FABTECH® just keeps getting better. In fact, the entire purpose of FABTECH is improve- ment. But hidden in the flash of new and better equipment and the appeal of the latest practices and methods is the real question: How do I
reduce my total unit costs to generate a sustainable competitive advantage? In other words, how
do I improve beyond my company’s current norm,
but also more than the competition?
To do this, you have to reduce those costs, and
not just by improving the throughput rate of a given machine. You have to do some digging.
Over the past year in this column I have addressed a number of topics related to this. ;is
has included the importance of selecting what to
improve; that is, identifying all the areas of potential improvement, selecting the important few, and
seeing those projects through to their completion.
;is is critical for achieving any real gains from
your improvement initiatives. ;e what part and
the discipline to follow through without di;using
your available resources are the prime distinguishing characteristics of companies that really do improve. Without these characteristics, no amount of
talent or management or procedural competence
can drive e;ective improvement.
Sometimes the what part is pretty apparent; you
may need to improve the capabilities of people or
machines. But usually the what isn’t apparent at all,
because many root causes are hidden and not terribly obvious in common business metrics.
;ere are various hidden cost drivers. Some are
inherent in almost any value-producing operation;
others are most damaging in high-product-mix
operations such as custom fabrication. Further,
these costs tend to confound other improvement
e;orts unless they are exposed and dealt with. So
let’s shed some light on the ones most pertinent to
;e amount of information flying around in high-product-mix shops still amazes me. Necessary information on what to build, when to build, what
and when to order, changes in dates, quantities, revision levels, acceptable quality, and a host of other
details can be overwhelming.
A lot can go wrong. In fact, the odds of something going wrong go up with the amount of information and its variety, and if that information
is communicated unclearly. ;e information issue
drives a lot of di;erent kinds of waste. It can be a
In a high-product-mix shop, the amount and variety of information aren’t likely to change. ;at’s
not really under your control. But you can improve
by translating the incoming information to a standard output format that is understood and actionable to a very high degree of accuracy.
;e goal is to have a mechanism that provides
correct information to the actual processing activities, especially those on the shop floor. ;e information needs to be correct,
unambiguous, timely, understandable by anyone
in the activity, and identically actionable—that is,
it causes the same action
regardless of who does it.
;is is a pretty tall order. But when you do
a root cause analysis of
what went wrong and
what generates unnecessary costs, you will find
that information flaws
almost always tops the
list. You also will find that
most of these flaws can
Here’s a simple but
common example: You
just bought a new ma-
chine that can process
parts 50 percent faster
than the old one. ;at’s
improvement, right? Well,
not if you build to the
wrong revision, or overbuild, or build the wrong
thing at the wrong time. ;e throughput im-
provement will be eaten up by the costs incurred
to make things right. And those costs will be bur-
ied. Although hidden, these costs are real, never-
ending, and cumulative unless you do something
Searching wastes are truly hidden because they
almost look normal. We are very accustomed to
seeing ourselves and others in the familiar activity
of saying, “Let’s see … where can that be…” It’s perfectly normal, but also perfectly costly and completely avoidable.
;e only good thing about search waste—a form
of information waste and downtime waste—is that
it is relatively easy to improve. Any sustained 5S/
visual workplace initiative will cure 80 percent of it.
It is one of the few improvements that in principle
can be initiated easily. ;e only expertise required
is in the sustaining plan and execution.
It’s hard to find any real reason to put up with
search waste and its costs. ;ey usually show up in
e;ciency variation and cumulatively contribute to
everything from schedule disruptions to overdue
orders, because search waste steals available time.
Excessive Material and
Here’s another simple one. It’s hidden because like
search waste it’s hard to “see.” Moving material
around a plant is perfectly normal. People moving
around also is normal. But excessive movement of
material and people has virtually the same e;ect
as excessive searching. It’s another classic waste
identified in lean principles. It is a bit harder to
remove because it can involve plant and equipment layout changes, build quantity and scheduling discipline, and a focus on part flow. But like
search waste, it is eminently improvable. It does
take expertise to get an optimal solution. But improvements can be made bit by bit. Cells and virtual cells are good examples.
In general, when you actually “see” and measure
the amount of cost linked to searching and excessively moving, you will be unpleasantly surprised.
But understand those excessive searching and
moving costs are only part of the total waste they
Time lost is cumulative, and if not corrected,
building excess capacity—with overtime, or even
adding more people and machines—is the only
tool left to recover that lost time. And adding
that capacity costs money that you wouldn’t have
spent if you had the movement waste under control. ;is is what makes this waste so hidden—and
Where they lurk and how to uncover them
Dick Kallage is principal of KDC & Associates Ltd., email@example.com.