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Reducing Setup Cost &

SMED

Presented by
Bipin Parashar Bhavit Mathur
Isha Mathur Usha Lata
Kapil Malakar Mayur Lodha
Atul Lekhra Vishnu Kumar
Vijay Kumar Purohit
How to reduce Setup Cost ?
 By reducing setup time

 By reducing wastages

 By reducing various costs


 To reduce setup cost one way is reduce
setup time.

 By reducing setup time, productivity


increases thus cost reduces.
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Reducing Setup Time
 Preset desired settings
 Use quick fasteners
 Use locator pins
 Prevent misalignments
 Eliminate tools
 Make movements easier
SMED Single Minute Exchange of Dies
 The analysis and implementing of equipment and
process changes to reduce the setup and
changeover time of changes tools in and out of
machines.
 Die exchange is the generic term for removing a
drill, cutter, punch, mold or die from a machine
and replacing it with another type on machines
that are capable of producing more than one part.
 It’s an extension of the Standardized Work Sheet
but applied to the tool changeover instead of the
operator.
 Intended to reduce lot sizes because the larger
the lot the more inventory must be purchased
and stored, lost, damaged or made obsolete,
more space required, more storage materials
must be purchased and labor and handling cost
increase.
 Broken down into internal and external actions
and doing the external activities before the tool
is actually changed.
 Improvements are made using a three stage
approach to time reduction.
Reducing Inventories
through Setup Time Reduction
 Central to JIT is the reduction of production lot
sizes so that inventory levels are reduced.
 Smaller lot sizes result in more machine setups
 More machine setups, if they are lengthy, result
in:
 Increased production costs
 Lost capacity (idle machines during setup)
 The answer is: REDUCE MACHINE SETUP
TIMES
SMED is Continuous Improvement

It is a customer driven requirement. Customers are


demanding:
Product and service diversity
Lower costs
Higher reliability and quality.
In essence organizations need to become leaner !
So organizations must:
Produce smaller lots, more frequently.
Expand the scope and diversity of products and
services.
Reduce quality defects.
Ultimately, SMED focuses on reducing changeover and set-up
times, thus enabling organizations to:

Produce smaller lots of products and services more


frequently !
Develop a broader scope of products and services !
Reduce quality defects towards zero !

Meet Customer’s Expectations !


What Does Set-up/changeover
reduction mean for any business?
Increased customer service levels and profits, Via
Waste Elimination resulting in :
 Reduced Lead Times-Faster Delivery
 Zero Inventories-Reduced Working Capital
 Improved Quality
 Improved Safety
 Smaller lots of products-flexibility
 Diversified Product & Service Options
Why SMED ?

Look Familiar ?

•To eliminate the wastes that result from


“uncontrolled” processes increasing
inventories and
lead times..
• To gain control on equipment, material
& inventory.
• Apply Control Techniques to Eliminate
Erosion of Improvements.
• Standardize Improvements for
Maintenance of
Critical Set-up Parameters.
One Step Setup
Implementation
Plan

Step 1 Step 2 Step 3 Step 4 Step 5


Develop One Step Setup Develop Specific Develop Communication Develop One Step Implement One Step
Implementation Team Implementation Plan Plan Setup Training Plan Set-up

Separate Internal
from External Progressive
Reduction of Setup
Setup Enhancements Processes

Optimizing Setup
Integrate Internal into
Processes
External Setup

Step 6
Verification / Standardization
STAGES OF SMED
120 MINS

STAGE I
TOTAL SET UP TIME

80 MINS

INTERNAL SET UP TIME


STAGE II

Segregate
Internal
Convert some 40 MINS
External
Internal
Elements
Elements or
STAGE III
parts of those to
External
Elements Reduce times of
residual Internal 7 MINS
Elements
Phase 2 Combining equipment functionality

Involves standardizing the equipment ( parts, tooling, processes) based on


commonality between setups to reduce the number of setup steps and cycle
times. The common setup parts were identified and
By using these replaced with this jig/holder combination.
fixtures, the
parts are
Notice how
automatically
different
centered and
quantities of the
adjusted for
same part can
height and
be setup with
flatness as a
the same fixture.
part of
Also, these
External setup-
setups can occur
not Internal
while the
setup.
machine is
running.
Phase 3: Reducing setup Elimination of Bolts &
processing time. Adjustments.

