Inline Inspection for Consistent Operations
Imagine you are a co-packing company producing delicious maple syrup for a large North American retail chain. Given their size and corresponding buying power, your retailer customer has taken on the responsibility to procuring bottles and caps for you to fill with syrup. This leads to frequent supplier changes as they play one company off of another in an effort to secure an ever lower price. At first, this seems to be a fine arrangement, bottles arrive regularly and it’s less work for your procurement person to deal with. Until one fateful morning, the line crashes, syrup is everywhere. Your team, who are already running a very lean operation, are doing everything they can to get the line back up and running as quickly as possible. A postmortem on the crash shows that the most recent batch of bottles you receive are taller than the specification by a full ¼ inch. You tell your customer about the situation, but their only response is to tell you to find a way to deal with. You get your engineering team together to come up with a plan and conclude you have four options. The first, assign someone to QA every pallet of empty bottles that comes in. The second, implement a “laser trip wire” sensor. This is a system that shines a laser across the conveyor at the max allowable height for your bottles on a given run. If it is broken, it will shut off the line to prevent a crash. This solution is comparably in expensive, but will require manual adjustment when you change bottle heights. The third option is to implement a camera driven empty bottle inspection. This will catch not only bottles that are too tall, but also those that are too short or otherwise not correctly shaped. This solution will cost more, but can be programmed to adjust automatically when new bottle heights are required. Lastly, you could do nothing and hope it just doesn’t happen again. So what do you do? Lets run the numbers.
Manual Inspection – $143,506.91
Let’s assume this is not a big enough job to be someone’s full time assignment, and they can help with other quality related activities. According to GlassDoor.com, a jobs and hiring site, an entry level quality engineer is $60,000 annually before overhead and other expenses. Let’s assume another $10,000 in overhead, training, insurance and other expenses and we get an annual cost of $35,000/year. Even at just 5 years and a 7% rate we get a net present value of
$143,506.91 for this hire.
Laser Trip Wire -$59,653.56
This system is relatively inexpensive at $25,000 plus another $5,000 for install and it will protect your capping machine from getting damaged. That said, you will still occasionally get bottles that are too short, requiring you to stop the line and clean things up. You estimate the value of this downtime conservatively at $10,000 per year and give this solution a combined estimated cost of $59,653.56
Camera Inspection – $60,000
This solution is more expensive out of the gate at $50,000 plus another $10,000 for install. On the plus side, you can virtually eliminate downtime from incorrect bottles as well as risk to damaging the machine.
Cross Your Fingers – $82,003.95
The last approach involves just resetting everything and hopping the suppliers get their act together. Of Course it will still happen sometimes and you estimate between replacing damaged parts and downtime this will cost you $20,000/year or a discounted $82,003.95 over the next five years.
All of these numbers are estimated and I’m sure you could come up with a different answer given some different assumptions. Perhaps there is a completely different approach that you would take. Comment and tell me how you would go about attacking this problem. If you would like to learn more improving operations with inspection, check out our inline inspection equipment page.
Process Improvement Innovator