Article | December 13, 2021
Lean manufacturing principles enable manufacturing businesses to achieve spectacular results and overhaul their conventional operations. A wide range of industries have adopted lean manufacturing because of its enormous advantages, and they have seen excellent results as a result.
The 2010 Compensation Data Manufacturing survey indicated that 69.7% of manufacturing organizations employ lean manufacturing principles. By consuming this data, we can understand how far organizations have progressed toward incorporating lean principles into their operations.
“Many companies are not willing to change or think they are done once they make a change. But the truth is technology, consumer demands; the way we work, human needs, and much more are constantly changing.”
–Michael Walton, Director, Manufacturing Industry Executive at Microsoft
Let's look at some examples of lean manufacturing from some well-known companies. These leading-edge examples of lean manufacturing will shed light on how lean principles positively affect.
Leading Companies Using Lean Manufacturing Effectively
Successful manufacturing businesses like Toyota, Nike, and Caterpillar are currently employing lean manufacturing ideas in their production processes. In addition, Intel, Parker Hannifin, and John Deere embrace these techniques. From them, we've described three different organizations in various sectors that are successfully adopting lean manufacturing.
John Deere has also implemented a lean manufacturing strategy. As a result, many of their quality control procedures are automated, which means that more components can be checked for flaws in less time. This means that more supply can be released each day, and the product can be supplied at a lower price to the consumer.
Additionally, these controls monitor the manufacturing process for each component of their products, ensuring that they never manufacture more than is required and waste essential materials in the process.
Intel, known for its computer processors, has used lean manufacturing techniques to provide a higher quality product for an industry that requires zero defects. In the past, it took more than three months to get a microprocessor to the manufacturer, but this principle has helped shorten that time to less than ten days.
Intel rapidly learned that creating more but worse quality was not the way to raise revenues and increase consumer satisfaction with its products, which were extremely precise and technical. Instead, both parties gain from quality control and waste reduction initiatives. This is even true in the tech industry, where goods are constantly changed and upgraded.
Toyota, the world's largest automaker, was the first to implement lean manufacturing in its manufacturing operations. But, even more importantly, they've learned how to limit products that don't match customer expectations by eliminating waste. To achieve these goals, Toyota employs two essential procedures.
The first is a method known as Jidoka, which loosely translates as "automation with the assistance of humans." This implies that, although some of the work is automated, humans always ensure that the result is of the highest quality.
When something goes wrong, the machines have built-in programs that allow them to shut themselves down. Known as the Just In Time (JIT) model, this is the second stage. Once the last part of a process has been finished, the next phase can begin. No unnecessary work will be done if there is a problem with the assembly line. This lean manufacturing technique has inspired thousands of other businesses.
Lean manufacturing principles and their execution require discipline and patience to get the results out of them. When we see the successful lean manufacturing examples, it is not a fraction of a second success. They have devoted their time, energy, and efforts to modifying every single operational process in order to become a part of lean manufacturing. Lean manufacturing is not a method; it is a way of life that transforms your business practices and takes your firm to a new level of operations. Gain insights from renowned organizations' lean manufacturing success stories to help you become a part of the lean companies of 2022.
What is the effect of lean manufacturing?
Lean is a performance-based, continuous-improvement strategy that removes waste and unnecessary processes from organizational operations. As a result, your company becomes more focused on the results.
Is it possible for lean manufacturing to fail?
It is conceivable in some circumstances, such as failing to focus on a single system implementation or implementing too many system changes at once and failing to have a sound follow-up system to check that everything is working effectively.
Why do certain businesses struggle with lean manufacturing?
Most businesses fail to see that lean is a management philosophy, not a set of tools. As a result, most corporate leaders either don't understand or lack the patience and control to implement lean manufacturing.
"name": "What is the effect of lean manufacturing?",
"text": "Lean is a performance-based, continuous-improvement strategy that removes waste and unnecessary processes from organizational operations. As a result, your company becomes more focused on the results."
"name": "Is it possible for lean manufacturing to fail?",
"text": "It is conceivable in some circumstances, such as failing to focus on a single system implementation or implementing too many system changes at once and failing to have a sound follow-up system to check that everything is working effectively."
