Learning Launch – Material & Labor Cost Reduction

Challenge

This is Fernando, earlier I was involved with many development projects in Automotive field. The

organization has DTA-Sales (Domestic tariff Area-Sales) & Export-Sales. I have been nominated for a

project titled Material cost & Labor cost reduction for DTA-Sales. The project scope includes reduce the

Material cost which involves rejections, excess material consumption & Labor cost reduction which

involves, labor cost resulted from rework & low efficiency. Also, the project has very limited workforce

(4member team) & lead time allocated was only 60days which includes our regular day to day basis

routine workflow also. We will focus on what the entire organization fails concentrate / having less

visibility to concentrate because of work priorities.

Selection:

Since there is very limited project lead time, we are ready with trying learning launching tools. As a basic

thumb rule, we had started to identify fest & cheap experiments. Also, we are planning to involve

Organization’s internal customers in all our experiments & results.

Application:

We had started interacting with all levels in the organization & collecting data for material & labor cost

variations. We had set targets for collection of inputs, analysis, presenting to management, include the

inputs from management, implement the activities, forming team to sustain the implemented process.

We had set our entire targets to weekly basis to have quick review & align the entire organization having

the visibility. We had segregated the data to 80/20 principle & focusing on attacking 80% cost contribute

items rather than focusing 20% least contribute item. This is based on the focus given from top

management to quantity the data & qualify the data.

Insight:

Based on the collected data, our team designed many experiments to prove the material variation

reduction in terms of rejection, excess material consumption & Labor cost reduction in terms of rework

& low efficiency. Labor cost reduction experiments planned with improved process layout & resigning of

bottle neck processes (More likely be true category) in the entire product cycle. Also many Material &

Labor cost analysis drilled down into

-  What we know

-  What we do not know

-  What we need to know

-  What do we learn what we need to know

In many cases, we had identified few design changes in product design to reduce material cost & resign

the process to have better labor cost from current situation. After identification of key product & process

activities we had finally mapped activity plan to track all experiments & their results. We had used the

following structure to track the activities

-  Key assumptions

-  Who

-  When

-  Timeframe

-  Cost involved / Reduction

Approach:

After successful completion of activities our team knows the entire learning launch process also the same

to be reviewed by our team further more to have better insights again which can be used for further

learning launch in near future to have organization’s success.

