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Design Cost Savings Into Machines

Dec. 11, 2012
How to Reduce Hardware Costs While Balancing Labor Costs Between Engineering and Assembly
About the Author
Dan Pienta is president of Automatic Handling Int'l (AHI), a family-owned and -operated business that makes roll handling and packaging systems in Erie, Mich.The challenge to reduce hardware cost and balance the labor cost between engineering and assembly is a real-world problem that we face every day. As a machine builder active in both custom and standard machine design, we face this challenge in two different ways, each tailor fit based on the number of systems that will be built.

When we have a system that's a custom design, requiring engineering effort, then our primary focus is to reduce that engineering time and also drive the electrical assembly time to a minimum. A typical example of this is our high-speed film wrapping lines for paper, board or pulp, where a system is made up of multiple machines. Each system has its own layout and complexity, pushing us to create hardware design standards — drawing templates that can be pulled from our standard library and software templates to help our engineers reduce the overall design time.

These standards also have a great impact on the shop assembly side. Because our shop electricians are very familiar with the hardware standards as well as our standard wire-numbering techniques, this drives efficiency during the panel build and also helps to minimize machine wiring. We are producing three times the projects we were six or seven years ago, and yet we haven't increased our staff levels.

We made a concerted effort to build the standard hardware list, drawing templates and software library to enable us to be more productive in the long run. Now we enjoy the benefits of reduced engineering and build times. Custom projects are now five-month projects rather than 10-month projects because our engineers no longer have to spend the time investigating the right solution for a given capability.

The labor saving has a direct impact on our financial performance and level of competitiveness in this market. This is particularly true for a business like ours, where 90% of what we do are custom designs. While other machine builders might put more effort into reducing hardware costs, we've found that the bigger cost is on the labor side. This is true even for a big project where we might spend up to $150,000 just on electrical hardware.

But this is not the case in markets where we supply standard systems. In that case, our thought process is much different, and we approach the project with the need to have the lowest cost of hardware and to minimize the labor needed to assemble the hardware package. The kind of hardware we use will depend on the markets we serve — while we can save $1,000 in hardware costs for each cotton unwrapper supplied to the agriculture industry, there will be stricter hardware demands made by the Fortune 100 clients using our machines in the tissue industry, for example.

Regardless of industry, we have found that the upfront cost of number crunching, engineering and aggressive procurement, combined with assistance from our valued supplier base, has great benefits in driving down our cost. Rather than limit ourselves to the standards described earlier, we consider all available technology to drive our shop productivity and reduce our direct material cost.

The best example of this kind of change is when Rockwell Automation came out with the GuardLogix processor, which made a real impact on new systems from engineering to system wiring. Despite high hardware costs, we realized that the dollars we could save for the overall project were huge, so we have standardized on this integrated safety solution since late 2009. We like to answer two important questions when looking at new technology: How will it impact the performance of our machines? And will it help us be more successful? Any change has to have a purpose.

Although the bulk of our machines and systems are custom projects, there is significant value-add in having the two types of approaches to design. We are able to keep our eyes open to the new technologies and techniques that are available for our standard machines. Understanding those new technologies as they hit the market provides us the opportunity to change our standard libraries to benefit large custom systems.

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