Production engineering and cost keeping for machine shops

Our purpose in this book has been not only to bring practical assistance to the production managers, foremen and cost accountants of machine shops, but to give the higher executives a knowledge of the best in shop management practice, so that they may judge how effective are the methods used by their subordinates. The principles and practice here recommended have been developed in the course of years of actual installation of improved production, engineering and cost keeping systems in metal trades plants. They have thus been well tested and proved.

Of course no system, however successful in one shop, can be taken over into another shop in its entirety. There must be intelligent adaptation. But the underlying principles are widely valid and the specific procedure here set forth should prove suggestive of better policies and methods. They should give more production and cheaper production.

Our aim has been to tell why and how at every step and to state the case in language as non-technical as possible. For this reason the book should prove a valuable manual of instruction and inspiration to under-executives all down the line.

In the first part of the book, production planning methods are described as concretely as possible. The proposals of this portion of the text should apply with slight modification in the majority of shops.

This is also true of the part of the book dealing with cost keeping methods. Those here described should fit fully ninety per cent of American machine shops; the very large shop will want more detail, perhaps; the very small shop may get along with less. But it should be possible for an executive of judgment with a little thought to fit all the suggestions to his needs.

If your product happens to be one in which several parts are assembled, it is a safe guess you have at times had production held up because one vital part had not reached the assembly department on time. It is no help that the other hundred-odd parts were there waiting. If a small and seemingly trivial part was late at the assembly floor, it may have kept you from shipping the entire machine.

You know what that meant customers disappointed in deliveries, an assembly room clogged with waiting material, idle assemblers and a lot of money tied up in materials that should be shipped.

The Unplanned Shop - Sometimes, of course, this condition cannot be helped, for accidents will happen to machines and men will quit unexpectedly. Nearly all trouble of this sort comes not from these causes, but from failure to schedule operations so that enough of all parts will arrive at the assembly department each day to get out that day's quota of assembled product. Unless every step of production is planned, it is not surprising that shipments of finished product are irregular and that it is impossible to prophesy them accurately.

Where production is not planned, the method of getting work through the shop may be described as "muscling" it through. The "muscling" is done either by foremen or tracers. Under this plan of running the shop, the foreman is given a copy of the sales order or perhaps a bill of material, and from his knowledge of the article, will pick out those parts which his department usually makes, and make them. He is in no position to judge when to start the work to best advantage for he has no knowledge as to how long it will take to make the other parts that go into the assembly.

The Wrong Way - If the material he needs is on hand, he grabs it and starts as soon as he has a man and machine idle. If he can't find material, he requisitions what he thinks he needs from the purchasing agent and with a copy of the requisition in his possession to "clear his skirts," waits without further effort for the purchasing agent to get the material to him.

A few energetic foremen go at production rough-and-tumble. They remind us of the "typical" American army officer of whom we once read, whose presumably effective tactics in France enabled him to put through tremendous engineering projects in unheard of short time. This officer's success in driving his work through to a finish ahead of schedule seemed generally to be due to his knack of "beating the other fellows to it " in obtaining labor and materials.

Perhaps he would divert a string of empty cars to his own use which should have gone elsewhere, or again he would use material that some other branch of the work needed urgently and depended upon. We wonder about the success of the others who were left without their transportation facilities and supplies.

Such violent methods, usually referred to admiringly as "getting things done" are not always praiseworthy. An army or a factory achieves the desired results only when it acts with all parts subservient to the whole. It does no good for one department to show phenomenal results a " clean slate" if it does so at the expense of other departments.

Reducing Emergencies - That which counts in manufacturing is not a rapid production of a single part of a product, but the amount of completely finished goods shipped out at the back door. It is this that production planning aims to accomplish in a shop. Many a machine shop executive has said "Production planning is fine for those who can use it, but my business is different. It can't be planned."

