Exploring Advanced Manufacturing Technologies. Steve Krar
high hurdle rates for evaluating new technology, believing this will result in high-return profits, rather than introducing new product and process technology to improve product accuracy and manufacturing productivity.
▪Delaying investments for advanced manufacturing technologies can result in a competitor gaining a market advantage that may be difficult or impossible to reverse.
Fig. 1-2-1 The changing manufacturing costs between the 1920s and the 1990s shows a major reduction in labor costs. (Courtesy Cincinnati Milacron, Inc.)
BASIC JUSTIFICATION APPROACHES
There are three basic approaches on how to justify the replacement of machines, tools, and processes, Fig 1-2-3. Industrial equipment justification is generally a management decision that is critical to the quality and price of the finished product. It often determines whether a company’s product will survive in the marketplace or how long a company will remain in business.
1.The defensive approach is where no capital equipment, major tools, or manufacturing processes are purchased until something wears out and cannot be repaired.
At that time, the equipment is replaced with comparable equipment with no thought given to any changes in the manufacturing method.
▪This approach is relatively easy, however it is generally leads to a loss of the company’s position in the marketplace.
Fig. 1-2-2 Factors that can determine the justification of an advanced manufacturing technology. (Courtesy Kelmar Associates)
Fig. 1-2-3 Types of justification approaches. (Courtesy Kelmar Associates)
2.The cost saving approach is basically a conservative approach that offers some degree of overall progress.
▪A piece of equipment is replaced with a similar kind that offers some manufacturing improvements.
▪There is no concentrated effort to see whether the entire operation, tools, or process should be changed.
▪The investment is made as long as the ROI (return on investment) looks favorable.
3.The aggressive approach takes a critical look at the present equipment and manufacturing processes to see if they are really the best ones that will keep them competitive in the marketplace.
▪It may mean a complete change in concept or methodology that offers the best possibilities for real changes in a manufacturing process.
▪This approach is the most difficult to justify by a dollar-and-cents formula, however, it may be the only way to generate new revenue and increase the competitive position of the company.
COSTING METHODS
There are two different types of costing methods: traditional and advanced manufacturing technology, Fig. 1-2-4.
Traditional Costing
Traditional costs are those that have always been recognized as permanent or essential to the process.
▪The purchase prices of the machine, process, and tooling
▪The cost of expendable tools and equipment
▪Labor and overhead costs per part
▪The setup and tool-change time
▪The number of parts produced in a cycle
▪The life of the machine, process, or tooling
Fig. 1-2-4 The two types of costing methods commonly used to justify expenditures. (Courtesy Kelmar Associates)
Advanced Manufacturing Technology Costing
Advanced Manufacturing Technology (AMT) costs are those that become important as a result of the effect they have on the entire company.
▪The reduced cost of storing and delivering tools to the workstation because of their extended life
▪Fewer tools required in inventory to meet the production schedule that reduces JIT (Just in Time) and inventory costs
▪Because of the quality of the machines and tools, there is less maintenance and therefore lower labor costs
▪Less scrap and rework resulting from the reliability of the machines and tools
▪The accuracy and repeatability of the machines increasing the productivity and the product quality
▪Greater customer satisfaction with the product quality that results in increased sales
JUSTIFYING THE INVESTMENT
The following look at justification is based on a realistic assessment of the impact that advanced manufacturing technology has on the manufacturing operation, the organization, and the corporate strategies.
Investment management should be seen as more than a budgeting process for capital outlays on new machines and manufacturing processes. The common thread that binds all successful automation implementation is careful planning that considers the long-range benefits and the risks involved. New technological investments that involve greater productivity potential must be evaluated on their projected competitive advantage and related benefits such as:
▪improved and/or more consistent product quality
▪greater flexibility
▪shorter throughput and lead time
▪reduced inventory
▪less floor space required – A new technology machine or process generally out-produces two or more machines.
▪Reduced indirect manufacturing costs that could include:
•material handling equipment and personnel material handling equipment and personnel
•the number of machines required
•scrap, rework, and warranty claims
•maintenance and disposable tooling costs
•QC (quality control) personnel
•light, heat, taxes, and insurance
An effective business plan, Fig. 1-2-5 should be a three-tiered approach based upon:
▪A global or strategic plan that considers the requirements for competing in the world marketplace
▪The business plan that develops strategies to compete around the world
▪A detailed manufacturing plan that identifies activities in support of the business and strategic plans to become a low-cost, high-quality producer.
•This plan must deal with components such as product cost, product quality and reliability, delivery lead times, and frequency of new products.
Fig. 1-2-5 An effective business plan includes three factors. (Courtesy Kelmar Associates)
By examining the non-technical concepts of a manufacturing plan, such as GT (Group Technology) or JIT (Just-In-Time) manufacturing, can become more productive with very little capital investment. These two factors provide the greatest savings, representing a large down payment on new technology,