The Economics of Group Technology
There is little value in talking about the economics of Group Technology without reference to the economics of the conventional way of operating a batch manufacturing business. It is well known that, under the conventional practice of batch manufacturing, excessive stocks and work in progress are inevitable. Despite these stocks, deliveries are invariably bad and throughput times lengthy and unmeasured. In simple terms, if a company has stockholding representing anything up to 55 per cent of annual sales value, there is the added annual burden of supporting that investment with high operating rates. In addition to this there is the further burden of excessive space utilization to house these stocks, heating and lighting, constant movement, and the ever present danger of obsolescence.
There are a number of indisciplines which also attend the conventional practice such as the ever-open door stores policy which enables materials to be withdrawn for the purpose of keeping machines and work-people busy irrespective of whether or not there is a need for the parts created, at least within a reasonably immediate future. The inability to measure properly and, therefore, predict manufacturing throughput times always endangers a correct delivery promise with the consequence of continued overdue deliveries often repetitive for the same product. A strong emphasis is placed upon the use of high volume capability machines in the belief that costs are reduced in an isolated place to the benefit of the company as a whole, whereas much simpler machines, properly arranged, would provide much lower investment with a far better reward to the company when all the facets are taken into account. Even with the items mentioned above, which are far from the total which can affect the conventional method of manufacture, the sum total of operating is far lower than the rewards to be gained by the application of Group Technology.
The accompanying short description of Group Technology and its application at Serck Audco Valves amply demonstrates the economic benefits to be derived.
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