Admittedly, the work of all shops cannot be rigidly planned weeks in advance. Some emergencies come up in every plant. The usual objection is that accidents to machinery, failure to get raw materials and other circumstances beyond control may render all this work abortive. Of course, no one is a prophet, but a wise man plans ahead on the information that is available and then changes his plans according to circumstances. But it is a fact that at least 80 per cent of the things we plan for, work out. That leaves only 20 per cent to handle on the emergency basis, whereas if we do not plan, the whole 100 per cent becomes an emergency proposition.

We truly believe that 80 per cent of the emergency production in any shop can, by planning, be reduced to routine. But the method of planning and the degree to which production should be planned depends upon the type of work done by the shop.

Three Classes of Machine Shops - Machine shops fall into one of three classes depending upon the sales policy which governs production.

First, there are the job shops which will make almost anything that the sales force can sell. The order may be for a single machine unlike any turned out before and it may be for a dozen or more of a kind.

Second, there is the shop that manufactures many types of product of a class, but always in quantity. It may make several thousand gears, transmissions, differentials, and so on to the customer's special design. Or it may make several standard styles of adding machines of its own unvarying design, to stock.

The third class of shop is the one which makes but a single style of one product. There are few such, the Ford Motor Co. being one of the few.

The planning for this latest type is largely preliminary. It consists of getting the best possible layout of machines and of departments, and supplying the proper tools and machines in sufficient quantity to give a certain production per day. The single product then flows in a perpetual stream, day in and day out.

In such a shop, a machine tool once started on an operation can remain on it indefinitely, barring a breakdown. Production planning as we think of it is not needed in such a plant, and the shop executives can give all of their time to keeping the wheels going round.

A Seemingly Impossible Case - In the jobbing shop, it is admittedly hard at first to plan accurately, and yet it is in the jobbing shop that planning is most needed for there the work is very irregular and losses from idle machine time are most apt to climb. In such shops, especially, it is customary to look upon every new order as an emergency. Unfortunately, the idea seems to be that the owner of a job shop must throw up his hands in despair of bettering conditions. This is probably because the economies to be had from planning were first seen by the owners of the larger shops in the automotive industry where quantity production of a comparatively few types of product was the rule.

But work in the job shop can be planned. It has even been accomplished in the repair shops of industries where a repair is an emergency job indeed, as interrupted production of a large machine may cost thousands of dollars in a few hours. In one repair shop for which the production is planned the repairs are now made in about one half the time they formerly took. This not only reduces the direct cost of repairs but means an economy through increasing the running hours of equipment in the productive departments. We shall not describe in detail the planning work in the strictly job shop, for the very sufficient reason that no two such shops are at all alike, either in the work handled or the equipment available; but we shall give in outline the steps in planning the work.

Planning the Job Shop - As a basis for planning in a job shop it is necessary to know just what machines there are in the shop and what operations each can perform. Then we must gather data which will serve as a basis on which we can estimate the time needed to perform any conceivable operation. This, to many a shop man, seems impossible. It is the reason always put forward to prove that the work cannot be planned. If the shop has been in operation for a year or so, there should be a mass of information on hand to show, for jobs already done, what the job was, what machine each operation was done on and how long each operation took. A study of these operations will show that they can be grouped into a surprisingly few classifications and so tabulated that they will afford a basis for a quick and sufficiently close estimate of the time needed for any new job that comes in. This list of jobs and operations should show the tooling, fixtures available, speeds and feeds. Then for practically every job we will not only be able to estimate the time needed for each operation, but we can give the workman full instructions for the work so that he can spend his time in doing the job, rather than fiddling around "getting ready to start to begin."

Eliminating Guesswork - One thing more is needed a means for showing the executive what work is ahead of each machine, how long the machines will be busy on work already in the shop, when each operation should be finished in order to meet the customer's requirements, what machines are now idle and when the others will run out of work. This information allows the shop to give accurate promises of delivery based upon knowledge of the shop's capacity, rather than on optimistic guesses warped by the salesman's desire to land an order.

This information can all be given graphically on the "schedule control graph " which we shall describe in detail in a later chapter. Of course changes in that graph will have to be made to meet the needs of the individual shop, but the changes needed will be apparent to the reader.

Two Divisions of Planning - It is now apparent that planning consists of two parts.

