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The 80-cent solution

Improving productivity is an arduous process. Just ask students who worked to shave 32 cents off the cost of making a little black rubber pad.

By HELEN HUNTLEY
Published July 30, 2006

The unassuming wedge of black rubber could be mistaken for a doorstop that turned out just a little too thick on one end. It has no moving parts, no batteries and no computer chips.

But for three solid months, the wedge was the object of intense scrutiny and detailed analysis. Economists may talk about reducing input and raising output in high-level terms, but this is what improving productivity looks like in the trenches: finding a better, lower-cost way to make a little black wedge.

Although it resembles a doorstop, the 3.5-inch wedge is a support pad for a touch screen voting machine. It is made at TSE Industries Inc. in Clearwater for Diebold Inc., the voting machine and automatic teller machine manufacturer.

Diebold thought the pad cost too much to make, at $1.12 a pop.

“We’re always looking at ways to shave dollars off the cost of processing and manufacturing a part,” said Mike Jacobsen, Diebold spokesman in North Canton, Ohio. “When you look at all the different parts and all the different suppliers we have, it can lead to real savings.”

The pad is just a tiny part of TSE’s business — it sold Diebold 50,000 last year and 70,000 this year — but Diebold is one of TSE’s most important customers, so the company’s concern got TSE’s attention. Family-owned TSE makes belts, wheels and rollers for Diebold’s ATM machines, along with rubber and plastic products for other customers.

And Diebold’s interest in a cheaper pad came at just the right time for Frank Cucchiara, manufacturing director of TSE’s engineered polymers division. He and 16 other students were dividing into teams for the final stretch of St. Petersburg College’s Lean/Six Sigma certificate program, and his team needed a project.

They had been studying the Six Sigma approach to improving quality by learning to define problems and goals, diagram and analyze work flow, pinpoint areas for improvement and measure results. Now it was time to show they could put what they learned into practice.

Two students — Deborah Beaver, corporate training analyst at Portable On Demand Storage, or PODS, in Clearwater; and Jeff Scheble, production scheduler at Beckwith Electric in Largo — signed on for Cucchiara’s project. Eleven TSE and Diebold employees contributed their expertise.

“We met here at my office every week for 12 weeks,” Cucchiara said. “If anybody had a question, we could go right out to the press line and talk to the engineers.”

Their goal: Get the price of a pad down to 80 cents, a 32-cent decline. They hoped to do it by reducing the amount of material used, reducing waste because of defects and reducing labor and machinery costs.

One of the first steps was a detailed analysis of the manufacturing process to determine where problems that increase costs could occur, from an oven not heating to proper temperature to a mold operator not cleaning the mold correctly.

The group studied rejection rates and analyzed the splits and chips that caused them. TSE was making 7,152 pads to get 6,500 Diebold could use. The three students mapped the movement of materials and parts on the production floor. And then they went to work changing it all.

First up was redesigning the pad, hollowing out the back side so less material would be needed. The first prototype proved too flimsy. The better idea: two sections hollowed out on the back separated by a solid piece across the center for stability.

The second big change was to switch machines. The pad was being made on a compression molding machine, but the team decided that using TSE’s injection molding machine would prevent the chips and splits that were causing waste. They suggested switching to a premixed Neoprene compound instead of mixing chemicals on site. The changes eliminated several production steps.

Not everything went according to plan. One operator could run three of the compression machines, but each injection molding machine required a full-time operator, meaning labor costs would go up. There would be changeover costs of $28,215, mostly for engineering and retooling the injection molding machine.

But there was good news when they ran the final numbers. Reduced raw materials, reduction in waste and cycle time and other changes offered a net after-tax savings of $44,730 the first year. The bottom line: TSE could reduce the price to Diebold to 80 cents and improve its profits at the same time.

Cucchiara said the companies expect to implement the changes next year when Diebold gears up to meet demand for voting machines for the 2008 elections.

The fast payback time made the TSE project a standout during the Six Sigma presentation night last month  at St. Petersburg College, but it wasn’t the only big money saver students devised.

A group at BIC Graphic USA in St. Petersburg automated the production process for printing scratch pads, doubling production. The project included procuring and installing equipment and training employees.

Not all the projects turned out the way students hoped. A group working at a defense contractor wanted to reduce manufacturing waste, but found the company had no accurate records of how much waste was occurring and why. Instead of reducing waste, the students decided to create a process for documenting it.

“It’s not uncommon to start a project with an assumption and then go into it and find out it won’t work,” teacher Jerry McCollum said.

The 17 students were the first to complete SPC’s Six Sigma “black belt” program. They earned college credit for the eight courses that made up the program and took a qualifying exam, then got their certificates at SPC’s graduation last week .

An engineer at Motorola Inc. developed the Six Sigma process 20 years ago, taking the name from a statistical term for how far a process deviates from perfection. The Six Sigma techniques provide a systematic way of analyzing defects and figuring out how to eliminate them to get as close as possible to perfection.

Walter Industries Inc. of Tampa has used Six Sigma techniques to come up with projects that save millions of dollars in areas such as improving recovery of coal in mining processes and reducing service and repair costs in production of modular homes.

Many large companies do Six Sigma training in-house, but “smaller companies don’t have the infrastructure to develop a whole training program and our program is relatively cheap,” McCollum said.

It takes a year and costs about $2,000 to earn a black belt certificate. Students who complete just the first half of the program earn a green belt certificate.

Although originally developed for manufacturers, Six Sigma programs have been applied to other types of processes, such as customer service and financial transactions.

Deborah Beaver, who worked on the TSE project, said she hopes to use it at PODS, which is in the temporary storage business.

“It worked in the real world,” she said. “You can use it on anything. You don’t have to produce a part. I’m producing training courses.”

Cucchiara said the techniques can help companies compete against low-cost manufacturers overseas. Low wages in China “force us to do things better, faster, cheaper and safer in order to remain competitive,” he said.

Helen Huntley can be reached at hhuntley@sptimes.com or (727) 893-8230.

[Last modified July 30, 2006, 23:52:43]