PRODUCTION ENGINEERING AND COST KEEPING PUBLISHERS OF BOOKS Coal Age * Electric Railway Journal Electrical World ^ Engineering News-Record American Machinist ^ Ingenieria Internacional Engineering 8 Mining Journal ^ Power Chemical 6 Metallurgical Engineering Electrical Merchandising PRODUCTION ENGINEERING AND COST KEEPING FOR MACHINE SHOPS BY WILLIAM R. BASSET AND JOHNSON HEYWOOD of MILLER, FRANKLIN, BASSET & Co. FIRST EDITION McGRAW-HILL BOOK COMPANY, INC. NEW YORK: 370 SEVENTH AVENUE LONDON: 6 & 8 BOUVERIE ST., E. C. 4 1922 COPYRIGHT, 1922, BY THE McGRAw-HiLL BOOK Co., INC. THE MAPLE PRESS YORK PA ', THIS BOOK BUILT LARGELY UPON OUR EXPERIENCE IN THE MACHINE TOOL INDUSTRY IS HEREBY DEDICATED TO THE NATIONAL MACHINE TOOL BUILDERS' ASSOCIATION BY MILLER, FRANKLIN, BASSET & COMPANY, INC., IN APPRECIATION OF THE SUPPORT ACCORDED BY THE ASSOCIATION'S MEMBERS DURING THE TWELVE YEARS' CONTACT IN WHICH THIS COMPANY HAS ACTED AS THE ASSOCI- ATION'S INDUSTRIAL ENGINEERS AND COST ACCOUNTANTS. NEW YORK CITY, July, 1922. 489451 PREFACE Our purpose in this book has been not only to bring practical assistance to the production managers, foremen and cost account- ants of machine shops, but to give the higher executives a knowledge of the best in shop management practice, so that they may judge how effective are the methods used by their subordinates. The principles and practice here recommended have been developed in the course of years of actual installation of improved production, engineering and cost keeping systems in metal trades plants. They have thus been well tested and proved. Of course no system, however successful in one shop, can be taken over into another shop in its entirety. There must be intelligent adaptation. But the underlying principles are widely valid and the specific procedure here set forth should prove sug- gestive of better policies and methods. They should give more production and cheaper production. Our aim has been to tell why and how at every step and to state the case in language as non-technical as possible. For this reason the book should prove a valuable manual of instruction and inspiration to under-executives all. down the line. In the first part of the book, production planning methods are described as concretely as possible. The proposals of this portion of the text should apply with slight modification in the majority of shops. This is also true of the part of the book dealing with cost keeping methods. Those here described should fit fully ninety per cent of American machine shops; the very large shop will want more detail, perhaps; the very small shop may get along with less. But it should be possible for an executive of judgment with a little thought to fit all the suggestions to his needs. We are indebted to the following members of our organization for help in preparing this book: B. M. Maynard, Geoffrey Steven- son, F. A. Smith, W. S. Powers and T. D. Nevins. NEW YORK, N. Y., THE AUTHORS. May, 1922. CONTENTS PAOE PREFACE v CHAPTER I. WHAT PRODUCTION PLANNING DOES 1 II. PURCHASING, AS A TOOL OF PRODUCTION 9 III. NEED FOR SYSTEMATIC STOCK KEEPING . 19 IV. ENGINEERING THE PRODUCT 36 V. TOOL ISSUE 45 VI. LAYING OUT THE MACHINES 60 VII. THE CENTRAL CONTROL OF PRODUCTION 70 VIII. CONTROLLING THE WORK IN THE SHOP 89 IX. PLANNING IN THE JOBBING SHOP 102 X. THE FUNDAMENTALS OF CORRECT TIME STUDY . . . .... 119 XI. SETTING THE STANDARD 132 XII. SETTING PIECE RATES 143 XIII. SPECIAL CASES OF TIME STUDY AND RATE SETTING 156 XIV. TIME STUDY ON AUTOMATIC MACHINES 164 XV. WHAT A COST SYSTEM CAN Do FOR You 173 XVI. THE FUNDAMENTALS OF COST 181 XVII. FIXED CHARGES 193 XVIII. DEPARTMENTALIZING THE OVERHEAD EXPENSE . . .... . . 200 XIX. ANALYZING THE LABOR COSTS 209 XX. ACCOUNTING FOR SUPPLIES 223 XXI. GETTING THE OVERHEAD INTO THE FINISHED PRODUCT . . . 237 XXII. HANDLING ABNORMAL EXPENSE 254 XXIII. GATHERING THE FINAL COSTS . . : 266 XXIV. THE STATEMENT OF CONDITION AND THE OPERATING STATE- MENT 275 XXV. WHAT DOES IT COST TO SELL? . . '.. .288 XXVI. GRAPHIC METHODS OF CONTROL . . 296 INDEX . . 305 VII PBODUCTION ENGINEERING AND COST KEEPING FOE MACHINE SHOPS CHAPTER I WHAT PRODUCTION PLANNING DOES If your product happens to be one in which several parts are assembled, it is a safe guess you have at times had production held up because one vital part had not reached the assembly department on time. It is no help that the other hundred-odd parts were there waiting. If a small and seemingly trivial part was late at the assembly floor, it may have kept you from shipping the entire machine. You know what that meant customers disappointed in deliveries, an assembly room clogged with waiting material, idle assemblers and a lot of money tied up in materials that should be shipped. The Unplanned Shop. Sometimes, of course, this condition cannot be helped, for accidents will happen to machines and men will quit unexpectedly. Nearly all trouble of this sort comes not from these causes, but from failure to schedule opera- tions so that enough of all parts will arrive