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In the previous three articles, we’ve examined the Break-even Analysis and Pay-back Period methods (Part 1 and Part 2) as means of evaluating capital investments. While these back-of-the-napkin methods are excellent starting points for analyzing investments, they’re both poor ending points. Neither provide a reliable basis for comparing investments side-by-side. And neither tell you how much value an investment is adding to your organization. [Read more…]
The problems with the payback period method as a means of analyzing and comparing potential investments extend beyond its problem with the time value of money. In fact, that problem can be corrected (but rarely is in practice) by using a method called the “Discounted Payback Period”, where the future expected cash flows are “discounted” to align them with the present value of the initial investment. But even with that correction, the Payback Period Method is still lacking as a primary return on investment (ROI) analysis tool. [Read more…]
If you’ve ever participated on a project team considering the purchase of a major piece of equipment, you’ve almost certainly heard of “Payback Period” – the length of time projected to recoup an initial investment through cost savings, increase profits, etc. It’s fairly simple to calculate: [Read more…]
As a teenager, my father was a house painter. He started out as a “brush and roller guy”, climbing ladders and cutting in windows. But as his business grew, he caught the attention of commercial developers with large jobs like grocery store ceilings and outfield fences. These can’t be completed with old school tools; they require a sprayer.
I remember my dad walking me through his logic of whether or not to buy a commercial sprayer. I didn’t recognize it then, but he was explaining to me “Break-Even Analysis”. [Read more…]
The deeper you drill into process capability analysis, the more you realize just how many capability indices are available. The two most common capability indices are Cpk and Ppk, and the closely related Cp, Cpu and Cpl, and Pp, Ppu and Ppl, respectively. Cpm is less commonly used, and has a unique way of accounting for the centeredness of a process within its specification limits. (See my past blog posts for extended discussions about all of these.) [Read more…]
One of the more confusing distinctions for quality professionals, especially those working within one of the quality management standards such as IATF 16949 or ISO 13485, is the difference between a Corrective Action Request (CAR) and a Preventive Action Request (PAR). [Read more…]
Metropolises in 2020, like New York and Shanghai, disconcertingly resembled London in 1831, in that a strange new disease passed through the population leaving in its wake confusion, grief and death. 2020 was beginning of Covid-19; 1831, Cholera. [Read more…]
If you’ve worked around the fields of reliability or quality for any length of time, you’ve certainly encountered and have likely assembled the humble yet mighty histogram. This specialized bar graph is one of the most common starting points for analyzing continuous data. It not only portrays the frequency of numerical data across its range of values, but also provides hints at the data’s underlying probability distribution. [Read more…]
My limited formal training about America’s Industrial Revolution came in tenth grade history class. And my few remaining recollections of my studies from that era include characters like James Watt and Alfred Nobel, and their inventions, the steam engine and dynamite. Oh, and how could I forget Eli Whitney and his cotton gin?
Now 40 years later, my interest in manufacturing has grown far beyond these elementary school lessons, and the Industrial Revolution continues to intrigue me. Yes, this era was rife with its inventors and their inventions. But the enduring gains from this era were the philosophies of manufacturing that transcended the specific inventions. [Read more…]
Consider the following two targets:
Shooter #1 and Shooter #2 both fired 15 rounds into their respective targets. Who is the better marksman? [Read more…]
The “D” is 8D stands for “disciplines”, and the 8D process is a problem-solving methodology employing eight sequential disciplines or steps that can be applied to a wide range of industries, situations, and disciplines.
The 8D process was developed in the late 1980’s by the Ford Motor Company to give its engineers a standardized method for dealing with design and manufacturing problems. Ford’s predecessor to 8D was called “TOPS”, Team Oriented Problem Solving. This is a fitting name to the methodology since it strongly emphasizes a team-based approach. In fact, the first of the eight D’s is “Assemble the Team”. [Read more…]
No discussion of root cause analysis is complete without a review of 5 Why Analysis. This brainstorming technique was developed by Japanese industrialist and founder of the Toyota Motor Corporation, Sakichi Toyoda, and used throughout Toyota since the 1930’s. As the wave of continuous improvement moved through the aviation industry in the 1970’s, the auto industry in the 1980’s, and the healthcare industry in the 1990’s, 5 Why Analysis moved along with it. The tool’s simplicity is what makes it so adaptable in the safety, quality, engineering and production disciplines. [Read more…]
One excellent starting point of the investigation phase of a root cause analysis is the comparison of the product measurements to the available process data. With an effective traceability system, you can define a relatively short time range in which the defective parts were manufactured. Once these “fence posts” are identified, use them to examine the available process data such as the recorded pressures, temperatures, times, and speeds. [Read more…]
Anyone who has worked around the fields of reliability or quality has certainly bumped into “standard deviation” – a statistic that measures the dispersion within a group of data. [Read more…]
Anyone who knows me knows I love hearing from the students who take my online classes. One reason is that they ask the most challenging questions. Here’s a recent question from a student taking my “Process Capability Analysis” class: [Read more…]