#CostReduction #FirstTimeRight

Currently, many businesses are struggling.

The immediate response is simply to Reduce Cost and/or Boost Profits .. to survive, correct?

But no, we can do better than this. Perhaps some of these tools can help YOU open some new possibilities?

"I have not failed. I've just found 10,000 ways that won't work." – Thomas Edison

First Time Right is a very common concept, found in every Engineering Quality book, and often not taken seriously enough. This refers to producing a part with no mistakes, no scrap or re-work. Now ask yourself .. how well do you really know your Manufacturing Process at your own organization? Go take a look, ask for their Yield, for a particular Process. Then ask yourself .. how do you know if this good enough?

Now step back, and imagine a part (or any product, even a loan application) that goes 20 processes through your organization. And each process having a yield of 85% (means you reject 15% due to whatever reasons). Perhaps you may think this is good, correct?

But would you believe that your final good yield, at the end process would be about 4%? Does this mean that 96% of all parts were scrapped or returned into various points of your organization for re-work? Now, just imagine how much this costs the organization (in total) to address? And the chaos created by 96% of everything going wrong (all over the place) every day?

Yes, with small improvements, namely reducing the number of steps to 15, and increasing the individual process yields to 90%, would already give a final end process yield of 20%, which is effectively 5 times. So already huge Cost Reductions, correct?

Yes, I hear you .. “if it was that easy, we would have done it years ago!”. Yes, this is a very common .. immediate .. defensive .. knee-jerk type reaction. No worries, this happens every time.

Well actually, this brings us back to last week’s post, namely having the right mindset in place. As most of the answers you seek, are already within your organization! Just start by engaging and motivating the people around you. Just ask for their thoughts, try by asking why? (which we will cover next week). Start with small steps, and if this does not work, share your thoughts? And let’s see what others would advise?

First Time Right has often been mistakenly perceived as a balance between Quality and Cost, but this is completely false. As on the long run, First Time Right actually saves hard-money in terms of improved flow, reduced delivery time, reduced stock, improved cash flow etc. And the newly-available production capacity is now available to generate further (additional) turnover! Additionally, there are also soft benefits to this, as it always increases employee motivation, with the reduced Fire Fighting and Blame Game.

There is no down-side to being First Time Right, this is the right path to take for concrete long term Cost Reduction.

Yes please do share your thoughts, tag someone, and even re-share within your network, as this will help others learn from your insights and experience … as we create a Cost Reduction community over this 23-week program ..

Till next week then, when we will discuss one of the simplest, and most powerful tool of all .. AskWhy? ..

Kind regards,

Aroop Bhattacharjee

#theprofitengineer