at the assembly department each day to get out that day's quota of assembled product. Unless every step of production is planned, it is not surprising that shipments of finished product are irregular and that it is impossible to prophesy them accurately. Where production is not planned, the method of getting work through the shop may be described as "muscling" it through. The " muscling 7 ' is done either by foremen or tracers. Under this plan of running the shop, the foreman is given a copy of the sales order or perhaps a bill of material, and from his knowledge of the article, will pick out those parts which his department usually makes, and make them. He is in no position 1 2 PROtiUVW'QN- : EtfG>{$&EtiING AND COST KEEPING to judge when to start the work to best advantage for he has no knowledge as to how long it will take to make the other parts that go into the assembly. The Wrong Way. If the material he needs is on hand, he grabs it and starts as soon as he has a man and machine idle. If he can't find material, he requisitions what he thinks he needs from the purchasing agent and with a copy of the requisition in his possession to " clear his skirts/' waits without further effort for the purchasing agent to get the material to him. A few energetic foremen go at production rough-and-tumble. They remind us of the "typical" American army officer of whom we once read, whose presumably effective tactics in France enabled him to put through tremendous engineering projects in unheard of short time. This officer's success in driving his work through to a finish ahead of schedule seemed generally to be due to his knack of "beating the other fellows to it" in obtaining labor and materials. Perhaps he would divert a string of empty cars to his own use which should have gone elsewhere, or again he would use material that some other branch of the work needed urgently and depended upon. We wonder about the success of the others who were left without their transportation facilities and supplies. Such violent methods, usually referred to admiringly as "getting things done" are not always praiseworthy. An army or a factory achieves the desired results only when it acts with all parts subservient to the whole. It does no good for one depart- ment to show phenomenal results a "clean slate" if it does so at the expense of other departments. Reducing Emergencies. That which counts in manufacturing is not a rapid production of a single part of a product, but the amount of completely finished goods shipped out at the back door. It is this that production planning aims to accomplish in a shop. Many a machine shop executive has said "Production plan- ning is fine for those who can use it, but my business is different. It can't be planned." Admittedly, the work of all shops cannot be rigidly planned weeks in advance. Some emergencies come up in every plant. The usual objection is that accidents to machinery, failure to get raw materials and other circumstances beyond control may render all this work abortive. Of course, no one is a prophet, but WHAT PRODUCTION PLANNING DOES 3 a wise man plans ahead on the information that is available and then changes his plans according to circumstances. But it is a fact that at least 80 per cent of the things we plan for, work out. That leaves only 20 per cent to handle on the emergency basis, whereas if we do not plan, the whole 100 per cent becomes an emergency proposition. We truly believe that 80 per cent of the emergency production in any shop can, by planning, be reduced to routine. But the method of planning and the degree to which production should be planned depends upon the type of work done by the shop. Three Classes of Machine Shops. Machine shops fall into one of three classes depending upon the sales policy which governs production. First, there are the job shops which will make almost anything that the sales force can sell. The order may be for a single machine unlike any turned out before and it may be for a dozen or more of a kind. Second, there is the shop that manufactures many types of product of a class, but always in quantity. It may make several thousand gears, transmissions, differentials, and so on to the customer's special design. Or it may make several standard styles of adding machines of its own unvarying design, to stock. The third class of shop is the one which makes but a single style of one product. There are few such, the Ford Motor Co. being one of the few. The planning for this latest type is largely preliminary. It consists of getting the best possible layout of machines and of departments, and supplying the proper tools and machines in sufficient quantity to give a certain production per day. The single product then flows in a perpetual stream, day in and day out. In such a shop, a machine tool once started on an operation can remain on it indefinitely, barring a breakdown. Production planning as we think of it is not needed in such a plant, and the shop executives can give all of their time to keeping the wheels