"name": "Why do certain businesses struggle with lean manufacturing?",
"text": "Most businesses fail to see that lean is a management philosophy, not a set of tools. As a result, most corporate leaders either don't understand or lack the patience and control to implement lean manufacturing."
Article | May 10, 2021
Jason Spera, picture left, recently shared his vantage of the changes for factory floor automation in 2021. Jason is CEO and Co-Founder, Aegis Software. Spera is a leader in MES/MOM software platforms for discrete manufacturers with particular expertise in electronics manufacturing. Founded in 1997, today more than 2,200 factory sites worldwide use some form of Aegis software to improve productivity and quality while meeting regulatory, compliance and traceability challenges. Spera's background as a manufacturing engineer in an electronics manufacturing company and the needs he saw in that role led to the creation of the original software products and continue to inform the vision that drives Aegis solutions, like FactoryLogix. He regularly speaks on topics surrounding factory digitization, IIoT, and Industry 4.0. Contact Jason on LinkedIn.
Article | December 21, 2021
When it comes to developing a budget for the following financial year of your manufacturing business, many operations managers start with direct labor and material expenditures. But, what about manufacturing overhead costs?
Manufacturing overhead is any expense not directly tied to a factory's production. Therefore, the indirect costs in manufacturing overhead can also be called factory overhead or production overhead.
Outsourcing and globalization of manufacturing allows companies to reduce costs, benefits consumers with lower-cost goods and services, and causes economic expansion that reduces unemployment and increases productivity and job creation.
– Larry Elder
So, this article focuses on some highly effective overhead cost reduction methods that would help you build a healthy budget for the following year.
Manufacturing Overhead Costs: What Is Included?
Everything or everyone within the factory that isn't actively producing items should be considered overhead.
The following are some of the variables that are considered overhead costs:
Depreciation of equipment and productionfacilities
Taxes, insurance, and utilities
Supervisors, maintenance, quality control, and other on-site personnel who aren't producing signs
Indirect supply from light bulbs to toilet paper is also included in the overhead cost.
Manufacturing Overhead Costs: What Is Excluded?
Everything or everyone within or outside the factory that is actively producing items should be excluded from the overhead costs.
Factory overhead does not include the following:
Employee costs for those making the goods daily
External administrative overhead, such as a satellite office or human resources
Costs associated with C-suite employees
Expenses associated with sales and marketing - include pay, travel, and advertising
How to Calculate Overhead Costs in Manufacturing
To know the manufacturing overhead requires calculating the manufacturing overhead rate. The formula to calculate the manufacturing overhead rate i.e. MOR is basic yet vital.
To begin, determine your overall manufacturing overhead expenses. Then, add up all the monthly indirect expenditures that keep manufacturing running smoothly.
Then you can calculate the Manufacturing Overhead Rate (MOR). This statistic shows you your monthly overhead costs as a percentage.
To find this value, divide Total Manufacturing Overhead Cost (TMOC) by Total Monthly Sales (TMS) and multiply it by 100. The final formula will be:
Assume your manufacturing overhead expensesare $50,000 and your monthly sales are $300,000. You get.167 when you divide $50,000 by $300,000. Then increase that by 100 to get your monthly overhead rate of 16.7%.
This means your monthly overhead expenditures will be 16.7% of your monthly income. Being able to forecast and develop better solutions to decrease production overhead.
Five Ways to Reduce Manufacturing Overhead Costs
A variety of strategies may be used by manufacturing organizations to reduce their overhead costs. Here is a summary of some of the most important methods for reducing your manufacturing overhead costs.
Value Stream Mapping – A Production Plant Process Layout
A value stream map depicts the entire manufacturing process of your plant. Everything from raw material purchase through client delivery is detailed here. The value stream map provides you with a complete picture of the profit-making process. This overhead cost-cuttingmethod is listed first for a reason because every effort to reduce manufacturing overhead costsstarts with a value stream map.
Lean manufacturingis also one of the techniques of eliminating unnecessary time, staff, and work that is not necessary for profit and has gained undue favor in the manufacturing process. You must first create a value stream map of the whole manufacturing process for this technique to work. Once the lean manufacturing precept is established, the following strategies for decreasingmanufacturing overhead expenses can be examined.