Example of One Step Fastening


Bolt attachments requires 32
complete turns for each bolt or
screw (1 for each thread) to fasten
this bolt and die to a machine.
This clamp attachment requires one
step to attach the die to a machine.
Example-
Cost reduction is the goal

“Cost Reduction Is the Goal”

There are two ways to increase


efficiency: 1) increase production
quantity or 2) reduce the number of
workers.
In the short
term, you may
need to
•Reduce
Over time, lower costs, people at all
levels in the
higher quality, and faster organization
development & production
times will increase sales. Manufacturing
as a
Competitive
Weapon
Setup Time Reduction
 When we switch from one product or part to
another product or part, the production
system should be setup for the next product.
 Setup could take several weeks in
conventional systems.
 In JIT it is a matter of minutes.
 Setup time reduction is a must in JIT.
General guides
 Use simple equipment and standard and
simple procedures for setup.
 Use small and multi-purpose changeover
equipment.
 Products and parts which are similar in
shape or material may require very
 similar setups. Sequence them after each
others.
 Train the operating personnel to do setups
themselves.
 There is no separate setup group.
Example- (Before)
After SMED
Setup Time Required for an EOQ
The economic production lot size (EOQ) model is :

2DS  p 
EOQ =  
C  p-d 

where: D = annual demand rate


d = daily demand rate
p = daily production rate
C = carrying cost per unit per
year
S = cost per setup
Setup Time Required for an EOQ
 The setup cost required for a given lot size
can be derived from the EOQ model as:
C(EOQ)  p-d 
2
S=  
2D  p 
 The setup time can be derived from the
setup cost, S:

S
Setup Time =
Labor rate
Example: Setup Time Required

A firm wants to determine what is the length


of the setup time of an operation should be in
order to make an production lot size (EOQ) of 50
economical.
An analyst has made the following estimates:
D = 16,800 units (annual demand)
d = 84 units (daily demand rate @ 200 days/yr)
p = 140 units (daily production rate)
C = $20 (carrying cost per unit per year)
Labor rate = $25.00/hour
Example: Setup Time Required
 Setup Cost Required for EOQ = 50

C(EOQ) 2  p-d 
S=  
2D  p 

$42(50)2  140  84 
=    $1.25
2(16,800)  140 
Example: Setup Time Required
 Setup Time Required for EOQ = 50
S $1.25
Setup Time = = = 0.833 hours
Labor rate $15.00/hr

.0833 hours = 5.0 minutes


Cast Tek

 The company Cast Tek currently


produce lightweight stone products by
hand for the building industry.

 The Business is located in Denny and


employs 15 people
Cast Tek

Current State
Cast Tek

Current State
Cast Tek

Raw Material
storage
Cast Tek

Raw Material storage


Cast Tek

Process steps
Mix materials
Cast Tek

Process Steps

Load Mould
boxes
Cast Tek

Process Steps

Roughing and

Finishing areas
Cast Tek
The Challenge

Issues with existing factory


1. Building in poor state of repair.
2. No logical flow of materials
3. Excessive time spent locating moulding boxes,
material storage equipment, preparing for next
job.
4. Poor productivity – 70 blocks per day for 6 directs
5. Order book potentially 120 blocks per day
Cast Tek
The 7 Wastes: Tim Wood

Transport
Inventory
Motion
Waiting
Overproduction
Over Processing
Defects
Cast Tek
What they did…

 Cast Tek are planning to move to a new


factory in the next 6 weeks.
 Huge opportunity to layout processes using
Lean Principles to minimise the 7 wastes
 Agreed a 3 day project to create a Lean
layout / process to improve Productivity by
40%
Cast Tek
New Layout

Finishing Stations x 4
Block Curing
Roughing stations x 4
Block Curing
Pre set stations x 4
Block Curing
Mould Box Storage
Despatch
Mixing Area

Material storage
Cast Tek
The 7 Wastes

Reduce Transport
New layout creating
individual bays for sand /
raw material storage
Dedicated storage areas for
mould boxes and material
handling equipment.
Cast Tek
The 7 Wastes

Reduce Inventory
New process has decreased throughput time
by 40% thereby reducing overall inventory
Odd ball equipment not to be stored line side.
Only runners and repeaters.
Cast Tek
The 7 Wastes

Reduce Motion
The creation of Pre set stations for the
Roughing operators has reduced preparation
time / walkabout time etc by 50%
Cast Tek
The 7 Wastes

Reduce Waiting
Waiting time will be reduced by 90% due to
the next job being loaded to the pre set
station
Next job includes – raw material , mould box
and stretcher for storage
Cast Tek
The 7 Wastes

Over production
As the order book is full, under production is
the problem
Cast Tek
The 7 Wastes

Over processing
The process is very simple with no evidence
of over processing.

Curing time to be investigated as part of CI


plan
Cast Tek
The 7 Wastes

Defects
Customer order is checked at pre set station
to verify order.
Evidence of wrong mould boxes used in past.
Cast Tek
What was the Impact for the Company?

