Cost Reduction & Lean (Part 1 of 3)

QUESTION => Manufacturers – Are you achieving 500% + on Overall Equipment Efficiency (OEE)?  Are you achieving the planned ROI?

In this months’ topic series for COST REDUCTION & LEAN, we will be discussing a few business domain elements governing cost in your business.

They are:

1. Benchmarking
2. Cost
3. Performance Quality

This week, we will focus on the domain of BENCHMARKING and the influence it has for product cost leading to its affect on achieving business goals and growth.

Business processes and how you run your organization has a direct affect to profitability, productivity, and continual improvement.  Most organizations and the leadership therein, including your customers, are always mandating to reduce cost.  Easily said and is a script as common as ‘how are you today?’.  It is a phrase that falls easily from the lips in passing whether they truly care or not.  Question; Do you actually know what systems & principles logic coupled with the infrastructure it takes to reduce cost?

First thoughts are, if you have well defined and regimented set of integrated business processes benchmarked and tailored for your manufacturing environment, then cost is ultimately in control as long as the workforce (direct and indirect) follow them.  The least possible cost for your product and services inherently gravitates toward being optimum as an output of that infrastructure.  If not, then costs are typically variable and unpredictable from production run to production run where no one (you and your customers) are satisfied.

Earlier this year, we posted an article on “Productivity” related to organizations working toward developing the business related to artificial intelligence (AI).  At the bottom of this article, you will find the link to the blog. 

Within this article, you will see a chart of business development evolution “Steps of Business Development & Proficiency Evolution”.   We would like to draw your attention to ‘Level 2’ of the chart whereby manufacturers need to have well established business processes in order to be eligible to move into a lean environment.  Without that in place, you would be polishing an incapable set of processes and never achieve the next level of progression for your business.  Those who try spending a lot of time and cost with marginal success in achieving business goals and objectives.  Furthermore, by doing so, it erodes managements credibility in the eyes of the workforce.  That is a pitfall for passive resistance that is more dangerous than one can imagine.

So, lets get back to benchmarking and how it can help you and your team evolve.  Have a look at your processes with your Quality Assurance and functional leadership team.  How well are they aligned with world class standards?  We are not implying that six sigma is the answer, but the intent and framework of it should be an aspiration and guideline for good practices.  We believe that having the right horse for the right course is the key.  Just because [ACME Manufacturing] does it a certain way does not mean that is the right process for your company.  It’s the basic principles that matter and to make them work for your organization.

How does your company employ lean & 3S (sort, sweep & standardize) manufacturing in comparison to your direct competitors?  Maybe you are doing better than them, maybe not.  Utilizing your Quality Assurance team to benchmark would be a good step if you don’t already.

When it comes to ‘boots-on-the-ground’ manufacturing, have a look if your team embraces single-minute-exchange-of-die (SMED) type of methodologies.  Again, the intent of this is not meant to be literal.  Does your team think this way and apply elements of it to suit your product and service offering for optimum works-cost?  It also fosters efficiencies, proficiencies and improvements to product quality.

On another subject supporting good benchmarking is Continual Improvement (CI) programs.  This is where your workforce is engaged every moment of the day looking for ‘how can we do this better’ type of mentality.  Further, your functional leadership needs to embrace this and ‘lead’ the workforce.  This is as important as breathing to sustain life and longevity.

We can go on with many aspects of benchmarking and will cap this short blog off at this point.  Next weeks article will be focused on ‘COST’ which is an output of what we have been discussing here.  Until then, build your house on a solid and level foundation, the rest will be straight and possible.

We encourage you to reach out to us on this topic.  We are practitioners with a true passion to help manufacturers like you meet your objectives.  It costs nothing to enquire and we wager that you will be glad that you did.

Take a few minutes to watch the fire-side chat video below with our LYNXBMG Technical Support Partner Gary Buss.  We discuss the importance of good product design for manufacturability and optimized works-cost.