What?
Running at risk is a tradeoff that many companies face. However, some may not realize that they lose more money in downtime than if they continued to run.
For this project, you need to determine whether waiting for quality approval of the first piece inspection is better or if it's safe to proceed without the inspection and avoid wasting too much time.
Before implementing "Run at Risk," it's crucial to consider the reject rate of your first piece inspection. If the reject rate is too high, it may not be worth the risk to run without inspection. Not every plant may be able to do this project, depending on the reject rate. However, if the reject rate is low, it may be more cost-effective to run at risk and reject the full lot some of the time, rather than being down for first piece inspection all of the time.
Time Commitment: Low
Features Required: Downtime Labeling
Notes: Not every plant will be able to undertake this project, depending on the First Piece Inspection reject rate. You need to ensure that you have a way to identify & quarantine the parts that will be produced before quality approves or rejects the first piece in case of rejection.
Case Studies:
- An Amper customer discovered that "Waiting on First Piece Inspection" was a major downtime code, even though they didn't often reject the first piece. To investigate, they analyzed how often they rejected the first piece of a lot and used Amper data to determine how long their machines were typically down for first piece inspection. They calculated how many pieces they could have run and how much money they could have made by running instead of waiting. They also used the rejection rate to estimate how much money they would lose if they ran and needed to reject the entire lot. Ultimately, they determined it was more cost-effective to "Run at Risk" and reject the full lot some of the time, rather than being down for first piece inspection all the time.
How?
- First, create a Downtime Code for “First Piece Inspection”
- After a few weeks of this, you'll be able to see how much time/money is being lost waiting on “First Piece Inspection”.
- For example, if we’re losing 200 hours a week due to this issue, we can apply our hourly cost of production and see how much we might be losing a year.
- 200 hours/week x 52 weeks/year x $75/hour = $780,000 lost in waiting on First Piece Inspection
- Calculate the cost of “Running at Risk”.
- You’ll need your
- Average Rejection Rate at First Piece Inspection (Ex. 2%)
- Average Time of each Downtime Event for “First Piece Inspection” (Ex. 30 min)
- Average Number of First Piece Inspections performed a week (Ex. 400)
- Average Run Rate for the machines (Ex. 1 piece/min)
- Average Cost/Piece of each rejected piece (Ex. $10/piece)
- Calculate the cost!
- 400 inspections/week x 2% rejection rate = 8 rejections/week
- 8 rejections/week x 30 min/inspection = 240 min/week lost to rejects
- 240 min/week x 1 piece/min x $10/piece x 52 week/year = $124,800/year
- Make a decision
- It looks like we’re losing $780,000 due to this issue and potentially only saving $124,800. In this case, it makes sense to run at risk and we could save roughly $650k!
- Implement “Run at Risk” and Track this for a few weeks
- After a few weeks, track how much time/money is being lost due to the Downtime Code “First Piece Inspection” and how much money has been lost to rejected lots. Claim your savings!