123 Avoid Manufacturing More Costs Than You Already Have
a bonus if they are able to reduce premium labor costs in relation to sales dollars annually.
These two tactics will encourage your supervisors to come up with ways to increase productivity during the week without having to come in on weekends. To measure whether your supervisors are meeting this goal, compare monthly or annual premium labor costs and measure this number as a percentage of sales dollars.
Do you encourage other small manufacturers to visit your facility? Again, some small business owners are concerned about competition and don’t want a rival stealing their great processes. Others are merely defensive and don’t want to hear that another company is doing something differently or better. You’ll fi nd, however, that allowing visits from other business owners is like having an unpaid consultant.
They come into your facility without any biases about your particular operation; they can look at it objectively and ask questions that you may not be asking because you’re too close to what’s going on.
Do you ask your operators good questions, and do they feel free to respond honestly? This give-and-take between you and the people who are closest to the equipment is cru- cial. If you ask perfunctory questions or no questions at all, you’ll never learn what they know. If they feel you don’t really want honest responses, you’ll also be in the dark. Your operators know the nuances of the machines they operate, and by communicating with you about their concerns and questions, they give you a way to save money.
For instance, one of my operators recently asked me why we carried two different sizes of grinding wheels, since our grinding machines were all similar. I wasn’t quite sure what the answer to the question was, so I asked around and dis- covered that one machine had a hub that was different from the hubs on all the others—our other machines had been modifi ed and this one hadn’t. As a result, certain types of grinding wheels came with this machine, and the purchas- ing department had simply bought the same type of replace- ment wheels and never questioned why they were different.
It turned out that it would take our staff about two hours to modify this machine’s hub so that it was like all the others, and we could then buy just one type of grinding wheel. This small modifi cation saved us about $1,000 annually. More 3.
4.
SmallBusinessSP.indb 124
SmallBusinessSP.indb 124 2/27/07 9:56:44 AM2/27/07 9:56:44 AM
125 Avoid Manufacturing More Costs Than You Already Have
signifi cantly, it taught me that there are many of these oppor- tunities for incremental savings, but you have to ask ques- tions of the people on the line to fi nd out what they are.
Do you have a state-of-the-art tooling expert? Tooling changes with astonishing speed, and if you don’t have an expert who can help you upgrade your tooling, you’ll lose money through ineffi ciency and lost productivity. Finding a tooling sage isn’t easy, but every small manufacturer should make it a priority.
We have traditionally purchased right-handed fl ute ream- ers for our hole fi nishing. Based on our expert’s suggestion, we are now in the process of changing them to left-handed fl utes. This has improved the life of the reamers and the fi nish of the holes. With a longer life span, less resharpen- ing of the tooling is needed. While our initial cost was high for these new reamers, we project a 15 to 20 percent gain in productivity. We needed an expert in this instance because we lacked an employee who knew the benefi t we’d receive from left-handed reamers, and our expert’s suggestion made this signifi cant gain possible.
Are you willing to automate, and are you actively looking for automation opportunities? This question is relevant now more than ever. If you don’t start automating now, you’ll regret it later. Yes, automation requires a fi nancial investment, but this expenditure is nothing compared to rising labor costs. Small business owners tend to be myopic when it comes to decisions that involve a choice between machines and people. They assume that it’s cheaper to use people than to buy expensive machinery. What they don’t realize is that we are burdened with an aging labor force, and that labor shortages in most industries will be inevitable in the near future.
Therefore, you should at least evaluate what operations can be automated and how the costs for doing so would 5.
6.
SmallBusinessSP.indb 125
SmallBusinessSP.indb 125 2/27/07 9:56:44 AM2/27/07 9:56:44 AM
compare to the current and projected costs of people doing these same jobs. Obviously, some jobs are still done more effectively by people than by machines, so the idea is not to get rid of as many people as you can as fast as you can.
Instead, be continuously aware of automation possibilities and don’t be afraid to make the transition from people to automation when it is warranted.
SmallBusinessSP.indb 126
SmallBusinessSP.indb 126 2/27/07 9:56:44 AM2/27/07 9:56:44 AM
127
C h a p t e r