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Cost Reduction Strategies for Industrial Engineering

Paper Type: Free Essay Subject: Engineering
Wordcount: 2092 words Published: 8th Feb 2020

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The role of newly appointed Industrial engineering’s is to use their knowledge and skills to improve systematic processes through the use of statistical analysis, interpersonal communication, design, planning, quality control, operations management, computer simulation, and problem solving. (University, Oregon State, 2012) This essay will bring about a better understanding to some of the techniques that the industrial engineering can used in the development of a cost reduction programmes when a firm is undergoing a significant reorganisation. Here we discuss and critically evaluate the key methods used in the eliminate of waste, give a personal example of the practice, explain the set-up reduction core principles and evaluate the techniques used and their effectiveness with regards to reducing batch sizes,

There Seven forms of waste

  1. production of defective parts
  2. production of more than the number of parts needed (overproduction)
  3. excessive inventories
  4. unnecessary process steps
  5. unnecessary movement of people
  6. unnecessary transport and handling of materials
  7. workers waiting

The three key methods of waste elimination are

  1. Just in time production
  2. Autonomation (automation with the human touch)
  3. Worker involvement

Taiichi Ohno describes Just-in-time and Autonomation as the two pillars needed to support the Toyota production system. The term Lean production was coined by researchers at the Massachusetts institute of technology to explain the success of the Toyota production system. The Toyota production system was born in japan in the 1950’s from limited investment and limited manufacturing space in japans automotive industry and the necessity to develop a production system that would facilitate and complement Japanese car production post-world war two plus Taiichi’s aversion to waste. (Groover, 2014) The objective of just-in-time the first of the pillars of the Toyota production system is to reduce inventories especially work in process inventories, the term just-in time also means to deliver the exact number of components to the downstream operation in a manufacturing sequence at the exact time when that component is needed. This principle of manufacturing has the capability in reducing inventories, which as a result can therefor eliminate the need to hold large amounts of stock. This requires receiving goods from suppliers when orders are to be produced, also known as the pull system. The pull system allows the ability for smaller batch runs and a more reliable production operation. JIT seems a more cost-effective way of managing stock, other benefits of this practice are less warehouse space, a faster turnaround of stock, also reducing rents and initial outlay when choosing a location for a new premise. Other impacts of waste reduction that JIT bring about are reducing risk of obsolete goods by reducing WIP, additionally reducing finished goods that may become damaged while in storage, smaller stock holdings equal smaller outlays or investments and can help maintain cash flow.

Though JIT can save the company time, space and money it has its disadvantages which can bring a considerable negative effect on the company if they arise, JIT means becoming reliant on your suppliers, to reduce this risk maintaining a good relationship with suppliers and suppliers with a dependable supply chain are imperative. While ordering smaller stock amounts might reduce outlay and waste, it requires more of an understanding of its customer base and sales forecasts, to ensure stock levels when needed, planning becomes a priority, and understanding seasonal changes become essential. The ultimate goal of just in time is to have a production system so responsive that products can be made in a batch size of one and scheduled according to the market’s demand rate. (Enkawa & Schvaeveltd, 2001)

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The second pillar is Autonomation or automation with a human touch, the conception here is that a machine has the freedom to act independently, as long as they stay within the parameters of their design and function, once they move outside these parameters or produce sub-standard or out of specification parts they stop. These machines are designed to be highly reliable also incorporating the ability to check for errors in their production processes and also stop if found, once stopped they can then alert the operator, this is by way of Andon boards. An andon board is lighting panels or a traffic light system each machine of an autonomous nature will have, positioned above or besides the machine, these boards display different colour light that can be seen from anywhere on the production floor and light up when there’s a malfunction or process problem, consequently alerting the operator with a flashing light identifying that there is problems with that machine, the problem can be identified by different coloured lights giving the operator immediate knowledge of what the cause may be. A production problem can consist of defective parts, the absence of parts, batch quantity reached, machine tool change.  Jidoka is a common word associated with autonomation, the word is Japanese for machines that are designed to stop automatically when something goes wrong,

With Just -in-time the left pillar and Autonomation the right, squeezed in the middle is worker involvement. Worker involvement consists of continuous improvement, visual management and standardized work procedures. The Japanese word Kaizen means Continuous improvement of production operations, the implementation of a continuous improvement programme is usually carried out by the workers, worker teams know as quality circles or sometimes kaizen circles are established to help deals with the many issues of production such as quality, maintenance and other issues the company can have on the factory floor. These quality circles are usually made up of experienced factory workers their supervisors and management and meet on a part-time basis to discuss the problem and find solutions to rectify them. Visual management is another key element, with the ability of being able to visually see the actual work in process this results in the ensuing of immediate remedial action if and when necessary. (Groover, 2014) Another concern that visual management overcomes is poor housekeeping, as good visibility throughout the plant makes it easy to detect issues of this nature, it also helps in keeping work in process to a low level thus reducing clutter on the plant floor. Finally, standardized work procedures, these are similar to traditional methods engineering and time study techniques and are used to keep productivity levels to a maximum using the least amount of resources, retain an equal workload through all the processes, and maintain the work in process to a minimum.

