Tiny component, big cost saving potential

Wood screws

We all are looking for cost reductions. These cost-reduction projects don’t have to be always the big ones. Improvement projects can be found in many different areas.

The one area I would like to review today is miscellaneous hardware: the nuts, bolts and screws. Simplification and standardization is the target. This time we are looking at wood screws, but the methodology also can be used for other groups of items.
Standardization
First, take an inventory of all the screws you are using in the company. You can make a list or simply tape one of each on a large piece of cardboard.
Besides sorting by length and thickness, you can sort the list by head type, screw driver type, finish and even thread type. If you have the approximate annual usage of each item, you can start analysing.
Often, just looking at the line up might show opportunities. If you have screws of the same length and thickness, but use a different driver type, you might have an easy standardisation step. A challenge might be the Robertson screw. It is the better screw when is you look at assembly and installation productivity. However, if you export the product your customers might have difficulties finding the right screwdrivers.
The next step is to look for similar screws. Is it possible to eliminate some sizes or types, or some of the less-used items?
Special attention must be given to non-standard screws. Look for opportunities to replace these with standard (commodity) screws.
Speciality or custom screws
The decision to standardize should not be made in isolation by product engineering, especially when the appearance and functionally of the product is affected. Sales, marketing, production, management and customer service should have input.
Involve suppliers
In projects that include purchased items, the suppliers should be involved. Sometimes, suppliers are reluctant to help in converting the product line to a commodity product. However, their help is especially important if you analysing specialty or custom screws. Here, your supplier, or even the manufacturer of the screws, should be asked to give input.
One case I remember was a custom screw purchased in high volume over many years from the same supplier. The analysis almost skipped the screw because of its high usage. The custom product seemed to be justified until the supplier explained that we were the only company still buying this screw. Everybody else had been successfully converted to the next-generation product.
At the time, nobody remembered why we did not do this switch earlier, as well. As it turned out, the new screw performed as well as the original one for two thirds the price. Sometimes you find cost savings where you did not expect them.
Cost savings are not always in the reduction of the purchase price. Every screw, like any other purchased part, is a stock-keeping unit (SKU). It needs to be set up in the data base, ordered, received, paid, stored, dispensed, inventory-controlled, evaluated and reordered. Reduction of SKUs by one item may not seem to make a recognizable difference. However, it will add up.
The more SKUs you have to maintain, the higher is the chance you will run out of stock once in a while. Every stock-out causes extra work, extra cost for rush delivery or even work stoppage.
The more fragmented your SKUs are, the more safety stock you need to keep. Standardized supplies allow you to reduce stock levels safely, require less space, less warehouse labour and have less obsolesce.
Inventory effects process
Take a close look on how the screws in your operation are used in the assembly and installation processes. Every time the operator has to change the driver bit or has to reach for a different screw gun, you have a potential improvement opportunity.
Observing the work performed is always a valuable lesion. Sometimes we think we have it all properly planned and organized. Seeing work executed shows how much of your plan has actually arrived at the shop floor and at the installation site. You also see easily what does not work and what has been overseen at the planning process.
Organizing your screws is a small project and could be carried by a co-op student or a new engineering recruit. The methodology is however basically the same for bigger and more complex projects.
For these reasons it makes it a very suitable starter project.
SeppGmeiner is a partner with Lignum Consulting.

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