Hidden costs – they’re everywhere, they’re everywhere… Is MFG 4.0 the answer…

Advanced Cushioning

Costs lie hidden in production environments – from the obvious to the not so obvious. 

Obvious… internal costs – cost associated with defects found before the customer receives the product

  • Waste, scrap, rework, recalls, recurring failures — and, the not so obvious failure to quantify all of the labor costs and lost opportunities associated with resolving these issues

Sometimes painfully obvious and extremely high cost… external costs – cost associated with defects found after the customer receives the product

  • Repairs and servicing, warranty / recall claims, complaints, returns

Obvious but bits and pieces are just accepted as a part of doing business – measuring & monitoring – costs incurred to determine the degree of conformance to quality requirements — all those little things we have to do but wish we didn’t have to do…

  • Verification, quality audits, supplier ratings

More of the stuff we wish we didn’t have to do and more costs that just aren’t always quantified – prevention / avoidance – costs incurred to keep failure, measurement & monitoring costs to a minimum

  • Managing product requirements, quality planning, quality assurance, training

Where are the next round of cost reductions in your organization?  What if the above cost could be cut by one half?  What would the impact on your financials be?

Keep learning…

Vision AND Action… there is no contradiction both are required in all areas of business

Being able to see hidden costs is the key to moving toward Manufacturing 4.0.  If hidden costs are a blind spot within an organization, they are not ready to justify taking the next steps.  What are the hidden costs an organization needs to focus on? Research has show that the:

  1. Cost of bad data -typically, 15% to 25% of revenue
  2. Cost of quality – typically, 15 to 20% of revenue
  3. Costs associated with OEE of 60% is fairly typical for discrete manufacturers
  4. Cost of under-utilized assets (manpower, equipment, facilities, etc.)

What costs are a prime target of Manufacturing 4.0?

Advanced Cushioning

Being able to see hidden costs is the key to moving toward #Manufacturing 4.0.  If hidden costs are a blind spot within an organization they are not ready to justify taking the next steps.  What are the hidden costs an organization needs to focus on? #Lean on steroids.

  1. Cost of bad data -typically, 15% to 25% of revenue
  2. Cost of quality – typically, 15 to 20% of revenue
  3. Costs associated with OEE of 60% is fairly typical for discrete manufacturers
    • Discrete manufacturing is typically described by individual or separate unit production. … The processes deployed in discrete manufacturing are not continuous / flowing in nature. A separate process step (discrete) can be started or stopped and can be run at varying production rates.
  4. Cost of under-utilized assets (manpower, equipment, facilities, etc.)

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