NOVEMBER 20209MANUFACTURING TECHNOLOGY INSIGHTSIt is a mathematical fact that a 10 percent product cost improvement contributes more to the bottom line than a 10 percent sales increaseI would like to summarise with the following tips. Avoid becoming overwhelming, remember "analysis is paralysis," do not focus your attention on organisational structures but above all keep it result driven and don't forget weekly project and program follow up is an absolute must. Assessing the Building Blocks to Operational ExcellenceI have developed below schematic where some critical areas of opportunities are or reversely areas you are challenged with. This model is not meant to be exhaustive, but it gives a good starting platform to work from.Deeper into the BlocksThe opportunity foundation is made up of Operational Expense, Manufacturing Throughput and Inventory.What is Operational Expense exactly? I a nutshell it is the cost of material, labour, indirect and fixed cost. This on itself works as an eye-opener when properly looked at. What do I mean with this? Well, it is critical to understand how your product cost is built up percent wise across these. What is the Pareto breakdown of these categories and within each of these categories? By the way, Pareto (also known as ABC) is my all-time favourite how to look at things separating the trivial many from the important few. Then deeper investigate the possibilities and opportunities. What other operational expense can be scrutinised by monitoring actuals versus budget by example, what are the material variances or performance variances versus standard hours of work, target utilities and so on. What is value-add versus non-value-add activities or cost in your operations?Increasing Manufacturing Throughput is a matter of process flow across your production floor or rather on a broader scale of your Operations. Value Stream Mapping (VSM) is a powerful LEAN tool to get a grip and overview on things, identify gaps and to use as a basis for optimisation. We are always measured through the eyes of the customer or at least we should be mindful we are. How good is your customer service level really from the customer perspective and expectations? How strong are you versus your competitors?More technically we get into the domain of OEE (Overall Equipment Effectiveness) where we often focus on machine breakdowns but don't forget to definitely look as well at overall stoppages and their reasons (for instance material shortages, product process issues, waiting for QC). Are there opportunities around improving cycle times? A lean organisation cannot function without stabilising your capacity and output. Your production system needs to be a true reliable apparatus.Inventories have a direct impact on cash-flow and which is why companies are always looking for improvements around it. Have you done an ABC portfolio analysis (50 percent of items contribute to 5 percent of profit)? Think about it what is the best driver to work down inventories, is it A or C items? Well, actually, it is A item that has more frequent deliveries in and yet often have the same number of safety stock days than any other item on a far more important volume. Needless to say, C items need to be worked on as well but more with regards to sanitising the tail end of your business. Work with your A suppliers on lead times, who carries the stocks, call of agreements, JIT deliveries. And finally, there is SLOB (Slow Moving and Obsolete) the one category that everybody wants to forget about instead of having quarterly review and true action meetings on it.
< Page 8 | Page 10 >