going round. A Seemingly Impossible Case. In the jobbing shop, it is admittedly hard at first to plan accurately, and yet it is in the jobbing shop that planning is most needed for there the work is very irregular and losses from idle machine time are most apt to climb. In such shops, especially, it is customary to look upon 4 PRODUCTION ENGINEERING AND COST KEEPING every new order as an emergency. Unfortunately, the idea seems to be that the owner of a job shop must throw up his hands in despair of bettering conditions. This is probably because the economies to be had from planning were first seen by the owners of the larger shops in the automotive industry where quantity production of a comparatively few types of prod- uct was the rule. But work in the job shop can be planned. It has even been accomplished in the repair shops of industries where a repair is an emergency job indeed, as interrupted production of a large machine may cost thousands of dollars in a few hours. In one repair shop for which the production is planned the repairs are now made in about one half the time they formerly took. This not only reduces the direct cost of repairs but means an economy through increasing the running hours of equipment in the productive departments. We shall not describe in detail the planning work in the strictly job shop, for the very sufficient reason that no two such shops are at all alike, either in the work handled or the equipment avail- able ; but we shall give in outline the steps in planning the work. Planning the Job Shop. As a basis for planning in a job shop it is necessary to know just what machines there are in the shop and what operations each can perform. Then we must gather data which will serve as a basis on which we can estimate the time needed to perform any conceivable operation. This, to many a shop man, seems impossible. It is the reason always put forward to prove that the work cannot be planned. If the shop has been in operation for a year or so, there should be a mass of information on hand to show, for jobs already done, what the job was, what machine each operation was done on and how long each operation took. A study of these operations will show that they can be grouped into a surprisingly few classifications and so tabulated that they will afford a basis for a quick and sufficiently close estimate of the time needed for any new job that comes in. This list of jobs and operations should show the tooling, fixtures available, speeds and feeds. Then for practically every job we will not only be able to estimate the time needed for each opera- tion, but we can give the workman full instructions for the work so that he can spend his time in doing the job, rather than fiddling around "getting ready to start to begin." Eliminating Guesswork. One thing more is needed a means WHAT PRODUCTION PLANNING DOES 5 for showing the executive what work is ahead of each machine, how long the machines will be busy on work already in the shop, when each operation should be finished in order to meet the customer's requirements, what machines are now idle and when the others will run out of work. This information allows the shop to give accurate promises of delivery based upon knowledge of the shop's capacity, rather than on optimistic guesses warped by the salesman's desire to land an order. This information can all be given graphically on the " schedule control graph" which we shall describe in detail in a later chapter. Of course changes in that graph will have to be made to meet the needs of the individual shop, but the changes needed will be apparent to the reader. Bird's -eye View of Planning. The real complications in plan- ning come in the shop of the second type, which either manu- factures in quantity to the customer's order, or has a number of standard lines of its own which can be made to stock. This is the group under which the great majority of machine shops fall and this production can be accurately planned. We shall show in detail in subsequent chapters how the planning of production is done in shops of this kind. Each chapter takes up a single detail of the planning and describes it thoroughly, but first we want to give a bird's-eye view of the method as a whole. Where the output is made in quantity it is possible by means of time study to tell accurately just how long any operation will take. This, together with the known dates when delivery must be made, gives the basis on which to work. When the sales department gets an order, it is sent to the engineering department, which makes up a list of the parts going into that assembly. If new tools, jigs or fixtures are needed, they are provided in advance. The road is smoothed so that the shop's productive departments need bother about nothing but production. Naturally some of the component parts of an assembly take longer to make than others and there- fore must be started sooner. Taking the delivery date as a starting point the planning department works back and finds the date on which each part