© Copyright G.R.P.Technology 2018 - Adelaide Australia
We live in a world where manufacturing has moved to
Asia.
Price is what it's all about.
Hence the page title - 'low cost manufacture'.
You simply can't compete on labour cost - so you find
means of removing the labour, or have the labour
intensive part made overseas.
If you can extract the labour - as in the video on the right
then the rules are different.
Beware of the middlemen doing this for you.
The amazing thing is that there are so many people, and
I use the average company director as an example, who
seem to live in some sort of dream world that you would
have a hope of competing with Asia. Normally I challenge
them to count the products around them that are made in
other than Asia. The TV set, the air conditioner, the
computer, the printer, the video player, the BBQ, it goes
on and on.
We can help you in all the above areas and more.
We have a summary list document here
I used to have this funny idea that the 'best' product
around would win !
Reality taught me that this is a load of nonsense !
It just doesn't work that way mate !
The best product is sitting in someone's drawer
somewhere. The fifth best has the marketplace ! Why
?
Well because it's available at a realist price, is properly
packaged, promoted and effectively distributed.
If you want to have your own personal delusion - fine !
If it is a 'hobby' for you to keep you off the streets - OK -
BUT - if you actually want to make a commercial
success of your product then you need to re-evaluate.
We outsource products/packaging/printing to Asia in a
substantial way ... details here
Optimising the product for the process is one of the
secrets of product development. You do not impose
your design on the process, but make the most2 of it
by being prepared to change and compromise where
required.
You get the best cost outcome by
working through the product
processing with the plant people.
The aim should be to sort out the
processing issues that effect the
product price. This includes things
like reject (off spec.) production,
careful selection of the right raw
materials. Elimination of labour
intensive operations for low cost
manufacture is essential.
To-and-fro between the Product
design and its Processing and still try to maintain the
product feature benefits.
Smarter design, less waste, working to make the
most of the processing equipment, will give you lower
costs, and better plant utilisation.
Too often the Designer imposes upon the Process
people, rather than work with them.
Should special equipment need to be designed to
achieve the right outcome then we can do this.
However wherever possible I always advise people to
look for off-the-shelf solutions if possible.
It is better to subcontract out product manufacture
wherever possible, provided you can find competitive
contractors that can produce at consistent quality.
Example - when G.R.P.Technology was first started
many years back this was a plant design to use water
jet cutting, which was very new then. This allowed
cutting of product automatically to size continuously
without dust and material wastage.
A small section of plant we designed in the past
In the Western world labour costs ! - you do not want
to double handle anything. There are a lot of tricks,
procedures and equipment to avoid costs associated
with handling raw materials and product.
Plant & Storage Layout
Factory layout of existing plant in a format that ALL
players can easily understand ! Location of people, and
optimum equipment layout on floor plan to suit is an
essential starting point for low cost manufacture.
Improvements to Plant and Storage Layout
Rearrangement of the system to achieve minimum
handling of Raw Materials and finished goods. It will
reduce operating costs.
Optimum storage arrangement considering storage
height as well as floor space is a valuable exercise.
Consideration of ease of identification of components
as they pass into the factory, through each section, and
out of the warehouse to effectively track inventory with
minimum effort.
We live in the age of process control - get on with it !
There are limitless options for automation - your Activity
Based Costing system is the guide to what you spend -
it will weigh the saving options.
I have experience with computer controlled plants, and
have gone further down the route to link into the
information system, so production data is even available
to the sales rep. in the field.
This can result in efficiency increase, control of quality
(and reduction of waste) with less labour and data for
your management control system.
Computer Controlled Process's
The secret here is to use systems that allow data to flow
in and out of the plant in a standard form which is
compatible with other software, so that you can link up
your inventory, scheduling, costing & company
reporting.
Optimum use of Labour
Look carefully at where the people are located in
relation to the equipment layout and material flow.
Redesign layout to 'bring the process to the people'.
What equipment (standard or purpose built) can be
employed to remove labour intensive functions. Use
Activity Based Costing to allow 'what-if' decision
making.
What parts of your process could be more effectively
outsourced ? See Outsourcing Presentation here
Process cost reduction is one of my favorite
subjects. Surprisingly one that few companies take
seriously (apart from using the buzzwords). There
are usually always options for those prepared to
think outside-of-the-square.
Activity Based Costing (see Costing) is the key tool
to use for this function.
Forecasting Demand
So many companies (small & large) have poor forecasting
ability, which is inexcusable considering how many simple
forecasting packages are available. Forecasting allows you
to look at how to make the most of you processing assets
and minimise inventory. For those with seasonal sales this
becomes absolutely crucial for low cost manufacture.
Capacity Planning
A reasonably accurate forecast is the basis for this. The
use of Activity Based Costing will allow you to put a
value on spare capacity and prompt some insightful
marketing decisions on selling prices and export pricing.
Understanding the factors that effect a forecast.
Detecting a Trend to a Loss in Productivity
Some people wake up one morning and find they can't
compete. Usually this is a result of being asleep-at-the-
wheel. These trends can be picked up before it gets to the
point, where there is no easy way out.
A real live example below with the name changed to protect
the guilty.
Inventory costs
Good concise reporting is the key guide to keeping this
issue in focus. If the information is not readily available
most people will be happy to ignore it. You want to know
what you've got and what the rate of stock turns is for each
product and raw material.
The other headings here give a guide of key factors
involved in controlling inventory.
Identification of the flow of Raw Material, Product in
process and Storage, handling of incoming Raw
Material and outgoing Finished goods. Optimisation to
achieve best flow path.
Often a lot of lip service paid to this subject.
I am usually wary of those companies with the 'four ticks'.
Usually more piles of paper and waffle rather the the key
the that counts.
If your people don't have the right attitude then it is all
nonsense.
Product Range
Rationalisation - is
about making money.
Stock costs money -
product variations
reduce efficiency.
This is something that
has to be continually
worked on. People put
products on the range
and some rarely want
to take them off.
Eventually they drown
you. Emotional
attachment tends to
hold them there. Most
get it - few face it.
We are good at this, and one of the reasons is that
most companies are constrained by the company guy
who scored 'big' with the one on the left and won't
concede that things have moved on (to the one on the
right - with the blood). As outside consultants we can
be a little more objective.
Still this whole business has to be handled with care.
Sometimes you discover feature benefits in products
(when you take the product off the range) that the
company was not aware of - as sales people were not
close to the customer.
Product - Off spec., Reject
Everyone gets it - few act properly on it. Isolating the
reasons and making improvements to the system is vital.
A value should be placed upon this every month to focus
attention on obtaining solutions.
There are always solutions for those who looking !
Waste Elimination
I'm always amazed how people will battle tooth-&-nail to
get a 10% return and yet let a possible additional 1/4 to
1/3 or more of this be wasted in terms of product yields
and raw material waste etc. without anybody really
working up a sweat. There usually are solutions.
So how do we advise our clients to approach manufacture ?
Well it does depend on each type of product but the following
may give you an insight.
Let's start the journey.
If you went out and had a product made, it would wind up at
a price 3 times that price that left your hands !
This varies above and below this depending on whether it is
a retail or industrial product, and the type of distribution etc.
So an extra $1 from you can equate to an extra $3 for
customer.
Can you see the multiplier effect ?
Why is this so - well distributors need their margin as do
retailers etc.
We have % on top of %
A small difference at the start winds a big one for the
customer.
For low cost manufacture we advise a variety of approaches
from, getting your local act sorted out, to having the product
made in Asia. We are 'thinking out of the square' souls here !
If you are an inventor or developer we can help you with your
project.
