Nov 01 2007

Improving Profits

Published by at 9:44 am under Uncategorized

We’re all on the never-ending quest for improved productivity and profits.  But finally people are looking in the right direction – profit is made by minimizing costs.  Profit is the difference between what you sell it for (Price) and what it took to make and sell it (Cost).  Price is something you have little control over.  Your costs are in two categories – your Raw Materials which again you have little control over what you pay for them, and your Added Value Manufacturing Costs (AVMC). By lowering your AVMC you dramatically improve your profits.

In your QUest for Improved Profits (QUIP) you’ll find the age old formula: time = money.   Using some simply algebra we see wasted time generates no money and therefore creates loses. More efficiently used time generates more money because it increases its value creating profits.  Even worse, lost time cannot be recovered.

To begin our QUIP we first start with data. For purposes of this article your data collection device will be the production log book taken from the molding floor, and a spreadsheet program on your computer that contains a graphing function.
Data has three characteristics.  It must be REPEATABLE, USEFUL and VALID.  All three must be in place at the same time to be considered data:  Given the appropriate circumstances data boiling water at sea level with the appropriate atmospheric pressure will always give the same value.  If we need to know the temperature to do something else and can relate the value our temperature measuring device has given us; this is data.  But suppose we wanted to control the temperature of the water but didn’t have the means to do so? While repeatable and valid, this information is not useful and therefore cannot be considered data for our purposes.
Here’s how you set up your spreadsheet. Look at your operation and set up one column with time wasters on the production floor.  Let’s briefly look at ten wasters and their solutions.
Machine down – no schedule The sales force’s purpose in life is to overload your shop.  If a machine sits idle you’re not making money.  Injection Molding is a 24/7 technology, yet many shops don’t run 24 hours per day and more still only believe in a 5 or 6 day work week.  If you are not fully utilized, your shop is losing some very lucrative potential profit.

Machine down – no operator This is inexcusable for several reasons.  First you’ve made your operation people dependent and unfortunately people are not particularly dependable.  Second, injection molding maximizes its profit potential by running fully automated processes.  Third, (I’ve actually seen this in several plants) the workforce is so ‘lean’ that some machines have to be shut down when folks go on breaks, go to lunch, at shift change, during vacation time, or the opening day of hunting/fishing season.  You’ve got to be mule-stupid to have put yourself in this position.

Machine down – no mold If you schedule properly, you should always have a backlog.  If a scheduled mold hasn’t arrived at your plant, is being repaired, or you’re awaiting approval from a customer; put another mold in the press and mold parts.  The worst that can happen is that you’ll have partially completed this new run and you’ll have to pull the mold and put the one in that was originally scheduled.
Machine down – machine maintenance Scheduled maintenance is part of the cost of doing business and is not wasted profit.  However, neglecting maintenance and going down because something inadvertently broke is inexcusable.

Machine down – tool maintenance Tooling should be maintained when the job is not scheduled to run.  Water leaks, broken pins, scratched cavities etc. are things that should be anticipated and interdicted before the mold was mounted in the press.
Machine down – setup Setups are a necessary cause for down time.  However setups that take more than half a shift are wasteful.  You shouldn’t have to go hunting for equipment (bolts, clamps waterlines). You shouldn’t have to stop your setup to troubleshoot another machine. You shouldn’t have to stop and wait until someone else is done using (your only torque wrench, the crane, the forklift etc.)
Machine down – no material  Going down because you ran out of plastic to process, awaiting for the hopper to dry your material, not having boxes to put parts in or skids to stack boxes on should be grounds for termination for lack of planning.

Rejected lot – If everyone knows what a good part is, the mold is properly maintained, and if the mold has made acceptable parts in the past; there is no excuse for making bad parts.  Ever.

Slow cycle – If you’re making scrap and you slow the cycle down (physically slow it down, block off a cavity etc.) you’re wasting time you’ll never get back.

Inspecting quality in – If fear of a reject requires you to put additional labor on a job to inspect every part, it’s probably cheaper to put a few $20.00 bills in with the parts and let your customer sort them.  If you must sort quality in, there are devices that can do it faster, more accurately and better than people.
Each of these wasters could very well be broken down into several sub-categories.  It doesn’t matter.  Set up a list of the time wasters that best fits your operation for your machines.  As a pilot program you might pick only a few machines.  Gather data (repeatable, useful, and valid) so you can account for 24 hours per day, seven days a week for each machine regardless of how your plant operates.  You’d be surprised, when you add up the hours of machine time, how often people ‘forget’ to put in the true downtime because they feel it makes them look bad.  This is a situation you’ll have to deal with.  Gather data for two weeks minimum.  Longer than two months (unless you’re using the ever-exploitable/abusable Summer Students) is a waste of time and money.
With this data in hand, calculate the total non-profit-generating hours for each category by machine and draw a bar chart.  Create another bar chart simply by category for all your machines.  Redo your charts into a Pareto Chart format.  The importance of insisting on true data and using the Pareto approach is that you are pointed towards the issues with the highest profit potential.  Using the Pareto Principle of “80% of the problems are generated by 20% of the causes” as you go through your charts by machine you’ll notice some very specific time wasters unique to certain machines.  Machine specific time wasters are usually maintenance issues.   However there are always some surprising generic time wasters.  Many people think 10 minute mold changes are a good goal to pursue.  While it certainly is, comparing the lost time of running 7 cavities on an 8 cavity mold puts running on full cavitation as a the top of the list and faster mold changes something to be worked on later.
You may now QUIP management with a plan to correct these deficiencies.  While they like charts (‘executive coloring books’) some of the more enlightened also want data expressed as money, making your request for money easier to justify.  Simply multiply your lost hours by whatever dollar figure you use in quoting parts.
This pilot program can be used as a “crystal ball” experiment – the data you’ve got from this small sample of machines is probably typical of your entire operation.  Implement your QUIP on a small scale, measure the profits and then leverage it plant wide.  A Pareto Chart is a snap shot in time. But circumstances tend to be dynamic.  If your QUIP report generates enough profit to make this an on-going program you’ve now justified purchasing one of the several prewritten programs.
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This article is virtual.  You can read it, set up your own program, and look like a hero.  You can also use it to scare management as they watch jobs going overseas.  Or you can use it to say “I told you so” when you get downsized.
Your choice.

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