Interim CRO / Reduction of quality costs of a tier 2 supplier
As part of the restructuring, the internal and external quality costs of a Tier 2 supplier were to be reviewed and significantly reduced.
- Negative EBIT
- Quality cost variance
- Decreasing contribution margin
At the beginning, the entire process & goods flow from goods receipt to shipping was analyzed and checked for potential improvements. Here, very high expenses for various control operations such as sampling, 100% control, outgoing inspection and, in general, very high costs for the entire quality assurance were already apparent at the beginning.
Through process improvements or automation with a low one-time investment, the 100% visual output inspection could be changed to an inline quality inspection by the machine operator. Additional error cost reduction could be achieved by an increase of the system availability (camera inspection) and the reduction of the start-up scrap.
Rework costs were allocated to the appropriate source and supplied with costs accordingly. This change strengthened the effort in the responsible production units and led to a corresponding cost reduction through internal quality circles and lessons learned.
Solutions at a glance:
- Value stream mapping
- Failure Cost Analysis
- Control Plan Review
With the measures implemented, the halving of quality costs (reduction of approx. €1 million/year), the quality enhancement project was completed very successfully and profitability improved significantly.
Results at a glance:
- Reduction of quality costs
- Elimination of rework
- EBIT improvement