The High Cost of Manufacturing Errors
High costs of rework and scrap plague many manufacturing organizations across all industries and product lines. And the list of root causes—and, quite commonly, excuses and finger pointing—can be bewildering.
Most commonly, manufacturing blunders that result in rework, tool damage, and scrap are the outcome of poor design for assembly and manufacturing.
But quite often, manufacturing setbacks are caused by human errors, omissions, and plain misunderstandings in the process of transitioning a new product from design to manufacturing.
Other organizational ills, such as poor maintenance practices of manufacturing assets, unmotivated employees, and poor quality management, can add to the problem.
No matter the root cause, the impact of rework and scrap can be overwhelming, especially when a problem is discovered only when the organization is already in full volume production. About half of the causes for rework are discovered during ramp-up time, resulting in design or process changes that cascade to several design or manufacturing activities, and impact work in progress, inventory and supplier contacts, and are highly disruptive and resource intensive.
The waste in time and money caused by rework can be dramatic. One study found that 16% of manufacturers estimate that scrap and rework cost more than 4% of sales. 20% of the companies reported cost greater than 2% of sales.
Oops, You Did It Again!
Organizations that investigate the causes of rework are often surprised by the poor adherence to well-established best practices, negligence, overzealous engineering, and nonconformance with standard procedures.
A good measure of the manufacturing process maturity and the magnitude of rework and its impact on design and manufacturing is the volume and root causes of Engineering Change Orders. Analyzing ECOs, ECNs, and ECRs—engineering change requests come under many acronyms—help understand the impact of changes not only during manufacturing ramp up, but also throughout the product lifecycle.
An eye-opening statistic are ECOs that were issued to correct problems in routine processes that the manufacturing organization assumed are established and well-honed, such as mechanical assembly, plastic injection mold design, and molding process.
An internal review of ECOs conducted by an industrial equipment manufacturer estimated that 65% of the ECOs were preventable. Most of these avoidable incidents were caused by negligence and misapplication of well-established design and manufacturing practices.
Another in-house study undertaken by a heavy equipment manufacturer was even more revealing: over 80% of the ECOs were preventable. While many of these ECOs were a result of errors and omissions in documentation and supplier communication, a significant number of change requests were to correct design errors that lead to manufacturing and assembly problems.
These studies and others highlight the level of systemic avoidance of best practices and standard procedures. Manufacturing organizations that are not taking steps to avoid these costly mistakes, are doomed to repeat them.
You Can’t Afford to Do It Again!
As the old adage goes, “If you don’t have time to do it right, when will you have time to do it over?”
Most new products in all industrial sectors miss the planned launch date. And the impact of a delay, even a short one, is significant. It means loss of revenue, squandered market position, and damage to the brand image. Put together, the outcome can be stern.
Already in the early 80’s, Caltech’s Donald Reinertsen estimated that a 6-month delay can deplete 33% of lifecycle profits. In a more recent study, 20% of manufacturing companies estimated the cost of scrap and rework to be between 2% and 4% of sales, and 16% of manufacturers reported losses in excess of 4% of sales.
Organizations are Poor Learners
If, as I described earlier, the root causes of engineering changes are well known, and ECOs are easily preventable, why are manufacturers not doing more to nip them in the bud during early design? Why are they not more aggressive in applying engineering and manufacturing knowledge and practices?
Many organizations are slow to learn and even slower to disseminate new knowledge and lessons learned.
Even successful companies are often the victims of their own success. They are locked into operating models that were successful—or at least sufficient—in the past, become driven by habits that put them on autopilot. They may event erect bureaucratic guards to keep those supposedly tested and proven methods churning and protected against change.
The resistance to change is often more pronounced in manufacturing operations that, by nature, especially in the era of six-sigma culture, are designed to be structured and repetitive. In a similar vein, the contemporary approach to product engineering that stresses agility and rapid iterations, has little time and patience to allow lessons learned from manufacturing to influence design.
Don’t Do It Again: Design with Confidence
Getting the design right at the beginning of product design is key to meeting product cost, quality, and time to market objectives. Design issues, whether functional or manufacturing-related, must be caught early enough so that changes are less disruptive and less costly.
HCL’s DFMPro helps designers check their designs for manufacturability and assembly, and correct issues early in the design stage, when the cost of change is lower. It interprets the design model as per the manufacturing intent and applies rules-based checks that are based on design and manufacturing rules, best practices, and general process guidelines for core manufacturing processes like machining, injection molding, sheet metal fabrication, casting, and assembly.
Unlike other quality checking tools that check for compliance with general manufacturing guidelines, DFMPro applies manufacturing intelligence specific to the manufacturing process and various downstream activities.
Automation of design checks driven by a centralized repository of design rules is a centerpiece of quality management and continuous process improvement. It facilitates early detection of design and manufacturing errors caused by poor practices, and encourages knowledge capture and reuse, which, subsequently leads to the continual removal of bad and outdated practices.
Manufacturability must be designed-in. Product organizations should embrace a culture of proactively designing and engineering products to optimize all the manufacturing functions to ensure the best cost, quality, and time to market.
Image: Charlie Chaplin in “Modern Times (1936)
This article was sponsored by HCL Technologies