Cost Reduction and Optimization for Manufacturing and Industrial Companies
Scrivener Publishing 3 Winter Street, Suite 3 Salem, MA 01970 Scrivener Publishing Collections Editors James E. R. Couper Rafiq Islam Richard Erdlac Pradip Khaladkar Norman Lieberman Peter Martin W. Kent Muhlbauer Andrew Y. C. Nee S. A. Sherif James G. Speight Publishers at Scrivener Martin Scrivener (martin@scrivenerpublishing.com) Phillip Carmical (pcarmical@scrivenerpublishing.com)
Cost Reduction and Optimization for Manufacturing and Industrial Companies Joseph Berk Strivener @WILEY
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Dedication and Acknowledgments I HAVE WORKED WITH great manufacturing leaders. This book is dedicated to Johnnie Crean, Chuck Sebastian, Ed Elko, Irv Barger, Greg Burns, and John Gozza. Thank you for all you have taught me. PneuDraulics, Incorporated, a world-class developer and manufacturer of precision hydraulic aerospace components in Rancho Cucamonga, California, allowed access to their operation for many of the management concepts and photographs in this book. PneuDraulics is a great company, and I wish to thank their employees and the management team for their assistance. V
Contents Introduction Chapter 1 Part I Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 Part I1 Chapter 10 Chapter 11 Chapter 12 Chapter 13 Chapter 14 Chapter 15 Part I11 Chapter 16 Chapter 17 Chapter 18 Organizing a Cost-Reduction Program Labor Defining Headcount and Controlling Staff Growth Developing and Implementing Time Standards Measuring and Using Efficiency Assessing Machine Utilization Controlling Overtime Making Multiple Shifts Productive Finding and Reducing Lost Time Using the Learning Curve to Drive Costs Down Material Make-versus-Buy Determinations Inventory Minimization Material Utilization Minimizing Supplier Costs Supplier Negotiation Supplier Competition Process Improvements Workflow Optimization Setup Time Reduction Material-Handling Improvements 1 3 15 17 28 36 45 52 61 67 76 87 89 100 110 117 125 133 139 141 151 160 vii
viii Chapter 19 Chapter 20 Part IV Chapter 21 Chapter 22 Chapter 23 Chapter 24 Chapter 25 Part V Chapter 26 Chapter 27 Chapter 28 Part VI Chapter 29 Chapter 30 Index Scrap and Rework Reduction Work Center Cleanliness Design The Design Approach Requirements Relaxation Tolerance Relaxation Materials Substitution Packaging Overhead General Overhead Expenses Travel Inspection Gaining Disciples and Measuring Progress Suggestion Programs Measuring Progress CONTENTS 166 178 185 187 194 199 207 211 219 221 231 236 245 247 253 255