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SMT007-July2021

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JULY 2021 I SMT007 MAGAZINE 71 very high. Numerous employees stopped Maggie or John and thanked them for these chances for self-improvement. On two occa- sions, workers stopped Maggie to thank her, and they burst into tears and gave her a hug. Neither saw that Maggie had tears in her eyes, too. Maggie, John, and John's friend, Frank Emory, had spent scores of hours working out a continuous improvement plan. Frank was mainly responsible for optimizing the business processes while Maggie and John would man- age the operational processes. ey agreed that quick turnaround time, customer satis- faction, high operational efficiency, profitabil- ity, and employee morale where their top con- cerns. e tools would use Lean Six Sigma approaches. A common Lean Six Sigma acro- nym is DMAIC, which is defined as: • Define • Measure • Analyze • Improve • Control As they were discussing their high-level improvement plan, Frank chimed in, "Hey, you guys, you're the experts in SMT process optimization, but I have to tell you: BE's line uptime stinks. [1] is is so fundamental to all that we want to accomplish that we need to address it before we do anything else." Both Maggie and John knew Frank was right, but John finally asked, "Frank, how did you come to that conclusion?" "I've been here every day now for weeks," Frank responded. "Whenever I walk past the shop floor, I make a note in my smartphone if a line is up or not. What do you think the uptime is?" Maggie groaned, "Don't tell me it is less than 20%." "I get about 15%," Frank said. Maggie and John both looked crestfallen. "Hey, the good news is the business is doing OK right now, and we can easily make it a lot better by getting the uptime to more than 35%," Frank said. Maggie and John both nodded in agreement. What will the trio do to get the uptime to at least 35%? Stay tuned to find out. I imagine some readers are chuckling at the largesse of Maggie and John, thinking that it would be difficult to be so generous in today's business climate. Yet, they understand the Law of Exponential Profits (LoEP). (Okay, I made this term up.) Here is an explanation of the LoEP by a sim- ple example. Suppose a small company like Benson Electronics has $10 million in sales per year, 3% ($300,000) profit, and $700,000 in business expenses, such as labor, rent, depre- ciation, utilities, etc. Since they are assem- bling electronics, a low value add but high return on assets business, about $9 million of the cost of their sales is in purchased material such as components, PWBs, etc. Let us assume they increase their productivity by 10%; they will now have $11 million in sales. However, their business expenses increase hardly at all. Labor, rent, and depreciation do not increase, whereas utilities increase only marginally. So, their business expenses might go from $700,000 to $740,000. erefore, profit is now $360,000 (10% of $11 million—$740,000). Hence, if pro- ductivity increases 10%, profits increase 20% ($360K vs. $300K). SMT007 References 1. Uptime is simply the percentage of time the line is running during production hours. Surprisingly, 35% is very good. I get these values from the scores of factories that I have visited worldwide. If anyone claims to have 70% or more uptime, please invite me to visit. Ronald C. Lasky is an instructional professor of engineering for the Thayer School of Engineering at Dartmouth College, and senior technologist at Indium Corpora- tion. Image of Maggie Benson by Sophie Morvan. To read past columns, or contact Lasky, click here.

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