 Output increase
from 70 per shift to 100 (40%)
 Unit Cost per block
reduced by 20%
 Increased turnover
by £300k
Example
If set-up time is 8 hours and running time per
unit is 1 minute then for a batch of 100 units the
average time/cost is
[8(60 min.) + 100(1 min.)]/100 units = 5.80
min/unit
If we increase lot size to 10,000, the average
time/cost is
[8(60 min) + 10000(1 min)]/10000 = 1.048
min/unit
This is an 82% reduction in per unit cost.
Cont….
If set-up time/cost can be reduced, the effect
on optimal lot-size can be substantial. For
example, if the set-up time in the earlier
example is reduced from 8 hours to 10
minutes:
Then for a batch of 100 units the average
time/cost is
[10 min. + 100(1 min.)]/100 units = 1.10 min/unit
If we increase lot size to 10,000, the average
time/cost is
[10 min + 10000(1 min)]/10000 = 1.001 min/unit
Thus, the benefits from increasing lot sizes are
small.
Reducing setup costs in a Cafeteria
(1 of 2)
Consider the work-in-process in a cafeteria
setting:
People pass by containers of food and take
what they want.
Employees organize the food preparation
activities so that the containers are refilled just
as they are being emptied. The batch-related
setup costs otherwise (one serving at a
time) would be prohibitively expensive
Reducing setup costs in a Cafeteria (2 of 2)
 Reducing setup costs allows for the reduction
of batch sizes along the line
 This reduces the level of inventory (and costs)
in the system
 It also improves quality while increasing
customer satisfaction
 The ultimate goal is to reduce setup costs
and to reduce processing time as possible,
so that the system can produce and deliver
individual products just as they are needed
ABC Classification System

 Demand volume and value of items vary


 Classify inventory into 3 categories,
typically on the basis of the monetary
value to the firm
PERCENTAGE PERCENTAGE
CLASS OF UNITS OF DOLLARS
A 5 - 15 70 - 80
B 30 15
C 50 - 60 5 - 10
ABC Classification
PART UNIT COST ANNUAL USAGE
1 $ 60 90
2 350 40
3 30 130
4 80 60
5 30 100
6 20 180
7 10 170
8 320 50
9 510 60
10 20 120
ABC Classification
TOTAL % OF TOTAL % OF TOTAL
PART PART
VALUE UNIT
VALUECOSTQUANTITY
ANNUAL USAGE
% CUMMULATIVE
9 1
$30,600 $ 60
35.9 6.0 90 6.0
8 16,000
2 18.7
350 5.0 40 11.0
2 14,000 16.4 4.0 15.0
3 30 130
1 5,400 6.3 9.0 24.0
4 4
4,800 5.680 6.0 60 30.0
3 5
3,900 4.630 10.0 100 40.0
6 6
3,600 4.220 18.0 180 58.0
5 3,000
7 3.510 13.0 170 71.0
10 2,400 2.8 12.0 83.0
8 320 50
7 1,700 2.0 17.0 100.0
9 510 60
$85,400
10 20 120
ABC Classification
TOTAL % OF TOTAL % OF TOTAL
PART PART
VALUE UNIT
VALUECOSTQUANTITY
ANNUAL USAGE
% CUMMULATIVE
9 1
$30,600 $ 60
35.9 6.0 90 6.0
8 16,000
2 18.7
350 5.0 A
40 11.0
2 14,000 16.4 4.0 15.0
3 30 130
1 5,400 6.3 9.0 24.0
4 4
4,800 5.680 6.0 60 30.0
B
3 5
3,900 4.630 10.0 100 40.0
6 6
3,600 4.220 18.0 180 58.0
5 3,000
7 3.510 13.0 170 71.0
10 2,400
8 2.8
320 12.0 C
50 83.0
7 1,700 2.0 17.0 100.0
9 510 60
$85,400
10 20 120
ABC Classification
TOTAL % OF TOTAL % OF TOTAL
PART PART
VALUE UNIT
VALUECOSTQUANTITY
ANNUAL USAGE
% CUMMULATIVE
1
9 $30,600 $ 60
35.9 6.0 90 6.0
8 16,000
2 18.7
350 5.0 A
40 11.0
2 14,000 16.4 % OF TOTAL4.0 15.0
% OF TOTAL
3 30 130
1 CLASS
5,400 ITEMS6.3 VALUE9.0 24.0
QUANTITY
4 4
4,800 5.680 6.0 60
A3,900 9, 8, 2 4.630 71.010.0
B 15.030.0
3 5 100 40.0
6 B3,600
6 1, 4, 3 4.220 16.518.0 180 25.058.0
5 C3,000 6, 5, 10,
3.5710 12.513.0 60.071.0
7 170
10 2,400
8 2.8
320 12.0 C
50 83.0
7 1,700 2.0 17.0 100.0
9 510 60
$85,400
10 20 120
ABC Classification
100 – C
B
80 –
% of Value

60 –
A
40 –

20 –

0 |– | | | | |
0 20 40 60 80 100
% of Quantity
Why ABC?
 Inventory controls
 Security controls
 Monetary constraints
 Storage locations
Thanks…