Hi,

 

I've been given the responsibility to lead our organization's Inspection Cost Reduction Project. To give you some background, my employer is a passive telecom infra & services provider. While the telecom tower is being erected Civil & Tower Inspection should be done and this task has been outsourced to External Agencies specializing in Civil Foundation & Tower Inspection.

 

The objective is to reduce this cost either by going for a sample inspection by external agency (currrently 100% of the sites are being inspected), or hiring permanent resources for 100% inspection or hiring permanent resource for sample inspection etc. Though the objective is clear the exact solution here is unknown however cause for high cost is known. Also, there might not be any scope of MSA as the data available is plain simple of inspection happening and the amount being paid for every inspection.

 

My question to the gurus here is doing a project like this qualify as a BB project that can be undertaken with DMAIC approach.

Hi,

 

In my views this can a GB project if the improvement only affects & involves one department in the company. For it to be BB it the effect will be on multiple departments and will involve process changes at many level. Hence if you go my the above explanation you will be able to justify as this project will be a GB or BB.

 

The word inspection open doors to many doubts and grey areas. The first reason to have inspection means you are looking for quality and zero defects. If there is 100% inspection means there will be a definition for defects and there are different opearators doing the inspection hence Gage R & R surely can be done.

My approach would be Define the defect, Calculate Sigma, do Gage R & R, do a CP , CPK, find out the cycle time taken for each inspection, Reduce the cycle time will surely help in reducing overall cost.

 

I hope I am able to give some amount of guidance.

 

Best of Luck

Hi Vikram,

 

Let me try this way your inspection cost rotates around inspection about civil works ie Foundation of the tower to be erected. Let me share one of my experience with DLF Liang"O" Rourke they earlier are the authorized contractor for DLF residential and commercial building project. Prior to concreting of any activity of the wall / Foundation, we prepare cubes of the concrete and placed it under water for 7,14,21 days. After completion of each of the days, we test the compressive strength as per applicable IS standards. DLF Personel will check the results of the cube compressing strength we had conducted in order to qualify the statement as per the quality plan they had given. If it confirms the requirement the site is good to go else we need to rebuild the whole process from the starting...

 

Hope you get the point

 

Just place a project quality plan in front of the vendor with all the applicable and relevant standards and just check the results submitted by vendor...and do a random site sampling inspection in order to verify the results submitted by the vendor .....i.e Just ask them to keep the extra cubes for the test results they had submitted cause the test results cannot be different for the cubes if the cubes are from the same population and chance become very less that vendor can submit u false information

 

Hope I'm  in line with the query you raised.

 

Cheers,

Mahi

Thanks Mr. Mahipal and Mr. Mahendra for your response. I think I was not able to clearly put across the objective of the project.

The objective merely is to reduce the cost. However, that doesn't really involve any kind of defect reduction here. May be high cost could be looked at as a defect.

By the end of the project we should be able to come up with an approach towards Inspection of Sites that costs less. Currently its done by external agency and 100% of the sites are covered. Bringing the cost down via negotiation has already been done (this cost reduction isn't part of the project) but we are also exploring the option of having in-house resources who could do the inspection for us. So what I'm trying to say is that we know of a few possible solutions but the decision to go ahead with any solution shall be based on some facts/calculations.

We do have a problem here, it would definitely require analysis of data e.g. based on the projection of sites coming up till next year and would outsourcing cost less or having in-house resource. It somewhat looks like it would fit within a DMAIC approach and hence I'm confused.

Hi Vikram,

 

Still, the query is incomplete? Six Sigma is applied to a Business case where conventional methods fail, not when u want data analysis in a six sigma way so just to have a six sigma DMAIC approach, first identify for the exact requirement you want the inspection of sites to cost less can u give some bifurcation of the inspection cost directly for example

 

Inspection Site Cost :

Concrete testing =$1000 ( Inclusive of Equipment cost)

Manhours used / Cost = 40 / $400

Rebar Testing = $500

Profit = $10% of Invoice value

Suppose u had done the Inspection of sites

Then Manhours used /Cost = 20 / $20

Equipment cost = $ 10000 ( If u r company purchase new equipment amortize that cost )

Similarly another cost, that is my 100% gut feeling that in-house inspection resources for sites will be 30% cheaper than an external agency.

 

Just have a comparison

 

Regards,

Mahendra

Hi Vikram........objectives of cost reduction, cost control are internal to company and therefore no direct correlation with the customer. In general, customer specific areas and parameters are considered for improvement using DMAIC or redesigning the process by using DFSS.

Having said that, this is not a GB and certainly not a BB project. But nevertheless, nobody is stopping you from adopting the approach as a method of foolproofing, so that at the end of the day all the process owners are convinced of the fact that you have approached the problem in a scientific manner and left no room for further cost and process improvement unless there is a radical change in the product or customer requirement.

Thus, courtesy Mahendra, you need to get your Quality plan approved by customer first. Then weave the operations around that. Redoing in any scenario is always costly and avoidable, and more so in Civil and structural works. Hence develop a plan to get everything 'First time right'.

Try 'Eliminating' wasteful activities/ processes in the whole operations and quality check process cycle, which will automatically lead you to the 'Optimum cost operations'.

Rgds//Srikanth

@ Srikanth S- I have a different point of view on this.... All cost control and cost reduction projects can and can not be directly correlated to customer specifications. At times we have seen customer specifications as secondary metric whereas cost reduction or margin increase can be our primary metric on any given project.

With respect to the query raised by Vikram; I agree to Mahendra's remark.

Wbr,

Sujeet Singh

Sujeet........you and me are not talking difft language. Both are stressing the same point, albeit differently. That's why i said cost is internal. Having accepted the customer order with SLAs and quality parameters defined, at a particular revenue flow, then the customer is going to see only the quality and time, the 2 governing parameters, in order to release the payments. Hence, after getting order, the cost reduction, rationalisation, elimination all are internal and customer is not bothered abt it. If one's costing was not right while obtaining the order, and now he is squeezing in to make some margin, or feels that he has bitten more than he can chew, then the cost cutting becomes internal priority, but certainly not at the expense of loosing the order by compromising on quality parameters or other SLAs.

rgds//Srikanth

Vikram,

If the primary CTQ of your project has been identified as being the cost of operations in a certain area or department, it is possible to define an appropriate secondary CTQ and use the DMAIC approach. The project can qualify as a Green Belt project as long as too many aspects of the process cost are not dependent on unpredictable external factors (which would then require a Black Belt project to be initiated with multiple CTQs in a cross functional vein).