Engineer cost reduction

Aug. 13, 2013
Stanton McGroarty says save money from what you don't do.

Quiet as it’s kept, the best engineering is precision laziness. This is particularly true of engineered cost reduction. Precision laziness reduces the number of parts, operations, specifications, tools, information, and people needed for a product to meet or exceed customer expectations. In all fairness, this kind of laziness typically starts with a great deal of design work, but design work is normally done once. Production and maintenance work are repeated indefinitely as a product is made and sold. This means that the most fruitful laziness will occur when we engineer out production and maintenance work.

Two prime examples of component reduction are found in recorded music and printed books. Engineers started by reducing large stacks of 78 rpm clay recordings to 33-1/3 rpm long playing vinyl albums. Now, several iterations of product reduction later, customers purchase a license for an electronic copy of a recording, buying pure information without a package. One could argue that this product actually became a service in the reduction process.  Similarly, publishers changed from hard cover books to paperbacks and now download files to their customers’ tablets, skipping the purchase of physical merchandise altogether. This is stripping down products to their essence, without non-value-adding physical trappings.

Not only do customers save the cost of the merchandise itself, they also eliminate the time and expense of picking up a book or record at the store. On top of all the savings, the quality of the sound and printed material is usually regarded as better than anything provided by physical media. There are some customers who argue that recording reached its peak quality on the analog equipment at Abbey Road. But they don’t usually take into account the wear and tear and peanut butter that affect physical media.

Not all products lend themselves to this degree of streamlining, but the same kind of precision laziness can be applied successfully to most. Producers save money by avoiding work, not by adding it into the process. A quick cost analysis of the book and record examples will also demonstrate that not all of the savings were passed along to customers. A $0.99 song file or a $10 best-selling book download are certainly less expensive than their physical predecessors. But the production, sales, and distribution costs are miniscule by comparison to those for traditional books and records. Moreover, some other costs like spoilage and inventory carrying are practically eliminated.

OK, so more can be less, and the change can be made in a way that is particularly advantageous to producers and maintainers. How do we apply precision laziness to the world of manufacturing and maintenance?

A value analysis (VA) approach to the elements we’re trying to trim will usually help. VA can usually be applied as a set of questions that identify opportunities in products and processes. The questions must be tailored to your products or services, but start with this kind of logic:

  1. What is the value of this element (part, operation, specification, tool, information, or work) to the customer, or anyone else?
  2. What is the cost of this element, both as an amount and as a percentage of the total cost?
  3. Can we eliminate this element altogether, simplify it, or combine it with another element of the product or service?
  4. Is there another material, process, or labor grade that could deliver this value at reduced cost?

Probably the best-known instance of applying this kind of logic to a product is the Bic pen, developed in 1950. The Bic Cristal ballpoint pen, born into a world of fountain pens and ballpoints that were fountain pen lookalikes, was stripped down to its value-adding elements — point, ink, protective cap, and barrel. The Cristal ballpoint sold for about $0.19, far below the cost of a conventional pen. Between 1950 and 2004, it sold more than 100 billion units. With only one significant engineering change, a vitrified tungsten carbide ball, the Cristal is still available today at $3.29 for a 12-pack.

Yup, engineer it once, and then don’t make most of it. When applied to production and maintenance, the same principle shows a lot of promise. A look at the Toyota Production System (TPS) reveals use of the VA questions. Work that does not add value is eliminated as a first choice and then minimized or incorporated into other operations.

Production of in-process-inventory (WIP), along with transport, racking, stacking, and storage is eliminated. Production and supply lines are designed to run with almost no storage. As for complex inventory management systems, they are replaced by kanban or other simple, physical systems. Today the best auto plants don’t build a car until they have a customer order for it, and there is precious little inventory between them and their suppliers.

J. Stanton McGroarty, CMfgE, CMRP, is senior technical editor of Plant Services. He was formerly consulting manager for Strategic Asset Management International (SAMI), where he focused on project management and training for manufacturing, maintenance and reliability engineering. He has more than 30 years of manufacturing and maintenance experience in the automotive, defense, consumer products and process manufacturing industries. He holds a bachelor of science degree in mechanical engineering from the Detroit Institute of Technology and a master’s degree in management from Central Michigan University. He can be reached at [email protected] or check out his .
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In process, inspection is eliminated or automated by simple tools like poka yoke inspection. A gate shaped like a good part is placed in the line. Oversized parts block the gate and stop the flow of material until the production operation is adjusted to reduce size. Similarly, a gate to the scrap bin is made so that undersized parts drop off the line, stopping production electronically and sounding an alarm. Variations on this theme abound in production systems. Rather than make junk, which is of no use to the customer, the systems stop production until they are adjusted to produce good product, which the customer does want. Production machines inspect the parts coming in so that they don’t add work to junk. It’s more precision laziness. If you can’t sell it, don’t make it. In fact, if you can’t sell it soon, don’t store it. Wait until a customer wants it, and then produce it in the right color.

Maintenance costs can be managed with the same questions. Starting with high-maintenance-cost equipment, identify which costs add value for the maintenance department’s internal customers. Do they care about bearing replacement? No. In fact, they don’t even care about oiling. Can we do something cheaper to eliminate those operations? Probably we can. First, find out why failures are occurring. Get the process right, including precision alignment and appropriate bearing loads. Then see if we can use some of the new sealed bearings or solid oil units. Do this engineering once and then stop doing the repetitive maintenance work that interrupts production and drains resources.

Once the bleeding from repetitive repairs is staunched, take a hard look at PM and PdM work. Start with the most costly. Do your inspections create corrective work orders. If the answer is no, re-engineer the frequency of your checks. Can you eliminate or reduce them? Can they be incorporated into other operations like belt changes? Are there ultrasound or other quick, safe inspection methods that will replace most of the other checks. Can you incorporate the ultrasound checks into the greasing operations that you should be doing with ultrasound anyway? And, whatever you do, remember to be lazy. When you have made an operation unnecessary, eliminate it. You’d be amazed at how often people forget this step.

Let’s all say it together: “Savings happen from things you don’t do.” We always knew work was the enemy.

Read Stanton McGroarty's monthly column, Strategic Maintenance.