must be started to meet the delivery date. This depends upon the time needed to make the part and the machine capacity available. Now it is necessary to make sure that all raw material will be in the plant when needed, so the 6 PRODUCTION ENGINEERING AND COST KEEPING planning department notifies the purchasing agent of the shop's requirements as to quantity and delivery, and follows him up to see that he does as he should. From the time the raw materials come in until the finished product leaves the plant, it is under the control of the planning department this does away with "buck passing." Providing for Breakdowns. The plan so far outlined may seem so rigid that if anything went wrong the whole production would be snarled up. Later it will become apparent how the necessary flexibility is attained. Suffice it to say now, that between each two lots of parts scheduled to a machine, several hours are allowed as a cushion to take up shocks due to machine breakdowns or other delays in production. Then, too, reservoirs of finished and semi-finished parts are generally provided which will enable assembling to continue for a day or so even should a severe check come in production. The work is actually given out in the shop by "booth men," there being a production booth for every department or two. They are close to the men and machines and have authority to assign the work to any one of several machines of a kind, depend- ing on conditions. The central planning department thus plans only to operations; the booth to the individual machines. The booth' man also attends to moving the material between machines and departments, checks the time of the men and so on. Two Divisions of Planning. It is now apparent that planning consists of two parts. First, the way is made clear beforehand so that the parts can be processed without a hitch. Sufficient machine capacity is provided to handle each operation. The machines are physically arranged so that the parts can be moved from operation to operation with the least possible trucking. That means that the machines, so far as possible, are arranged according to the sequence of operations. The whole shop is put in balance. This planning is preliminary; it is done before an order is taken. Second, each job is planned through the shop, and the road cleared for it so that the machine operators have nothing to do but perform productive operations on the parts. Tools that are to be used are supplied, raw materials needed are purchased and both are delivered to each operator just before he is ready to use them. Usually he does not even have to set up his own tools. The time of starting each job is worked out so that every part WHAT PRODUCTION PLANNING DOES 7 which goes into an assembly will be finished in time to get to the assembly floor at the right minute. Planning has a much deeper significance to a business than merely to assure smooth production. The real purpose of planning is to conserve capital so that the rate of turnover will be decreased; that is, so that the time which elapses between the purchase of the raw material and the shipment of the finished product will be a minimum. Obviously, when this time is reduced, a given volume of sales can be handled with a less investment in goods in process. Most manufacturers believe that what they need most of all is more capital in their business, and to prove it, point to the business failures, which are usually blamed on lack of capital. It is seldom that a manufacturer can talk about his business for an hour or so without laying emphasis on what he could do if he only had more money. Yet we believe that most of these men not only do not need more money but would be worse off if they had it. The strange thing is that when considering the getting of more money, they almost invariably think of Wall Street and the banks, rather than realizing that very likely they would be able to pick it out of their own business. Capital turnover is a subject which is given too little study by the average manufacturer. This is not the place to elaborate on all of the ramifications of the subjects, but the fact remains that if the time taken in manufacturing a given article can be cut in half, the value of the goods in process inventory will like- wise be cut in half and the money released from the unnecessary goods in process, will be additional working capital which may be used in expanding the business. Innumerable instances of plants can be cited where this has been done. Doubling Output through Planning. In one machine shop in particular, where production planning was installed, the results were most striking. At first glance, this concern seemed to be well managed. The machines were well laid out; there was a time-study department of eight men, and nearly every operation in the plant was on piece work. Nevertheless the planning system reduced the goods in process from $3,000,000 to $1,000,000 in spite of an actual increase in sales. That means that $2,000,- 000 in cash was picked out of the goods in process inventory and was available for other purposes. 