IMPROVEMENTS FOR WELDING PRODUCT AND PACKAGING

IMPROVEMENT FOR HIGH VOLUME PRODUCT

*Case studies have been anonymized for client confidentiality

CHALLENGES:

A team of five people from a major Midwestern manufacturer of welding equipment joined together with a team of expert business strategists. The goal? To reduce the cost of one of their “heart-of-the-line” products – a welding rod. Specifically, their goal was to find any savings that could help prevent the loss of market share to an off-shore manufacturer. In addition, the president gave them a second special goal:  “Any change you consider… must either maintain or improve the quality of the product”.

RESULTS:

Through the agile Value Analysis process, twenty-seven ideas were considered. After evaluation, nine were not cost effective and fourteen still required work. Finally, four were presented to management as implementable solutions. The results of these four ideas, created dramatic spin-off savings to other products their line. These results are shown in the table below. Additionally, two key faults with the packaging were resolved, and two innovative ideas for product improvement were initiated.

The team stated at the end of the project that because of the intensity and depth of the discussions presented throughout the process of Value Analysis, (also known as Value Engineering) they got the equivalent of a master’s degree in metallurgy. The team proposed the savings shown below to the president and his executive staff. The Value Study was considered a success by the client, who subsequently scheduled two more projects.

PROCESS:

Their unique goals were set and the team was guided by an experienced business strategy consultant. The Value Analysis team embarked on the process of product improvement for the next two months. To minimize the effect on their regular work routines, the Value Analysis project was broken up into one, two, and three-day nonconsecutive sessions. The teams spent eight full days, plus 20% to 30% of their time between sessions, investigating ideas.

THE TEAM:

The following specialties were chosen to give the team a balanced view of the product: a process engineer, the manager of finance, the marketing manager, a purchasing agent, and a development engineer.

CUSTOMER INPUT:

During a one-day customer satisfaction meeting, held prior to the start of the project, executives and customers shared ideas and thoughts, discussed product faults and complaints, and learned the following three things. (1) This model has 13 good points. (2) The customers would like 6 new features added to the product. (3) They could only find 8 faults with this model. Of these, only two ranked high enough to warrant fixing, and these were packaging issues.

BENEFITS:

Results of the Welding Rod Value Analysis Study:

 1 YEAR SAVINGS   3 YEARS 
ITEM GROSS INVESTMENT NET SAVED NET SAVED
This project $94,000 $47,000 $47,000 $235,000
Spin-Off $361,000 $151,000 $210,000 $930,000
$257,000 $1,165,000

SUMMARY:

Using Value Analysis, guided by an experienced business strategy consultant, a company can reduce overhead, and improve a product in the process.

The typical guidelines are as follows:

Adjust Priorities

Adjust the company’s priorities to allow time for the study

Establish Team

Establish the team based on the “right people”, not on whoever is available

Numerical Goal

Establish a specific, measurable, numerical goal to work towards

Involve Customer

Get your customer to provide feedback and be involved in the changes

Fix Faults

Fix all serious faults identified by your customer and team