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Cost Reduction

PROBLEM:

An international tooling company was faced with many challenges in maintaining profitability and market share with expanding international machining customers.

Strategic company goals had been established to:

• Reduce manufacturing costs for standard tool holders
• Achieve production cost target for new tool setter design
• Reduce cost of selected driven tools through value engineering and component standardization

APPROACH:

Steering Committee “sponsors” were selected for each team, and cross-functional teams were established for each goal.  Workshops addressed a process improvement model for each team to adapt to its unique project tactics and objectives, and a format was designed for developing and documenting a Project Charter Statement.  Detailed team minutes and reports were maintained in a central location for easy access and management visibility.

Throughout the project, each team periodically reported to executive management regarding their objectives, plans of action, accomplishments, and bottom-line results. With help from CMS, teams developed follow-on strategies to address longer-term actions and monitor results.

RESULTS:

Pre-Setter team

$485,692 projected savings based on initial cost estimates for new product design

$372,279 actualized savings for project actions completed:  

• Guide rail design changed to reduce assembly errors
• Camera changed from existing design (purchase cost reduction)
• Cost savings by outsourcing some parts and optimizing lot sizes for internal parts fabrication
• Grinding cost avoidance due to spindle design change and process improvements
• Improved layout for assembly process, including single product flow and 5S of area
• Negotiated better pricing on purchased components (factory installed and resale)  

Tool Holder team

$496,689 projected cost avoidance

$134,991 actualized savings for 2007 based on project activities completed:

• Provided back-up tooling to workstation to reduce delays and changeovers
• Programming changes for some machining operations and sequencing to reduce on-machine time
• 5S workstation, including quick-change features
• Changed material to lower cost stock

Driven Tool team

$262,709 projected savings

$221,837 actualized savings based on completed project action plans:

• Bearing re-design to lower cost item
• Gearing supplier change
• Outsource rough-machining operations
• Bearing supplier change for standard commercial items
• Assembly process improvements

 

Process Improvement Home

Material Flow 

Setup Reduction

Lean Manufacturing

Cost Reduction

Waste Reduction

President 

Vice President

120 Assembly Drive, PO Box 339 ~ Mendon, New York 14506-0339 phone: 585-624-7660 ~ fax: 585-624-7668