Do Not Forget Your Back Office Management
Before focusing on factory floor cost reduction techniques, remember that your back offices, where payment processing and customer contacts occur, may also be simplified and increase profitability. Fortunately, automation can achieve this profitability at a cheap cost.
Manufacturers increasingly use robotic process automation (RPA) to sell directly to customers rather than rely on complex supply networks. This automation eliminates costly human mistakes in data input and payment processing by automatically filling forms with consumer data. Moreover, the time saved from manual data input (and rectifying inevitable human errors) equates to decreased labor expenses and downtime.
Automating Your Manufacturing Plant
For a long time, manufacturers saw factory automation as a game-changer. As a result, several plant owners make radical changes in their operations using cutting-edge technologydespite knowing it realistically. Over-investing in technologies unfamiliar to present industrial personnel might be deemed a technology blunder. Investing in new technology that doesn't generate value or is too hard for current staff to use might be a mistake.
It's usually best to start small when implementing newtechnology in manufacturing. Using collaborative robots in production is one way to get started with automation. They are inexpensive, need little software and hardware, and may help employees with mundane, repeated chores that gobble up bandwidth. It is a low-cost entry point into automation that saves labor expenses and opens the door for further automation investments when opportunities are available.
Reuse Other Factory Equipment and Supplies
Check with other factories to see if they have any unused equipment or supplies that may be "redeployed" to your manufacturing plant. Redeployment would save you time and money by eliminating the need to look for and install new equipment while lowering your overhead costs.
Outsourcing a fully equipped factory, equipment, or even staff can also assist in lowering overhead costssince you will only pay for what you utilize. As such, it is a viable method to incorporate into your production process.
Employ an In-house Maintenance Expert
An in-house repair technician can service your equipment for routine inspections, preventive maintenance, and minor repairs. This hiring decision might save money on unforeseen repair expenses or work fees for an outside repair provider. Having someone on-site who can do emergency repairs may save you money if your equipment breaks after business hours.
Manufacturing overhead costis an essential aspect of every manufacturing company's budget to consider. Smart manufacturingis intended to be productive, efficient, and cost-effective while effectively managing production expenditures. Calculating the manufacturing overheadcan provide you with a better understanding of your company's costs and how to minimize them. Depending on the conditions or geographical needs, each manufacturing plant's overhead expensesmay vary. As a result, identify your production overhead costsand concentrate on reducing and improving them.
What are manufacturing overheads?
Manufacturing overhead cost is a sum of all indirect expenses incurred during production. Manufacturing overhead expenses usually include depreciation of equipment, employee salaries, and power utilized to run the equipment.
What is a decent overhead percentage?
When a business is functioning successfully, an overhead ratio of less than 35 % is considered favorable.
How can I calculate the cost of manufacturing per unit?
The overall manufacturing cost per unit is determined by dividing the total production expenses by the total number of units produced for a particular time.
Article | April 1, 2021
April 12 -15 ProMatDX, the largest material handling event, will take place virtually. It will feature dozens of AGV vendors. Sadly, some of these highly innovating products still need to be plugged-in to capture power. No more.
Wiferion in process charging eliminates the plug-in charging making AGVs truly autonomous. In process charging eliminates the waste of AGV downtime – the fleet is always working AND charging. In process charging is safe ensuring the OSHA, ergonomics, and danger to workers significantly reduced. In process charging is cost-efficient because full vehicle deployment means a reduced fleet count ensuring a rapid ROI.
For OEMs of AGVs and industrial trucks implementing inductive charging technology solves the wear and tear issues caused by conventional charging methods as well as making vehicles fully autonomous. For end-users of AGVs and industrial trucks, inductive charging in combination with lithium batteries can improve fleet availability by more than 30%.
Whether driverless transport systems (AGVs), electric forklifts, or mobile robots (AMRs), the efficient use of industrial trucks is a decisive factor for competitiveness during ever- increasing cost pressures. The energy systems are being scrutinized and lithium-ion batteries are the preferred technology. The advantages versus lead-acid batteries (including the ability to recharge faster and more often) are obvious. Until now the full potential of storage technology has not been fully realized.