Material efficiency

1. Material efficiency Munich 11 May 2012 Dr. Gerhard Glotz

2. Contents • Typical problems • Identify potential areas of improvement • Reduce waste • Perform (Re)-DtC (Design-to-Cost) analysis • Establish clearly what does and doesn‘t count as improvements in efficiency • The role of mass flow analysis • Typical savings • demea interactive check • Published results from demea • Examples from the metalworking industry • Ressource efficiency and material efficiency • Grants and fundings • Identify suitable consultants and service providers

3. Contents • Typical problems • Identify potential areas of improvement • Reduce waste • Perform (Re)-DtC (Design-to-Cost) analysis • Establish clearly what does and doesn‘t count as improvements in efficiency • The role of mass flow analysis • Typical savings • demea interactive check • Published results from demea • Examples from the metalworking industry • Ressource efficiency and material efficiency • Grants and fundings • Identify suitable consultants and service providers

4. Typical problems • Rejected products • Worn tools • Too much time for settings • No information when mistakes occur • Bad interdepartmental cooperation • Already solved problems occur again and again • Dead stock • Interruptions within the production process • Poor machining  Unacceptable high material costs

5. Contents • Typical problems • Identify potential areas of improvement • Reduce waste • Perform (Re)-DtC (Design-to-Cost) analysis • Establish clearly what does and doesn‘t count as improvements in efficiency • The role of mass flow analysis • Typical savings • demea interactive check • Published results from demea • Examples from the metalworking industry • Ressource efficiency and material efficiency • Grants and fundings • Identify suitable consultants and service providers

6. Potential areas of improvementsCost structure within the German industry 2008

7. Material cost saving potential: 20%Potential areas of improvements

8. Zero loss managementWaste during mechanical processing

9. Damaged products

10. Typical reasons for losses

11. Within ZLM (Zero loss management), all cost elements not being used and payed by the customer have to be minimized

12. ZLM process

13. ZLM cost reduction potential

14. Quality cost savings

15. Typically, a large part of quality costs are not directly visible

16. Estimation of quality costs

17. Quality cost structureTypical example from a metalworking company Rough estimation: Quality costs 10% of turnover Material losses within quality costs 2% of turnover

18. Process analysis Mass flow analyis incl. supply chain Analysis of production process

19. Cost analysis of lossesExample

20. Elaboration of measuresCauses and effects

21. Elaboration of measuresLessons learned workshops

22. Realization

23. Control realization

24. ZLM & DtC

25. Σ Established costs 100 Costs Establishment of costs 90 80 70 60 Σ Costs 50 Costs of goods in % 40 30 20 10 0 Concept- Process plannung Purchasing Manufacturing Administration Phase 70% of product costs are established in early phases of development  only with DtC those costs may be reduced significantly

26. Target costing & (Re)-DtCA modified value analysis

27. Target costs, example

28. Customer requirementsWhat are the key purchasing factors of the customers? Example: Key purchasing factors of a concrete mixer

29. Weighting of customer requirements ……..with the perspective of the customer

30. Identify main product components

31. Contribution of components to fulfil customer requirements

32. Contribution of components to fulfil customer requirements

33. Compare with production costs of components

34. Results of comparison Over-engineered? OK Too expensive

35. Idea generation for each component

36. Idea realization

37. Typical results

38. Establish clearly what counts and doesn’t count as improvements in material efficiency • Effectsofannualpurchasingnegotations • Effectsofmoreefficientfabrication • Effectsof material costssavings

39. Price performance analysis doesn’t count as improvement Only material savings are considered as better material efficiency, but not other measures such as price negotations, reduction of process time etc

40. Contents • Typicalproblems • Identify potential areasofimprovement • Reducewaste • Perform (Re)-DtC (Design-to-Cost) analysis • Establishclearlywhatdoesanddoesn‘tcountasimprovements in efficiency • The roleofmassflowanalysis • Typicalsavings • demeainteractive check • Publishedresultsfromdemea • Examplesfromthemetalworkingindustry • Ressource efficiencyand material efficiency • Grants andfundings • Identifysuitableconsultantsandserviceproviders

41. The role of mass flow analysis • Mass flow analysis is the key element of the process analysis phase within ZLM

42. The role of mass flow analysis

43. Example Within the German programme VerMat, a mass flow analysis has to be done at the beginning of each project

44. Contents • Typical problems • Identify potential areas of improvement • Reduce waste • Perform (Re)-DtC (Design-to-Cost) analysis • Establish clearly what does and doesn‘t count as improvements in efficiency • The role of mass flow analysis • Typical savings • demea interactive check • Published results from demea • Examples from the metalworking industry • Ressource efficiency and material efficiency • Grants and fundings • Identify suitable consultants and service providers

45. demea interactive check

46. demea interactive check - results

47. Published results from demea

48. Published results from demea

49. Examples from the metalworking industryDtC-results in the automotive industry only 25% due to material efficiency

50. Examples from the metalworking industryProduction of mechanical induction devices Results of analysis of losses: • Processes  5.7 % of turnover • Re-DtC  2.1 % of turnover • Gross effect  7.8 % of turnover However, the reduction of losses results in additional permanent costs (e.g. quality control etc) • Permanent personal costs  2.2 % of turnover • One-time costs  0.7 % of turnover • Net effect  5.6 % of turnover