Montana State University |
Montana State University |
by Deborah Nash
04/15/99 BOZEMAN - Rework, or the fixing of flawed products or goods that don't hold up while under warranty, is the bane of every manufacturer. Rework burns time and money better spent making new goods or otherwise improving business. Smart manufacturers learn why rework happens and take steps to minimize it.
Last year Richard and Nancy Schoenfelder, owners of Mountain States Drivetrain (MSD) in Whitehall, shifted their business focus into reverse to look at their rework history and other company practices. A team from the Montana Manufacturing Extension Center (MMEC) and the University Technical Assistance Program (UTAP) at Montana State University-Bozeman helped them. And reduction of rework is only one of the changes they made.
Mountain States rebuilds manual transmissions for clients across the Intermountain West and Northwest. Its rework percentage is low but extremely costly because manual transmissions require removal and reinstallation by the installing shop if the unit fails while under warranty, and that cost is covered in the MSD warranty. Transmissions are also heavy and must be shipped back and forth adding to costs and taking time away from production, UTAP engineer Bill Schell explains. He helped MSD identify ways to reduce warranty work using feedback from company data entered into a quality tracking computer application developed for them by UTAP.
The application uses their existing software and was designed to be easy to use. It includes a root cause analysis capability that has been especially valuable for looking at the rework issue. The analysis examined previous work order data and grouped it to show reasons for returns. Solutions then targeted recurring causes. With UTAP help, the company has already cut rework in half, saving $2-$4000 per month, and gaining production time.
The common thread in rework for Mountain States proved to be inspection related. The UTAP solutions report recommended a more thorough inspection program to ensure that all parts, whether existing, new or reconditioned, are not flawed. Richard accomplished this by documenting inspection steps as a type of checklist. He will also provide improved inspection training to future technicians.
Mountain States gained other benefits from the "Quality Tracking System" application. Using relational database tools, the application can create a variety of reports using queries about data from work orders. Some of that information includes: warranty registrations, raw materials, the direct labor hours for each rebuild, which technician did the work, etc. These reports help Mountain States continue improvements and further develop customer relations.
"The systems are not magic black boxes that will solve production problems and provide solutions automatically," Schell said. It requires a continued commitment on the part of Mountain States to accurately enter all work order, rework and warranty information and changes in costs and overhead. "If the system is not given full and complete information...it will be unable to provide management with the full story on potential production problems and costing changes."
Reduction of rework and quality tracking are not the only shifts made by Mountain States while working with MMEC/UTAP. The team worked with the company to develop a shop rate costing model that really shows the cost of operating the business for each productive hour of labor. The model looks carefully at productive or "direct labor hours" because those hours must carry the less productive hours that are a reality in business. Gaining an awareness of those hours was very enlightening, according to Richard. The system tracks other costs like tools, supplies, and overhead such as rent, utilities, taxes, etc. It was also designed with several "what if" scenarios to project how changes will impact growth.
"The shop rate has worked out well; it is certainly helping," Richard says. "At one point we really thought we would remain a small owner-operated shop, but now we're moving ahead with confidence. These systems will allow us to grow the business; we plan to grow it and hire more employees."
Schoenfelders' confidence in the ability to grow derives from allotting time to look at their business’ production and business management issues, tapping from the expertise of MMEC/UTAP, and a willingness to adopt new systems. For many small manufacturers faced with growth decisions, the stretch is too great because they lack vital and ever-changing information about their business and don't realize that help is available. MMEC and UTAP offer engineering, managerial, and technical assistance through five field offices located at MSU, University of Montana-Missoula, and economic development centers across Montana. The offices can be reached by calling 800-MEP-4MFG.
Send questions or comments to Debbie Nash at dnash@coe@montana.edu or MSU Communications Services, 416 Culbertson Hall, Bozeman, MT 59717.
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