Review of manufacturing and industrialization processes, and cost reduction

Problem

The company is part of a diversified industrial group. It has been active for decades in the machine tools sector and has several plants in Italy and abroad.

In the context of a rapidly changing market, the company has only partly managed to keep up with new technological needs. Despite their high technical performance, their machines are not competitive enough. Moreover, an old-fashioned organizational culture and obsolete procedures have had a negative impact on their ability to compete on price.

The company needs to take a new look at its production processes through an analysis of its working methods and supply chain.  The aim is to reduce costs and delivery times.

This requires an examination of the industrialization of different families of components and of a new machine currently under development.

The company lacks an industrialization unit.

Solution

A manager from Contract Manger takes up the role of Industrialization Manager. Particular attention is focused on the new machine under construction and the company’s top selling products. The objectives set for Contract Manager’s assignment are the following:

• to set up an Industrialization unit able to interact with the Technical, Purchasing, and Manufacturing Departments
• to base the actions taken on a new model of process analysis, defining new working cycles and new standard costs
• to implement effective performance monitoring tools and to undertake needed improvement measures.

The temporary manager undertook the following actions:

1. Proposals and plans for improving construction and metalworking processes, for the machining of raw castings and for the start-up of the assembly line of the new machine.
2. Analysis of the main manufacturing processes, benchmarking the company’s costs for each process against those of the market. Implementation of new in-house working cycles and review of suppliers’ conditions.
3. Provision of support to technical departments to simplify cost-saving measures.
4. Provision of support to accounts to define new component standard costs and new product standard costs.

Results

1. Creation of new methods of analysis and definition of production cycles and costing methods.
2. Reduction of production costs of castings (up to 30%) through redefinition of raw castings, working cycles and working time.
3. Reduction of tooling-up times, changing the machines used and using modern magnetic locking systems.
4. Improved productivity of the laser station, standardizing and reducing the number of material thicknesses defined by the designer.
5. Default settings, according to modern methods, thus reducing assembly times and eliminating manual adjustment.
6. Analysis of product cost of machines currently under construction to verify margins. Solutions proposed to cut costs and recover margins.
7. Training of skilled operators in carrying out technical and economic industrialization tasks.
8. Costs and margins reduced by up to 30%.
9. The creation of the industrialization unit generated new dynamics in product development, leading to equal weight being given to technical needs and product cost limitations. It also opened up a new, lean, effective dialog between Manufacturing and Engineering, with an all-round focus on cost awareness.
10. The foundations were laid for a thorough reorganization of the Product Development, Supply Chain and Manufacturing Departments. A new ERP system was implemented and integrated with a new product lifecycle management system.