8 PRODUCTION ENGINEERING AND COST KEEPING In another concern, making automobile parts, the goods in process inventory amounted to $800,000 with annual sales of the finished product valued at $3,600,000. This meant that the money invested in goods in process was turned over once in 80 days or 4^ times a year. A production planning system in this plant resulted in cutting the goods in process inventory to $450,000, giving one turnover in 45 days. This, obviously, is a cut of nearly one half. This concern thought that it was going to have to borrow money to build a new plant in order to meet its expected increased sales. Instead, the planning system enabled it nearly to double its output without additional buildings. To the casual observer, who might have seen the plant before and after the installation of the production system, it was evident that great changes had occurred, although at first glance it might have seemed that business had seriously fallen off. Where previously the floors of the shop had been cluttered up with partly processed parts, today the shop is clean. There are no accumulations of partly finished pieces at machines waiting for the next operation and no piles of finished parts on the assembly floor awaiting other parts which have not been started. What Planning Will Do. To sum up, a planning system accomplishes the following results: 1. It enables the sales department to make promises which are reasonably certain of being fulfilled. 2. It reduces the capital needed to handle a given amount of sales. 3. It tends to prevent delays in production. By foreseeing future requirements, it does away to a large degree with emergencies. 4. It relieves the productive departments of the plant from doing non-productive work. 5. It enables the plant to get out the maximum possible production. 6. It tends to keep all machines busy, thus doing away with the loss which an idle machine entails. 7. It reduces the unit cost of the output. These results are ardently desired by every manufacturer, but are seldom attained. We know of no other way to achieve them except through the medium of a carefully worked out planning system, but we do know that there is not a shop now operating under the hit-or-miss condition which cannot avail itself of plan- ning to a large degree, with the desirable results just mentioned. CHAPTER II PURCHASING, AS A TOOL OF PRODUCTION The motto "well bought is half sold," is an excellent one for the merchant, for price is important in trade. It is also a safe guide for the machine shop provided price is not made the sole test of good buying. An eastern machine shop hired as a purchasing agent, an ex- salesman who for 15 years or more had been selling to machine shops. Because he had been on the other side of the counter he knew the "tricks of the trade." It was assumed that since he would be able to play upon the fears and weaknesses of salesmen, he would make an unusually good purchasing agent. As a buyer he succeeded in playing one salesman against the other and his orders were unquestionably placed at the lowest prices on record. He assured his employers that the quality of his pur- chases was satisfactory. But the shop felt differently about it. Castings were of uneven hardness and sometimes full of holes; belts needed constant attention and although the prices paid for them were low, a lot more were bought yearly than before. Tools were often unsatisfactory and the maintenance cost of machinery and equipment was nearly double. Increased overhead expense, higher labor cost, returned goods and decreased life of supplies made this "shrewd" buyer an expensive luxury. It should not be necessary to point out that, in the machine shop industry, the price of raw materials and supplies is really the least important factor of good buying, for material is usually the smallest item of cost. It is more impor- tant that materials be the best for the purpose and that they be received on time than that they be bought at the rock bottom price. All of these factors, however, must be kept in balance. The Purchasing Agent. One of the best purchasing agents in the machine shop industry does the poorest buying we have ever seen. This man knows personally every source of supply, he is a shrewd bargainer, a good judge of quality and a marvel at getting deliveries through in record time. 9 10 PRODUCTION ENGINEERING AND COST KEEPING He has few equals in getting in materials of which the shop is short, the lack of which is holding up production and causing serious loss of profits. So good is he at this that he habitually postpones buying until a shortage report jars into action his really phenomenal abilities. He is what we call the "grand opera star 7 ' type. He won't tolerate routine; he won't use his talents for the maximum good of his organization. His buying is to him an art; an exercise for his talents, rather than a tool with which his employer can make profits. There are many like him. At the other extreme