Manufacturing Cost Reduction

Manufacturing Cost Reduction: Eliminating Over-weighting

A manufacturer supplying the building and automotive industry wanted to reduce the production of products that were "over-weighted" (excessive use of raw material). Currently, products for the building industry were being dispatched to market 7% - 15% overweight; raw material accounts for approximately 50% of total production cost. Improvements needed to be transferable to other products, including the automotive lines.

It was critical to establish what the major causes product over-weighting were. Condico Consulting facilitated an internal improvement team, as well as providing analytical expertise to identify the critical areas; actions were then identified to implement the findings.

The first steps were to clarify the problem and agree a factual, written issue statement, identify the potential savings that could be made, and identify relevant measures that would enable the team to measure the gains that were being made. An internal team was selected which incorporated two shop-floor operators who were involved in both production stages and the manufacturing manager; other experts were brought in as required. A framework for the way the team would work and the spending authorization was also established.

The team collated existing data around the product overweighting and tried to identify patterns from the data. All the potential sources of variation in the process were identified and some tests performed to make sure that the measurement systems in place were robust. Although there was room for improvement, the analysis did not uncover the major cause of the product being overweight.

Further practical tests were carried out which revealed that the cavities of each of the tools being used to produce the parts were significantly oversize, suggesting that the tools had not been machined to the original tool specification and that the cavity size had not been verified before production began.

The team set about redesigning the product, taking the opportunity to eliminate over-engineering. This process was carried out to reduce raw material consumption and deliver a product to market that was fit for purpose.

• Through close collaboration with key customers and the tool-makers, the existing tools were modified at a low cost with a payback of two months.
• Modifying the tools across all sites within Australia led to raw material annual savings of about $300K
• The savings funded a price reduction to customers which enabled the manufacturer to claw back lost business in a hyper competitive market; the remaining savings contributed directly to increased profit.