Factory owners can assess which areas of their manufacturing process require improvement by using cost deployment. It is a great tool that analyzes and quantifies the losses of a process to achieve process improvement. When quantifying losses, we look for continuous improvement of processes. Cost deployment consists of some steps that measure the different losses in each process. By breaking up the manufacturing process into smaller pieces, we can identify and eliminate the causes of losses in order to improve production.
- The key to success in cost deployment is to measure to losses and transform them into gains (profits).
- Every cost deployment iteration intends to reach more granularity and accuracy than the previous one.
What We Call “Losses”
Before starting to quantify losses, we must fully understand what a loss is: A loss is the use of any resource (man, material, energy, or machine) that has an associated cost in an activity that does not add value to the product.
This is interesting because companies usually detect a loss when there are more expenses than expected. With this new approach, businesses can find losses even when the standards are achieved.
Steps to Perform a Cost Deployment
To perform correctly a cost deployment and achieve process improvement, it is necessary to answer 3 questions:
- What? (What losses do we have?)
- Where? (Where does the loss occur?)
- How much? (How much does the loss cost?)
Lack of Information
The first problem we face when we start a cost deployment is the lack of information. For example, we know the amount of energy that a process consumes, but we do not know how much of that energy is lost in stand-by consumption due to breakdowns or non-operating times.
Data Collection Systems
The key to answering those questions is to set a proper data collection system. A data collection system can be manual, semi-automatic, or automatic.
A data collection system can help you:
-Understand machine stoppages
-Track products and batches
-Analyze the OEE in your production lines
-Be aware of current demand to reduce extra costs due to overproduction
Now that you know the benefits of such systems, do you want to implement one?
4i Platform to the Rescue
Let us lend you a hand if you have no clue where to start. Our 4i Platform makes it possible for you to automatically gather data from industrial equipment. It also generates KPIs which allow companies to make data-driven decisions and to perform better on continuous improvement processes.
Measuring losses will help you achieve process improvement, and, year after year, our data collection system will become more and more accurate, thus reducing costs and ultimately increasing profits.