CNC machines are a fundamental tool in the elimination of waste, used in many industries especially in metal working industries. With higher outputs because of their greater accuracy and repeatability and ability to run 24/7, these machines eliminated waste in many ways. Conventional machines needed one operator per machine where’s with CNC machines you can have one operator overseeing many machines. CNC machines allow for low to medium batch runs by allowing faster and more frequent changeovers when exchanging the tooling for different product parts, CNC machines also keep set up times to a minimum with multitool turrets or carousels this considerably reduced the frequency in which a machine must be stopped to wait for an operator to change tools. CNC machines also deliver maximum flexibility in their adaptability when it comes to similar parts where programming changes are easily modified to suit the new part or any alteration to existing parts without changing tooling, thus reducing set up times significantly. As well as the elimination of waste these features of the CNC machines are in line with the today’s Just-In-Time requirements for the manufacture of many products. (Khemani, Manufacturing Technology, 2009)

Set-up time reductions is an essential factor of Just-in -time production. The basic principles that reinforce the set-up time reduction process are, abolishing unnecessary set-ups, identify the internal and external set-ups, convert internal setup to external setup also shortening the internal setup operations and reducing external setup, thus giving precedence to the internal set-up as these will determine the length of time the machine will be out of production during a changeover,

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The setup is an element of the production operation, where’s to change the manufacturing conditions or setup of one machine producing a certain product to those so that it can produce a different product. Setup time is not only the time for changing tooling or calibration, set up time can be expressed as the following, the time the previous production run stops until the time the new production run produces a nondetective part at normal rate without ongoing stoppages or adjustments. Setup time does not take into account time related to external setups as that can happen before or after the machine stops. (Shirahama, 2001)

Internal setups can consist of changing or removing tooling, i.e. Moulds, dies, punches, jigs, setting of stops, also the repositioning of tooling and calibration and running off of test parts,

External setups can consist of reprogramming of machine for new part or loading program, having readied new tooling, tool assembly, collection of equipment needed to complete new setup. The benchmark of reducing setup times to less than 10 minutes is well known. This is also known as single-minute exchange of dies (SMED). (Enkawa & Schvaeveltd, 2001). Shigeo Shingo the Japanese industrial engineer who specialized in quality control. Is known for his various quality techniques and concepts such as Poka-Yoke, SMED, Just in Time Production, and Jidoka. He created set up time reduction procedures such as the Single-Minute-Exchange of Dies (SMED), which he originated in 1950 (Toolshero, 2018)

The outcome of set up time reduction when achieved will have a significant effect on the capability in the reduction of batch size. The effectiveness of this is once batch size has the ability to be significantly reduced, providing set up time reduction has been successfully, additionally set up cost are reduced too, which adds value and results in the reduction of work in process and excessive inventories.

To summarise when industrial engineering technique are applied with the elimination of waste being the focus it is one of the most effective ways to increase the productivity, reduce the cost, add value and quality to many different types of business. Production processes can either add value or waste and using the lean production approaches help understand precisely what waste is and where it occurs these techniques give industrial engineers the tools to develop a systematic approach for waste reduction and its many benefits.


  • Enkawa, T., & Schvaeveltd, S. (2001). Handbook of Industrial Engineering (Third ed.). (G. SALVENDY, Ed.) simultaneously in Canada.: John Wiley & Sons,.
  • Groover, M. P. (2014). Work Systems: The Methods, Measurment and Management of Work. Essex: Pearson.
  • Khemani, H. (2009, 11 27). Manufacturing Technology. Retrieved from www.brighthubengineering.com: https://www.brighthubengineering.com/manufacturing-technology/57396-benefits-of-the-cnc-machines/
  • Shirahama, S. (2001). MAYNARD’S INDUSTRIAL ENGINEERING HANDBOOK (Fifth ed.). (K. B. Zandin, Ed.) New York: McGraw-Hill.
  • Toolshero. (2018, 07 30). Shigeo Shingo. Retrieved from www.toolshero.com: https://www.toolshero.com/toolsheroes/shigeo-shingo/
  • University, Oregon State. (2012, 06 22). what-do-industrial-engineers-do. Retrieved from mime.oregonstate.edu: https://mime.oregonstate.edu/what-do-industrial-engineers-do



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