Cost reduction projects

Cost-reduction projects are aimed at reducing the cost of production of an existing plant. The most common cost-reduction investments are for preventive maintenance, in which equipment is replaced, repaired, or cleaned after a planned interval and before the equipment deteriorates to the point where it could impact process performance or safety. Most preventive maintenance projects are small and are handled through the plant maintenance budget, but some can be very large, expensive projects requiring a major plant shutdown, for example, replacing the fired tubes in a main... 

An optimization project is one of the most rewarding cost-reduction projects that a company can implement. The time and effort required to evaluate and implement optimization software is minimal, and the payback is typically substantial. 

There are a number of factors that will enter into situations similar to Acme s. The conditions just described are common. Instead of focusing entirely on the cost reduction benefit, an equivalent amount of time should be spent on strategic contributions. This avoids the trap described at the beginning of this chapter — having all cost reduction projects settle into the lower left-hand corner as shown in Figure 26.1. Such an analysis might also point to additional areas for financial benefits. 

This is often unfortunate. The decision-maker should formally consider strategic contributions from any cost-reduction project. This judgment should determine whether the project is "above the line" in our model shown as Figure 24.1 — that is, strategic — or below the line — nonstrategic. 

An example will illustrate the point. Our fastener company introduced in Chapter 7, Acme, has designed three cost-reduction projects. The projects coded "A," "B," and "C," have been presented for fxmding review. However, staffing and money limits dictate that only one of the projects can go forward. 

Changes to information systems, implemented as part of Task 4, will probably require more time. Some organizations will require major additions to their capability. Others will modify their existing structure in response to process changes. These include the addition of partnerships and cost reduction projects. 

As with ah thin-film PV technologies, the projected manufacturing costs of a-Si H ahoy PV modules fah rapidly with annual manufacturing volume, ie, MWp /yr. The primary driver of this volume cost reduction is the volume—cost relationship of commercially available thin-film processing equipment. Thin-film coating machines often have capacities equivalent to 3—5 yr, so that manufacturing economies of scale are more fully realized at the... 

Finally, the main benefit as far as competitive business performance is concerned is the potential for reduction in failure costs. Studies using CA very early in the development process of a number of projects have indicated that the potential failure costs were all reduced through an analysis. This is shown in Figure 2.47, where this potential failure cost reduction is shown as the difference between pre-CA and post-CA application by the teams analysing the product designs. 

Before setting about the task of developing such a model, the product development process requires definition along with an indication of its key stages, this is so the appropriate tools and techniques can be applied (Booker et al., 1997). In the approach presented here in Figure 5.11, the product development phases are activities generally defined in the automotive industry (Clark and Fujimoto, 1991). QFD Phase 1 is used to understand and quantify the importance of customer needs and requirements, and to support the definition of product and process requirements. The FMEA process is used to explore any potential failure modes, their likely Occurrence, Severity and Detectability. DFA/DFM techniques are used to minimize part count, facilitate ease of assembly and project component manufacturing and assembly costs, and are primarily aimed at cost reduction. 

Further developments in the effectiveness of the FCC gasoline sulfur reduction additives will allow a number of refiners to meet the required reduction in gasoline sulfur without undertaking costly capital projects. Additionally, improvements in the CO promoter additives will reduce NO emissions when the promoter is used. Finally, other... 

Dr. Blum Our office in New York has done several economic analyses. The distinct advantage of liquid-phase methanation, other than the fact it does not have recycle cost, is that it requires only about 60% of the capital cost. For a commercial plant of 250 billion Btu per day, the capital cost is projected at about 18,000,000. Since the operating costs depend very substantially on the capital costs, there is a very big reduction in operating costs. We project at the moment an advantage in the order of four to six cents per million Btu over cold gas and hot gas recycle. 

Projects in the DOG square face steadily increasing disadvantage, and reduction of profit, as producers with a higher market share pull ahead in experience and cost reduction. 

The only way to reconcile the true cost implications of a reduction in steam demand created by an energy reduction project is to use the optimization techniques described in the previous section. An optimization model of the existing utility system must first be set up. Starting with the steam load on the main with the most expensive steam (generally the highest pressure), this is gradually reduced and the utility system reoptimized at each setting of the steam load. The steam load can only be reduced to the point where the flowrate constraints are not violated. 

Developments and Cost Reductions on Renewable Energy Market Growth. Six Technology-Specific Reports Prepared Within the Project REMAC2000 - in Co-operation With the International Energy Agency. Switzerland NET, Ltd. 

As provider of Chemical Leasing services PERO Innovative Services was able to include in the project all peripheral devices necessary for the supply, reconditioning, recovery and maintenance of the chemicals. The equipment was engineered based on the principle of cost reduction with regard to chemicals consumption, energy consumption, supply of spare parts and service. The solvent and the stabilisers used were adapted to the specific cleaning needs of Automobiltechnik Blau. 

Within this project of the BMLFUW two other PERO customers with similar applications agreed to disclose their operating costs. PERO Innovative Services wants to take this opportunity to thank them for their support. Significant cost reduction could be achieved ... 

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