savings
$270 million in investments