Cost Based Prioritization of Overhaul Process Improvements

Abstract

This thesis was written in collaboration between Faiveley Nordic in Landskrona and the Division of Production and Materials Engineering at Lund University. It was set out to find improvements or cost reductions of the overhaul process at Faiveley. The overhaul process at Faiveley is a process were used and worn train brakes are taken apart and overhauled for further use. To achieve this goal, among other influences, Ståhls Cost model was used to create the so-called “Cost model system”. The Cost model system is an excel-based system of interlinked tables were data gathered from multiple company entities are inserted to provide a cost analysis, which can be used for production development.
To make the analysis, a lot of data was needed from multiple departments at Faiveley. To get accurate and thorough data on the processes, a time study was performed, for which a software tool, the so-called Time-study system was developed. All data gathered was inserted to the cost model system that provided insights about the current situation at Faiveley. The analysis from all data gathered and the results from the Cost model system, brought many issues to light which were then evaluated to create improvement suggestions. Some of these suggestions were picked for further evaluation in the Cost model system. The Cost model system showed that great cost reductions are possible, but of course to reach this point, investment in new equipment must be made.
Although the Cost model system was at first only intended to be used for the analysis conducted in this thesis, it turned out to be a powerful tool that shows great potential to be used at any production company for many more purposes than just production development.

Popular Abstract

FINDING THE TRUE COST OF PRODUCTION

In todays globalized world with its harsh competition, for a company to stay competitive it is of most importance to keep track of the costs of one’s products. But as production becomes more complex, it can be difficult to prioritize in a systematic way and to find the improvements most appropriate to implement. How should this then be done?
When looking at a factory with multiple products and processes, all of which possible to improve and in multiple ways, what should be done? Should a new machine be bought? Should we use another consumable? Should the factory be extended? Or should one product be eliminated? These sorts of questions are hard to analyze and get an overview of. Lean tools have for a long time been considered the go-to philosophy for analyzing and improving production. But many of these tools are not as profound as needed and could in some cases be quite flimsy and unpractical. Perhaps there is a better way? The NEXT STEP philosophy suggests the creation of a clear link between technology and economics and the use of economic indicators as a basis for making decisions. This is suggested to be done using a model for calculating changes in a parts cost, a cost model. The thesis, Cost Based Prioritization of Overhaul Process Improvements is a case study, in which a system for doing this was created - the Cost Model System (CMS).
At Faiveley Transport Nordic in Landskrona the question of how to improve the overhaul process of train brakes had been discussed for quite some time. A thesis project was initiated with the goal to find well-motivated and thought-out suggestions for improvements and in that reducing the cost of the overhaul process. However, if one wants to reduce the cost, one must first determine what the cost is. The way Faiveley have chosen to calculate the cost is to simply put a fixed rate on every process hour, independently of what process. This means that the costs of using a 5-axis CNC machine for an hour or a simple screwdriver for an hour, are perceived as the same. Calculating cost in this manner obviously has its issues and can cause the wrong prioritizations.
The Cost model system CMS was created, using excel and the add-on Power Query to create a data structure and interface that made the process of summarizing the cost and calculating the rate of all processes automatic. Taking in to account losses due to rework, maintenance and repair cost, the cost of the facility, equipment, parts, consumables and much more. The system as such was created to be generic, i.e. able to handle all products and processes at any factory. As the CMS was created alongside with the collection of data, the data structure could be made intuitive in the sense of that data could be inserted in the way it is found, without too much manipulation of it. The output is displayed in charts showing precisely which cost that goes in to the different products. The cost of every process and what those costs account for. It also shows which products are most profitable and which that are most costly. The system being flexible and easily modified, makes it easy to add processes, products, cycle times or try different setups of machinery.

The CMS was used to do a thorough analysis of the current situation at Faiveley. Multiple issues and areas of improvements were discussed, but only a few were further analyzed in the CMS. The sandblasting and its surrounding processes were chosen where three different setups of equipment were analyzed and compared with the current situation. Great cost reductions and process savings could be achieved, especially by implementing a machine which could do both sandblasting and washing. This would eliminate other processes where much material handling was involved. Even though this machine was quite expensive, it was shown using the CMS that substantial cost reductions were possible to achieve, where time savings were more substantial than the cost of the new investment.

• author: Nilsson, Martin
• supervisor: Carin Andersson
• organization: Production and Materials Engineering
• course: MMTM01 20171
• year: 2018
• type: H2 - Master's Degree (Two Years)
• subject: Technology and Engineering; Business and Economics
• keywords: Cost model, Cost model system, Process improvement, Production development
• publication/series: Cost Based Prioritization of Overhaul Process Improvements
• report number: 5295
• other publication id: CODEN:LUTMDN/(TMMV-5295)/1-151/2018
• language: English
• id: 8938257
• date added to LUP: 2018-04-09 10:06:15
• date last changed: 2018-04-09 10:06:15