Cost Leadership Strategy

Manufacturing cost reduction strategies involve taking the following broad steps.

1. Analyze the non-value added cost in manufacturing and how to eliminate / reduce them.
2. Enhance the operations supply chain through manufacturing innovation process.
3. Improve productivity and drive profits through cost reduction in 4 major areas.
4. Expand lean manufacturing concepts to lean enterprise for effective cost reduction.
5. Develop action plans to analyze, implement and monitor the results.
6. Use major key performance indices to measure effectiveness and to drive continuous improvement.

Defining Manufacturing Strategy and Operations Management

Manufacturing cost – What it is?

• Understand the costs involved in manufacturing – direct, indirect, tangible, intangible and hidden

Practical Manufacturing Cost Analysis

• Identify manufacturing costs benchmarks – company budget, past records and competitor costs
• Elements of Manufacturing Costs Reduction – study of the Operations Supply chain Management (downstream and upstream analysis)
• Wastes identification in your workplace – “CLOSED MITT” concept
• Manufacturing Cost Reductions Strategies – focusing on People, Plant, Product, Processes, Equipment, Material

Product

• Design of the product
• Conceptualization, Product Design, Process Design, Plan Conversion and Vision Connection phases
• Quality of the product design
• DFA and DFM concept
• Mistake proofing principle in product design

Plant

• Design of the plant and workplace – ergonomics, JIT concepts
• Facilities management – air-cond, ventilation, fittings, roofing, piping, conveyors, etc
• Safety and cleanliness in reducing accidents – 5 Levels 5S concept
• Incorporating visual management

Processes

• Identify process flow – value-added and non-value-added activities
• Effective production planning and estimation
• Inventory management – Kanban concept and JIT
• Improving method and workflow

Equipment / Facilities

• Efficiency and utilization analysis of machineries and equipments
• Understanding reliability and maintenance
• Total Productive Maintenance philosphy in driving the maintenance cost reduction
• Setup reduction through SMED

People

• Manpower productivity improvement – Ability, Direction, Competence, Opportunity, Motivation
• Effective change management to system approach – getting people to commit
• Incentives scheme – the positive and negative strokes

Material

• Supplier Partnership for improvement
• Outsourcing management
• Material handling / storage

Project Approach in Cost Reduction Action Plan

• Planning / Gap analysis stage
• KPI setting – performance measurement
• Implementation
• Monitoring, evaluation and review
• Kaizen approach for continuous improvement