Sewing Machine Manufacturer Gets A Handle on Costs

Barudan America, a producer of single- and multiple-head embroidery machines for small home-based and large industrial users throughout North and South America, has substantially increased its profit margins over the last several years, largely by more closely tracking its costs. The manufacturing system previously used by the company did not track actual costs for the company's customized embroidery machines, making it necessary to rely on outdated standard cost data.

This system provided satisfactory service when the company's product line consisted exclusively of fairly simple single-head machines. However, as Barudan expanded its product line to the multiple head machines used by industrial users, it become more and more difficult to manage the costing. Because the system didn't track actual cost of goods sold, company personnel calculated costs for each machine on a quarterly basis. Frequently, prices would change significantly during the quarter and invalidate costing assumptions. Inaccurate costing made it necessary to take larger and larger offsets at year end.

A consultant was hired to evaluate manufacturing software systems in relation to Barudan's needs. Because the company both sources and sells a large proportion of its volume overseas, the ability to handle foreign currencies was a significant requirement.

VISUAL Manufacturing, a Windows-based package from Lilly Software Associates Inc., Hampton, N.H., was chosen.

The VISUAL system integrates every aspect of the manufacturing process. An order is immediately exploded into the components and manpower required to fill it. The software applies available resources to the job and highlights any shortages in components or manpower. The graphical presentation looks just like a scheduling board hanging on the wall in a production office. Resources are listed down the left side of the screen while the time horizon is presented across the top. Shortages are highlighted in red and/or yellow and the user can jump to the purchase order module by clicking on a shortage item.

Any problems highlighted by the schedule can be quickly investigated by clicking with the mouse on the manufacturing operation of interest. This will bring up another screen with detailed information on the status of the particular job. This screen will highlight the reason for the bottleneck, whether it is a materials shortage or a reduction in efficiency of a particular operation. At the operation level, the user can quickly drill down to each individual machine and operator to see how each one is doing.

The new system integrates the purchasing function within the MRP II environment. The old system required that purchase orders be created independently in a separate module. With the new system, the user can see from the materials planning window that a particular material needs to be ordered. Simply clicking on the line item transfers the user into the purchase order module and partially fills out the form with suggestions for the material, supplier and order quantity.

The biggest advantage of the new software lies in its accurate and up-to-the-minute costing information. The machine keeps track of the cost of every item in stock, as well as the latest pricing information from suppliers. This means that when an order or quote is entered into the system, it will immediately provide a precise cost breakdown based either on actual costs or the latest pricing schedules. This eliminates the need to calculate cost schedules for the entire product line, which took an inordinate amount of time to build with the old system and became outdated nearly as soon as they were produced.

Having a handle on costs greatly improves Barudan's ability to compete. Knowing the profit margin on every machine, nearly to the penny, makes it possible to make rational pricing decisions. In many cases, the company has lowered prices in order to be more competitive. This would have been too risky in the past when the cost of making a machine wasn't known with any degree of certainty. Any pricing reduction from suppliers or improvement in manufacturing efficiency can be immediately translated into a cost reduction rather than waiting until the end of the quarter.

Accurate cost information has also given the company more leverage in its dealings with suppliers. In some cases, it's apparent that it will be impossible to provide a competitive price on a machine based on a supplier's current pricing schedule. In that situation, it's possible to go to the supplier, share cost figures, and ask them to reduce their price. Providing the supplier with proof that their current prices make it impossible to produce a competitive machine is often enough to obtain a reduction. The information provided by VISUAL Manufacturing has also made it possible to increase commonality of components between machines, resulting in lower inventory and increased quantity discounts.

The new system can also determine the value of in-process inventory, including labor, and it tracks inventory as well. This makes it easier to provide management with forecasts of sales and costs. Forecasts show schedules of when inventory is scheduled to be finished and billed for any desired time period into the future. This is exactly the type of information required by the company's banks, and the ability to produce it with a great deal of accuracy has improved relations with lenders.

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Sager Electronics Reduces Wasted Space With Modular Storage Cabinets

When Sager Electronics began construction on its new centralized distribution center — a building that would serve as the company's primary distribution facility — they were determined to create a state-of-the-art facility.

Founded in 1887 and located in Hingham, Mass., Sager Electronics distributes electronic components internationally to a variety of markets, with industrial, contract manufacturing, communications and medical markets accounting for almost 80 percent of its customers. Products include switches and relays, power products, connectors, passive components and semiconductors.

The new distribution facility needed a high-density storage system for small, fast-moving items. The system they purchased from Lista International of Holliston, Mass., consisted of 40 mid-width modular drawer storage cabinets. The cabinets can be stacked on top of one another so that storage capacity can be easily increased as Sager's storage requirements grow. In addition, partitions and dividers within the drawers allow Sager to create customized compartments for components of various sizes and shapes. According to Mark Lincoln, distribution center manager, one drawer can accommodate the same amount of inventory that it used to take 11 shelves to handle.

