AFT Finding Ways to Cut Costs
"AFT has efforts focused on its major quality and cost drivers," said AFT Divisional Cost Savings and SLS Support Manager, Greg Raleigh. "Most recently, we have been integrating systems into our New Product Development cycle, so that our growth and our continuous improvement philosophies will merge across the organization."
One cost-fighting initiative is the practice of seeking long-term partnerships with suppliers of raw and purchased materials. According to Raleigh: "It's normal to have year-over-year price reductions for sustained business relationships. Our long-term customers benefit by contractually guaranteed cost reductions. AFT benefits because these kinds of agreements provide a dependable structure for our cost reduction efforts, and our suppliers are encouraged to continue investing effort into business they know they will have for two or three more years."
AFT reduces variable costs through improved internal processing techniques and faster equipment cycle times. This effort is spearheaded by a throughput team, which, according to Raleigh, "meets weekly to attack our constraint operation, and has identified items that will lead to a double-digit increase in throughput."
Further reductions in variable costs stem from investments in automation and tooling that improves efficiency and quality. Notes Raleigh, "Dave Crawford and his manufacturing engineering group are attacking quality and efficiencies in a systematic format based on a ranking system that uses yield (quality), efficiency, and cost variances."
Most recently, AFT integrated a supplier to manage all commodity and maintenance purchases. The supplier, located onsite at the company's main facility in Longmont, Colorado, has reduced Maintenance, Repair and Operations (MRO) expenditures, and enables AFT to continue to grow without adding purchasing and shipping staff.
Indeed, cost reduction and future growth are closely intertwined. "AFT has been a growth orientated business," said Raleigh, "and in the last six months we have been trying to strengthen our never-ending improvement activities with this position. We are trying to achieve a difficult balance between growth of 20%+ per year and continuously improving our ongoing business."
"Heightened awareness of the cost of quality and the costs of running an enterprise are leading to a broader cultural base at AFT," concluded Raleigh. "At the same time, our efforts increase our competitiveness in the marketplace, which is beneficial to all customers." |
