Innovation in a Zero Capital World

March 9, 2009
Capital spending in the U.S. at the end of 2008 was off more than 20% from 2007.

Trained teams are often used in process improvement only to find what is obvious to anyone working with the process. Each of the popular process improvement systems like Theory of Constraints, Lean Manufacturing, and Six Sigma has high implementation costs. While these methods are valuable in evaluating ideas, often they cannot be supported in a zero capital world.

Conventional project development fails without capital. he standard way to look at projects is to quantify the problems and then select the project correcting the most deficiencies. Cost is only evaluated after we determine the deficiency to correct. In this zero capital world there is often no money or people for the process review and even less to fix the identified deficiencies. Capital spending in the U.S. at the end of 2008 was off more than 20% from 2007.

What is needed in the current economic climate is innovative ways to continue process improvements without capital resources. An often overlooked resource is employee input. Too often companies looked to scientific methods and teams trained to select the best projects instead of consulting with employees. Employee's pride and self-esteem can be enhanced just by acting on suggestions. Management needs to control and select from the suggestions submitted.

Two groups in particular tend to contribute most improvement ideas are production and maintenance workers. By interfacing on a daily basis with the various processes, production workers often learn how to create solutions that allow processes to become more efficient. Maintenance workers find solutions to common problems that require the most frequent maintenance calls.

A production worker mentions to the new engineer that the furnace seems to be using too much nitrogen purging gas during a cycle. The engineer mentions the complaint to others and is told that the worker is always complaining about something. However, the engineer investigates, then corrects the problem and finds significant nitrogen savings.

Savings: $250,000 per year Cost: Engineering time

A maintenance worker replaces an output card on a press without much thought because replacing the card usually fixes the problem. After looking into the failure, the root cause is a voltage spike from a de-energizing solenoid. Surge suppressors were installed to dissipate the spike; consequently, both the card replacement and machine downtime were eliminated.

Savings: $54,000 per year Cost: $150 in parts

Vendors and customers both have a stake in improving the processes. A company can let its stakeholders know that while capital is not currently available the company is nonetheless seeking ways to improve operations. Invite them to explore innovative ideas. During these tough economic times, everyone is looking for ways to improve profits. Vendors' insight may help find a new way to accomplish a task that will cost less or improve reliability. Vendors can also ring in experts to find ways that their products can improve your process.

In order to eliminate a weekly cleaning of a heat exchanger, a vendor identified changes to the water treatment system. These changes required the addition of several new chemicals. The vendor installed the necessary chemical tanks and pumps. The cost to the company was only for the chemicals. This eliminated the clogging problem for about the same price as the old inadequate treatment system.

Savings: 200 maintenance hours per year Cost: $0

Additionally, your customers may be willing to work with you on changes in their product that could reduce scrap and improve profits. Often customers are unaware how their specifications may negatively affect profits. A review with the customers' engineers might find specifications that unnecessarily add to your costs and theirs.

A product was selected for review due to high scrap rate. Working with the customer's engineer to relax some product specifications created less scrap. The customer received a product that met their needs at a lower cost.

Savings: Reduced scrap and rework costs Cost: Engineering time

When seeking ways to find funding, companies can approach vendors who might spread out the initial cost and allow savings to pay for the improvement. Lease purchase agreements with favorable financing could help. Additionally customers may pick up some of the tooling or other onetime costs to obtain long-term price reductions.

Innovation in a zero capital world improves the bottom line, but much more, it can improve your relationship with vendors, customers and employees.

Bill Wade is an engineer/manager with 25 years experience working in manufacturing.

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