But the expenditures can quickly become less fearsome when one considers the return on investment. The approach is to look at the savings that will come from the projected decrease in waste and rejections.
Waste and rejections are often misunderstood. Wastes are the raw materials that are not used for the finished product. Rejection involves two categories: products that are not shipped because of a defect, and products that are returned because of a defect. Consider that a product that is returned costs seven times the cost of manufacture.
At trade shows such as MESA International each spring in Orlando, plant owners and operators have an opportunity to view the latest waste and rejection equipment, software and sensors that can support an increase in profit.
The key element, or first step, is to determine total support to achieve an increase in profit. Is there a pre-planning operation in place? Is the pre-planning in writing or memo form? Who will be the lead person? Will the pre-planning group be limited to management only, or will there also be a person from the production line? If a production person is not involved, the “buy-in” is limited.
A careful analysis of cost savings at this point is, at best, a calculated guess. But once the pre-planning has determined that there will be a likely cost saving, the next step is to review vendor programs and determine which programs will result in the best return on investment and produce less waste and fewer rejections.
A rapid resolution to this situation is essential. Two thoughts are prevalent. One is, “The quicker the installation, the more money we can saved.” The other is, “If we wait, a better system could be available and might be less expensive.” But remember, there will always be a new system on the horizon. If it’s good today, and installed, the system can be improved tomorrow. Waiting may lead only to a loss of time and opportunity to increase profits.
How to choose
There are few guidelines for selecting a new system and vendor. Each manufacturer has varied demands and requirements. Each has limitations in dollars available, physical space, employee skills and resources.
A few direct questions should be part of the bidding process. Some may sound elementary, but without a list, some can be overlooked. Has the planning group clearly defined the specific requirements and goals for the new procedures? What is the delivery date and estimated time for the system to be operational? Are there penalties for failure to meet deadlines? Will the vendor offer comprehensive training, in understandable terms? Will there be upgrades in training and software “patches” at little or no cost? Are the operators and supervisors ready to accept a new procedure, and do they understand the new technology and its operation?
Is a procedure for tracking waste currently in place? This should be instituted immediately as the pre-planning group’s initial responsibility. A procedure must also be in place for tracking rejections of the product and why the product was returned. After the new procedures are installed, there is a comparative record as to the improvement or lack of desired improvements.
Installing a state-of-the-art procedure is not easy. But it is cost effective, if done right. Detailed plans with the right mix of group members can speed up the process and bring the desired results. Constant improvement should be the goal of all manufacturing units.
Jerry J. Field, Ph.D., [email protected], is on the senior staff and Adj. Professor at the Illinois Institute of Technology. He is also a member of MESA International, www.mesa.org.