Everyone knows variability is to be avoided. But too often manufacturers say: “My waste is very low. Everything passes the lab tests. So my process is under control.”
It’s not that simple. Process variability that wreaks havoc on your bottom line can be surprisingly well hidden. The flipside is that going after this variability will add plenty to your profitability.
Here are six hidden ways that variability may be sabotaging your bottom line:
• Running too far from customer limits – Most manufacturers automatically target a centerline that is further from customer limits than necessary. True, if the customer demands that you stay between 90 and 100, targeting 95 is very safe. But say you’re able to run consistently at 91 while never going below 90. You’re likely to make significantly more profit! The sweet spot where your process runs at its optimum may not be in the dead center of customer specs. Target the sweet spot where you make the most $$$, and have the confidence to stick there.
• Underestimating the cost of waste – Often waste is kept to a minimum by actively managing internal recycle. Feeding out-of-spec product back into the process can minimize wasted raw material and make the out-the-door product meet requirements exactly. But this fails to factor in the time, additives, manpower and energy put into making and then recycling bad product. Minimize variability and you get more product right the first time.
• Hiding the cost of poor employee performance – If your manufacturing process has significant ‘normal’ variability, it’s difficult to spot when certain employees/shifts fail to follow SOPs or take shortcuts. Failure to perform as directed will be hidden in process data noise. But when your process is tightly controlled, these behaviors stick out like a sore thumb. Poor performers can be identified – which makes an instant difference – and trained to ensure tighter control.
- Lost sales to competitors with better variability control – Manufacturers that best manage process variability use reduced costs and more predictable scheduling to improve competitive advantage. These manufacturers know exactly how to price the product and exactly when it will be ready to be shipped.
- Lost revenue from not making a premium product – When you manufacture products that become raw materials for other manufacturers, consistency is critical. A consistent input helps downstream manufacturers line their processes out, keep their machines running, and make excellent final product. Make a more consistent product than your competitors and you can command a premium price.
- Process errors – Errors in following procedures are costly. They take time to identify and correct; they wear down customer confidence. Typically, these errors occur in unusual situations rather than in typical daily processes. Minimizing variability leads to fewer times that people must deal with the unusual situations that tend to result in process errors.
Reduced process variability is the tide that floats all ships. Improved performance will quickly bear results through your entire organization. Paperwork burdens are reduced; expediting is reduced; customer complaints fall; the list goes on.
You’ll find there is no end to the benefits, large and small, from reduced process variability.
Filed Under: Industrial automation