is the purchasing agent who is merely an order-signing clerk. Where he exists, the shop superintend- ent, or perhaps an individual foreman, specifies what to buy, of what quality it shall be, how much to buy and when it shall be delivered. He has little to do but specify the purveyor, and sometimes even that authority is taken from him. Where this method is used the purchasing agent has no chance to buy well, for shop men are inclined to wait until they run up against a need, and then to need it badly. Requisitions are for small quantities " wanted at once" and he has no alternative but to place a rush order. The time given him and the individual orders placed are insufficient to enable him to buy to advantage. Effective Purchasing Policies. It would seem obvious that production, the sole end of a machine shop, suffers under either of these ways of handling the buying. Without raw materials the shop cannot work, and if quality is not what it should be final costs will be high. It is not necessary to elaborate on these facts. But a definite statement of even the obvious sometimes is needed. Therefore, to make the purchasing department an effective tool of production, the following points must be considered : 1. Raw material must get to the shop before it is needed. 2. The amounts purchased must be in accordance with known future requirements of the shop, neither more nor less than needed. 3. The purchasing agent must have sufficient time to enable him to buy well, except in occasional emergencies. 4. The materials must be the cheapest in the long run. 5. In order to achieve the first four points, the purchasing agent must have definite records of the past performance of all supplies, as to quality, price and delivery. 6. Fraud and clerical errors must be avoided by internal checks. How Buying Affects Production. The last-minute purchasing agent mentioned habitually violated the first of these rules. PURCHASING, AS A TOOL OF PRODUCTION 11 Time and again we have seen as many as 90 machines on the assembly floor, complete except for a small part which had been overlooked. These assemblies are worth when shipped about $800 apiece. That means that it is not unusual for $72,000 to be tied up for weeks at a time, because the purchasing agent delayed placing a small order for raw material. Obviously, the loss involves more than the mere tying up of working capital. Valuable productive floor space is being used as unproductive storage and congestion is caused at many points in the plant. That is the effect of under-ordering or late ordering. Over- ordering is also an expensive practice. What An Investigation Showed. A manufacturer of automo- biles decided to find out why he required what seemed to be a huge amount of working capital to handle only a moderate volume of output. An investigation of his storeroom showed him. Take one item alone axle housings, which cost him an average of $35 apiece. He used from 80 to 120 a month and had, as a rule, little difficulty in getting prompt deliveries. His stock of these parts averaged 100 more than was needed to care for any likely emergency. The same condition existed throughout the stockroom. By regulating the purchases, he released nearly $175,000 of idle money. This condition is bad enough, but it might be and in many shops is worse. The material overstocked might be obsolete. We have seen obsolete stock old at less than 25 per cent of cost a loss in one instance amounting to well over a quarter of a million dollars all because of unregulated buying. Conditions of this sort exist as a rule where the size of orders is left to the judgment of the purchasing agent. It is emphatically out of his province to determine how much to buy, when to buy it and when it should be delivered. Those questions can best be settled only by someone closely in contact with the shop and the sales department. An exception occurs in a rising market when it may seem to be good business to buy more than usual. This, however, should be done only after careful consideration of the future needs of the shop, the financial condition of the company, the facilities for storing unusual quantities of material and so on. It cannot well be decided by the purchasing agent alone. The best practice is for the planning department to investigate purchases. Even though no formal planning department may 12 PRODUCTION ENGINEERING AND COST KEEPING exist, there is someone who has knowledge of the needs of the plant and can exercise this function. How the planning depart- ment arrives at the quantity of material to be purchased will be described in a later chapter. In this chapter our only task is to show what is needed to make the purchasing department an effective tool of production. Don't Over systematize. Routine is necessary and records must be kept, but neither should be elevated to an end, of itself. Sometimes production is facilitated by smashing routine for an emergency order. Records should be as simple as possible and only needed ones kept. We have seen the entire time