90s Recollection Part 4

While working with Foreign Domestics, I had the opportunity of going to Japan on several occasions.  Prior to my first trip, I was so excited about visiting our OEM customers, suppliers and competitors.  I had really high expectations about seeing high-end technology, factories, systems and procedures.

Unfortunately, I was disappointed to discover the Japanese technology was not ahead of North America’s, but rather behind in some instances.

After this trip, I had a better perception of the Japanese know-how. The equipment they used for similar jobs we performed in North America was much smaller in size than ours.  Their plants were clean and well organized.  Their workforce was extremely proud and put a lot of effort into demonstrating their good spirit.  I could sense this throughout the plants I’d visited. 

Upon my return, I shared my experiences with my team members.  Finance confirmed my suspicions about why the Japanese use smaller machinery.

·      Smaller machines = cheaper cost to purchase, lower cost for installation, less utilization of floor space, less use of energy, cheaper spare parts, faster cycle time, easier ability to move machine from production floor when not in use.

In North America, our plants were mostly using 60 ton presses for end trim parts when in reality, we didn’t need half that tonnage to get the job done.  Our mentality was to buy big, just in case we would need it one day.  We were penalizing ourselves on competitiveness with higher operational costs.

The Japanese viewed equipment space and utilization as a significant factor to their cost. 

Based on the plants I visited throughout Europe and North America, most of these plants would work 5 days a week, with a work force of:

·      Shift 1 (days) 95%

·      Shift 2 (afternoons) 40 to 60%

·      Shift 3 (nights) 20 to 40%

In Japan, they’d work 6 days a week, with a work force that was fairly equal no matter which shift or time of day.  Another example of well used space and equipment utilization.

I quickly realized these two production costs are very important factors to consider when it comes to product costing.  They can determine whether or not you’re going to be competitive. 

I feel that costing is a very important subject on its own and will post about this subject separately as my recollection of the 90s continues.