Six Sigma Case Study
Cost Reduction Through Capability
This Six Sigma case study looks at how product cost was easily reduced for a company producing formed steel wires. This was one of the simplest cost reduction projects we had ever done but it was very effective. It is a good example of how easily simple tools can help you cut cost.
In this six sigma case study, we look at a factory producing formed steel wires. When the factory asked us for cost reduction suggestions, one of the first things we looked at was the wire "shop length".
The shop length of a wire is simply the length of the wire from one end to the other when laid down on a flat surface. This is not a very sensitive characteristic of the wire. Therefore, the customer tolerances for shop length were quite wide and lenient.
If we could find a way to reduce the shop length of the product and yet stay within specifications, less material would be used which would in turn reduce the cost of the product.
Over two days, shop floor measurements were collected randomly from products in the factory.
A capability study was then performed on the products' shop length. The result was a Cpk of 14! That is a 42 sigma level shop length cutting process! It was obvious that the wire cutting process was very accurate - compared to the customer tolerance at least.
Internal specifications were changed to make the tolerance about 7 times tighter. The target cut length was moved to the center of the new tolerance. This resulted in target shop lengths being about 1 to 2 percent shorter than the customer target, but well within the tolerance.
To ensure that measurement variability will not affect product acceptance, Gage R&R analyses were performed with the top 3 customers. No problems were found in the measurement system and it was consistent between all customers.
The project was completed in 5 days.
Product cost was reduced by an average of 1.3%. With about $30 Million of sales of this product, this was a straight cost reduction of close to $400,000.
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