of a clerk used to keep up records which might have a value to some learned society but which were never utilized. Good sense must govern. Often a report will be inaugurated for a temporary need, which will continue to be compiled long after the need has passed. It is well to check up on all records periodically and if they do not serve a purpose throw them out. The forms described here are simple and all are designated to aid the buyer to live up to the six requirements of good buying. How Orders are Handled. Let us consider the way an order is handled after the requisition is received by the purchasing agent. The forms and routine for various shops need not differ appre- ciably, no matter what the size of the shop nor what its product. The methods we are going to describe are now in use in shops employing 25 men, and also in shops having more than 2,000 on the payroll. Some of these shops do a jobbing business, building any kind of machines; one, on the other hand, builds gears, trans- missions, differentials, etc. thousands of a type. When a requisition comes in, the purchasing agent turns to the form shown in Fig. 1, on one side of which is the quotation record and on the other a record of purchases already made. There is a copy of this form for each item. For convenience, each supply house is given a number, which is used rather than the name. The information on this card is a valuable guide in showing which concerns have given the best prices, and the promptest deliveries in the past. The Performance Record. In buying many productive materials and especially supplies and tools a performance record is a valuable guide. Such a one is shown in Fig. 2. It consists of a manilla envelope one for each article in which can be PURCHASING, AS A TOOL OF PRODUCTION 13 kept memoranda and comments made by the shop and others on the article. This is an invaluable guide to the purchasing agent who keeps in mind that his duties require more than to buy cheaply. The persistent use of this performance record QUOTATIONS APTICU MAXIMUM.. MINIMUM DESIRABLE ORDER. DATE F N R J M FIRM QUOTING QUANTITY Ptll J T < O J bl ffl s Z i J C. u z U) 3 f o i t u u III Q Ul g (/ I z ^ H ?, A / n 5 s w t- Q H 9 I M O K Ul Z I) a > Ul U 5 2 Ul O K Ul Q X 2 K 2 i The Stock Records. The stock records are a part of all factory routine, whether costs or production, and they should therefore be kept by someone capable of keepingthem accurately. As a rule the type of man most suited to handling the stock itself is not the best clerk, so that in most shops the stock records are ad- visedly kept in the office. Where the factory production is planned, the planning department is the one most interested in the stock records and so should keep them. We shall first describe the routine found most successful in plants hav- ing a planning depart- ment. In general the stock records to be used are of two kinds, dictated by whether the shop turns out a standard product which the sales department must dis- pose of, or whether the sales department sells an order which the shop must make up. In the first instance the raw material pur- chased will be based on the sales department's estimate of future sales; NEED FOR SYSTEMATIC STOCK KEEPING 29 in the second, the materials are ordered in quantities sufficient to fill an order actually sold. The first condition allows, as a rule, much the simpler stock forms. For one thing, no records need be kept in the stock room itself, FIG. 9 Artfcle_JBLADE5_ Description. Marker Size_ >l(o Jan. Feb. Mat. Apr. May June July Aug. Sept. Oct. Nov. Dec. i* iso 100 i | ATO IOO fO i Section. Bin or Shelf. Ordered Date Received Delivered _ _ Quantity | bate [ Quantity | Date | Quantity j| Date | /Article Description. Size Maximum. Minimum. Section. . Bin ,or Shelf. Ordered Date Quantity Received Date Quantity Delivered Date Quantity Date Quantity Date Quantity Balance Date Quantity FIG. 10 FIG. 9.- Stock record with provision of varying minima. FIG. 10. Another form of stock record. except some device whereby the store keeper may tell quickly the exact physical location of all materials. The perpetual inventory sheet or card will be kept in the planning department, for it is safe to assume that a concern of this sort which is so well adapted to production planning will not try to do without such planning. Cards are much used, but loose sheets kept in a stock book, are to be preferred, for cards are easily put into pockets or stuck up behind telephones where they remain. Figure 8 shows a good stock sheet, while for the card "fan" Fig. 10 is good. If the demand is sufficiently seasonal to make it desirable to have 30 PRODUCTION ENGINEERING AND COST KEEPING the maximum and minimum quantities change from month to month, this can be provided for as shown in Fig. 9. How Much Stock to Carry. The " minimum" method of controlling the supply of material is fairly well understood and applied throughout manufacture, but frequently the minimum is based upon an " educated guess" and not in accordance with