By Dan Murphy
This article is Part 1 of a Swiss Wizard series on Reducing Part Costs and focuses on labor and simple automation to hold down costs…
Customers will stop buying from you for a variety of reasons including: service, delivery, their perception of your responsiveness, quality, and price.
When the economy gets ugly, many buyers naturally focus on price. China and other low labor cost countries open the selling conversation with price,. Reducing your high cost of business (compared to low labor countries) becomes the critical component of staying competitive… and getting the business.
Your high costs open the door for foreign competitors. And while they focus on price, they also may deliver quality, service, and good value. Don’t assume that foreign competitors can’t deliver quality- they can.
How do you beat them?
You must be zealous about reducing costs or you’ll see your customers disappear. Let's get started by looking at the factors driving the price of the parts that you are producing:
> Material – raw material for the part
> Tooling – tooling, cutting tools, collets
> Direct Labor - loading, setup, operating
> Machine Time – Setup time, cycle time, work in process inventory
> Overhead – Personnel, facilities, utilities, machine costs
> Other – Taxes, paperwork, compliance
It should come as no surprise that each bullet point above can be 'attacked' to produce cost savings. Reducing setup and changeover times are critical but have been covered extensively in previous articles in the Swiss Wizard Series. For that reason, this month's article will focus on cost savings from direct labor.
Eliminate Secondary Operations:
Doing away with secondary operations reduces direct labor costs and improves part throughput. Today's multifunction and CNC Swiss lathes are a great place to start because they're designed to produce complete parts in one operation. Removing direct labor costs will allow you to be more competitive with low labor cost countries. Remember, even small improvements can make a difference over time.
Simple Automation Produces Big Results:
Chip conveyors and automatic bar loaders are examples of simple automation that can drop thousands to your bottom line each year. If you're thinking that “it takes no more than five minutes, a few times a day, to clean out the chips, why would I buy a conveyor for each machine?” take a look at the following example.
Chip Conveyor:
> Cost: $5,000 - $7,000 per machine.
> Without it chips are pulled once an hour.
> It takes 5 minutes to pull chips. Plus it makes a mess.
> With a conveyor chips pulled one time per shift.
> 6000 hour year at 80% utilization = 4800 Hours.
4800 x 5 minutes=24,000 minutes/60=400 hours of direct labor at $20.00/hour=$8,000.00
> 4800/8=600 x 5 minutes = 3000/60 = 50 hours of direct labor at $20.00/hour = $1,000.00
> Chip conveyor savings $7,000.00 per year / per machine.
Automatic (Magazine) Bar Feeder:
Now let's take a look at the productivity increase possible of by switching from a tube feeder to a magazine bar loader, using a 2” part cut from 12' stock as an example.
| Bar Length in Inches | A | 144 |
| Bar Usage Per Part | B | 2 |
| Remnant Length | C | 7 |
| Parts Produced by Bar | 69 | |
| Cycle time in seconds | D | 45 |
| Bar change time for tube feeder. Approximately 300 seconds @ 100% efficiency | 600 | |
| Bar change time for magazine feeder | 45 | |
| Available time in hours | E | 20.4 |
| Available time in seconds | 73,440 | |
| Total daily production with tube feeder | 1,366 | |
| Total daily production with magazine feeder | 1,609 | |
| Percent Production Increase: 17.50% | ||
In a 5,100-hour year, a 17% production increase will result in 867 additional billable hours. At $60.00/hr that is $52,020.00 in additional income. The bar loader also will save approximately 985 hours of direct labor based on the given conditions.
Add 400 hours [for what] and multiply these hours by five machines. You'll save 6,925 hours of direct labor. Reducing these small amounts of direct labor creates large savings and allows one operator to run more machines.
Stay tuned for part II in the The Swiss Wizard's column next month: Matching the right machine with the right job.
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