First, the way is made clear beforehand so that the parts can be processed without a hitch. Sufficient machine capacity is provided to handle each operation. The machines are physically arranged so that the parts can be moved from operation to operation with the least possible trucking. That means that the machines, so far as possible, are arranged according to the sequence of operations. The whole shop is put in balance. This planning is preliminary; it is done before an order is taken.

Second, each job is planned through the shop, and the road cleared for it so that the machine operators have nothing to do but perform productive operations on the parts. Tools that are to be used are supplied, raw materials needed are purchased and both are delivered to each operator just before he is ready to use them. Usually he does not even have to set up his own tools. The time of starting each job is worked out so that every part which goes into an assembly will be finished in time to get to the assembly floor at the right minute.

Planning has a much deeper significance to a business than merely to assure smooth production. The real purpose of planning is to conserve capital so that the rate of turnover will be increased; that is, so that the time which elapses between the purchase of the raw material and the shipment of the finished product will be a minimum. Obviously, when this time is reduced, a given volume of sales can be handled with a less investment in goods in process. Most manufacturers believe that what they need most of all is more capital in their business, and to prove it, point to the business failures, which are usually blamed on lack of capital. It is seldom that a manufacturer can talk about his business for an hour or so without laying emphasis on what he could do if he only had more money.

Yet we believe that most of these men not only do not need more money but would be worse off if they had it. The strange thing is that when considering the getting of more money, they almost invariably think of Wall Street and the banks, rather than realizing that very likely they would be able to pick it out of their own business.

Capital turnover is a subject which is given too little study by the average manufacturer. This is not the place to elaborate on all of the ramifications of the subjects, but the fact remains that if the time taken in manufacturing a given article can be cut in half, the value of the goods in process inventory will like- wise be cut in half and the money released from the unnecessary goods in process, will be additional working capital which may be used in expanding the business. Innumerable instances of plants can be cited where this has been done.

Doubling Output through Planning - In one machine shop in particular, where production planning was installed, the results were most striking. At first glance, this concern seemed to be well managed. The machines were well laid out; there was a time-study department of eight men, and nearly every operation in the plant was on piece work. Nevertheless the planning system reduced the goods in process from $3,000,000 to $1,000,000 in spite of an actual increase in sales. That means that $2,000,000 in cash was picked out of the goods in process inventory and was available for other purposes.

In another concern, making automobile parts, the goods in process inventory amounted to $800,000 with annual sales of the finished product valued at $3,600,000. This meant that the money invested in goods in process was turned over once in 80 days or 4 1/2 times a year. A production planning system in this plant resulted in cutting the goods in process inventory to $450,000, giving one turnover in 45 days. This, obviously, is a cut of nearly one half. This concern thought that it was going to have to borrow money to build a new plant in order to meet its expected increased sales. Instead, the planning system enabled it nearly to double its output without additional buildings.

To the casual observer, who might have seen the plant before and after the installation of the production system, it was evident that great changes had occurred, although at first glance it might have seemed that business had seriously fallen off. Where previously the floors of the shop had been cluttered up with partly processed parts, today the shop is clean. There are no accumulations of partly finished pieces at machines waiting for the next operation and no piles of finished parts on the assembly floor awaiting other parts which have not been started.

What Planning Will Do - To sum up, a planning system accomplishes the following results:

1. It enables the sales department to make promises which are reasonably certain of being fulfilled.

2. It reduces the capital needed to handle a given amount of sales.

3. It tends to prevent delays in production. By foreseeing future requirements, it does away to a large degree with emergencies.

4. It relieves the productive departments of the plant from doing non productive work.

5. It enables the plant to get out the maximum possible production.

6. It tends to keep all machines busy, thus doing away with the loss which an idle machine entails.

7. It reduces the unit cost of the output.

These results are ardently desired by every manufacturer, but are seldom attained. We know of no other way to achieve them except through the medium of a carefully worked out planning system, but we do know that there is not a shop now operating under the hit-or-miss condition which cannot avail itself of planning to a large degree, with the desirable results just mentioned.