Interesting email this week. Client was really justifiably proud of six of seven days of zero waste from a step in their process. This was really an outstanding accomplishment that was not achieved without some serious work using Six Sigma tools. The previous months had seen most days of 25%+ scrap rate. The material that was being scrapped was one of the more expensive additions to the product and also a differentiators from our competitors. Obviously, I asked “what have you done to celebrate this and is your control plan in place”. I almost always assure that the people doing the job have a celebration so they remember when we do the job this way, it feels good!
As I looked at the additional data being tracked I noticed that fully 50% of the parts in this department were “reworked to acceptable quality standards”. We have cash flow issues as almost all businesses are experiencing. Material cost is 5X labor cost for our product, so this sounds like a good deal and everyone is pleased with our “world class rework procedures”. We congratulate ourselves on our ingenuity to salvage this material. Our job classifications pay the highest rate to our “reworkers”.
Does this part cost us more than the part that was made right the first time? How many hours of OT do we pay while remaking this part right? When do we say we are putting no more time ($) into reworking this part? Is our selling price for the product adjusted to show this additional cost?
Would our customer prefer to buy a product built with “world class reworked parts” or one with all the parts made right the first time???