The cabinets were placed in the center of the production area and are used to store the fastest-moving parts, such as connectors, switches and semiconductors. The parts are picked from the cabinets then transferred to the conveyor system and on to shipping.

Sager has seen improvement in overall productivity. "Our employees used to pick orders one by one and place them on the conveyor," Lincoln says. "Now, they can pick up to 10 orders at a time. The high-density capacity of the drawers has reduced employee 'traveling' time around the facility. On average, employees used to pick between 80 and 90 orders per day. That number has increased to 175 to 200, and we expect the increase to continue."

When the new distribution center was being designed, the need to track inventory through bar coding was considered paramount. Not only would this capability improve the accuracy of inventory control, it would further increase productivity. In Sager's system, each drawer compartment in every cabinet is bar coded with an alphanumeric address; in turn, every stored part has its own address. The bar code labels are scanned via a radio frequency system that keeps components more organized.

Lincoln points out that the improved organization of stored components has led to a decrease in shipping errors. "Basically, we've experienced a positive ripple effect," he explains. "Because inventory is more organized, productivity is up. Because productivity is up, shipping times go down. When shipping times go down, customer satisfaction is up. There are a number of factors that have contributed to the overall improvement, but the cabinets certainly play a large part in it."

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Controller Upgrade Boosts Profits For Injection Molder

Upgrading to a microprocessor controller on its injection molding machines helped Riverside Plastics boost profitability by reducing scrap rates from 20 percent to 10 percent. With its original controller, the 220-ton New Britain press generated a considerable amount of scrap because of pressure and temperature variations that caused short shots, flashing, warpage and surface defects. The new microprocessor controller reduces scrap by automatically compensating for variations to maintain a consistent cycle. It also offers digital setup of molding parameters which has reduced average machine setup time by 50 percent.

Riverside Plastics is a custom injection molder with about 25 different injection molding machines ranging up to 450 tons. The company serves a wide range of industries including electronics, medical equipment, appliance, automotive and recreational equipment.

The New Britain machine originally came with a combination microprocessor and relay controller. The primary problem was that, like any older machine, it was difficult to maintain a constant injection pressure and temperature due to variations in valve wetting and other components. This frequently caused scrap to be produced, particularly on parts with tight dimensions or other critical features that require a very tight processing window to maintain quality standards.

The old controller was also highly dependent upon electro-mechanical devices such as relays and limit switches that would frequently malfunction without any warning. When a pump or solenoid failed, the control would continue producing bad parts, usually without any alarm. It was possible to produce hundreds of bad parts before corrective action could be taken.

Diagnostic capabilities were lacking on the older control as well. When problems occurred, locating their source proved difficult. It was generally necessary to call in a factory service person even for what turned out to be very simple problems.

Management considered purchasing new machines but questioned whether the high cost was justified since their basic mechanical functionality was excellent. Thus, they decided to upgrade the control systems on the machines. The Trailblazer 10-T controllers they selected from Solid Controls, Inc., Hopkins, Minn., are able to keep all molding variables under close surveillance, thereby eliminating scrap caused by temperature and pressure variations. The controllers are programmed to maintain a constant velocity profile.

A key advantage of the new controller is that it monitors the injection cycle and takes immediate action if a fault occurs. The user can define the conditions that will trigger a fault, normally a pressure or injection velocity outside of the expected range. Riverside Plastics typically programs the controller to stop the machine immediately if a fault occurs, which means that only one bad part is produced. This was a key factor in the scrap rate reduction.

Besides stopping the machine, the controller also includes diagnostic tools that help maintenance staff identify the problem. When the power is turned on, the controller checks itself as well as key machine functions such as solenoid valves. If a fault occurs, the controller issues a code that provides the location of the problem as well as a graphical depiction of the machine with the fault highlighted. These diagnostic tools make it possible to identify the problem in just a few minutes.

Setup time has also been substantially reduced. The old controllers relied on a number of manual settings such as thumbwheels and limit switches, and there was no way to be sure they were right except to start the machine. This process typically took about two hours each time the machine had to be set up. The new controllers take only an hour to set up the first time for a new mold because parameters can be entered onto the keyboard directly from the setup sheet. A bit of trial and error is normally required to get it running right the first time. After the mold is running right, the configuration is saved into the controller's memory from which it can be recalled at any time in the future to produce perfect parts in about a minute.

The new controllers have dramatically reduced scrap, downtime and setup time. Since prices are based on nominal cycle times and do not include an allowance for scrap, the savings have gone directly to Riverside Plastic's bottom line.

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