1 % error Adds Directly to The Bottom Line

This business was very focused on its core processing activity, but less focused on the support functions. One of these support functions was the off-line handling and managing of its molds, which were quite fragile and breakable.

This was considered to be a less important activity than production and, as long as the molds were ready for production as required, Plant Management largely ignored this activity.

Also, the budget for this section was relatively small; in anyone year they would spend about $200,000 on the replacement of molds that were broken off line. As this was only about 1% of costs, the activity was never previously targeted in typical cost reduction programs.

As part of an operational review, this organization investigated its 1 %errors and this previously ignored cost.

A comparison with similar plants showed that it was possible to operate with almost zero breakages and that the current expense could be eliminated with better handling and management. The procedures from the other plants were adopted to address the issue.

This resulted in breakages being almost eliminated. Focusing on this previously ignored 1 % error and adopting simple procedural changes added $200,000 to the bottom line.