conditions actually governing manufacture. A " minimum," theoretically, is a quantity which should bear a definite relation to the sales or probable production, and it is therefore necessary to determine the demand for finished product and to reduce that demand to its equivalent in terms of material. Take as an illustration a manufacturer producing a line of assem- bled articles composed of about fifty parts, each carried on a minimum basis. How to Determine the Minimum. To determine the minimum we would proceed somewhat as follows: A "part" card is used and this card shows every finished article on which the part is used and also the quantity used for a dozen of each finished article. The estimated sales are then entered on the card and the total of probable parts used developed there- from. The minimum is then set as a certain percentage of this quantity, expressed in terms of so many days supply, as 30, 45 or 60 days, dependent on the length of time needed to make the replacing order quantity. The requirements of raw material are ascertained by means of a "material estimate card." This card shows every part which uses the same kind and size of material shown, and the quantity of material required per hundred. The number of parts shown on the cards is then employed to determine the probable total material requirements, which amount is then used to determine stock of material to be carried. The minimum must be of a size sufficient to allow the produc- tion, shipment and receipt of the replacing order quantity and it, too, is expressed in terms of so many days supply, as 30, 45, 60 or 90 days. This describes briefly a very simple yet accurate means of setting minimum quantities and is peculiarly suitable to assembly manufacture. The Shortage Report. To get back to the records. Note that in Fig. 8 there is a column headed "Apportioned" which does not appear in Fig. 10. Sometimes it is desired to set aside a NEED FOR SYSTEMATIC STOCK KEEPING 31 part of the available stock for an order which it is known will be run but which is not needed at once. If all orders are run as soon as the requisition for the material is issued, this is not necessary. When a purchase order is placed and when material is ordered out of the stock room by requisition the transaction is recorded on the stock record for that material. When the clerk in charge of this record enters a requisition which brings the supply of the material close to or below the minimum quantity WEEKLY SHOR MAKE PHVStCM. COUfcT Of, ITEM* TAGE REPORT BATE fttoTcIl Iff/t (DESCRIPTION MAXIMUM tO BE CARRIED MINIMUM TO BE CARRIED LAST ORDER, NUMBER NOW ON HAND fiAFEty POSTS ISOO soo />/73. H-1L BLADES 2.SOO fOOO 13 H-0 II&0 FIG. 11. Shortage report. he enters the item on a shortage report like that shown in Fig. 11. This is the purchasing agent's authority to buy more of the material. He has no authority to order until automatically instructed to by the stock reaching a minimum. It is good practice to send this shortage report to the stock room so that the stockkeeper may actually count the stock of that item as a check against the record. This enables him to keep a frequent check easily for he makes his physical check only when the stock is smallest and thus can be counted quickly. Further- more the check is made at the most important time for if error is then discovered a needless order is prevented from going forth. Some shops keep a double check to prevent the stock from falling much below the minimum by so arranging the stock physically that the stockkeeper can see at a glance when the minimum is reached. If materials or supplies come in packages the minimum quantity packages may be marked with red crayon so that when a "red" box is opened the storekeeper knows he has gone below the limit. A cord may be tied around the mini- 32 PRODUCTION ENGINEERING AND COST KEEPING mum quantity of such materials as steel bars, so that the same effect is secured. If the stockkeeper fills a requisition which brings him below the minimum and he receives no shortage report he can jog up the clerk who keeps the records. This set of forms, and the routine we have described will, with minor changes to make them fit the individual shop, do for most machine shops. Certainly it will give definite control which is what a large number of concerns lack. The problem of keeping stock records is somewhat different in the shop which manufactures large quantities of the same product to order. An example of this type is the Warner Gear Co. which turns out automobile transmissions, differentials, clutches and so on in large quantities to individual specifications. This concern buys its raw material to cover sales orders and so carries practically no permanent stock of raw materials. Its stock is carried solely to cover sales contracts actually on hand. The Production Stock and Demand Record. The sales call for delivery of a certain number of assemblies monthly. There- fore, in purchasing the needed raw materials, the deliveries are asked for in such monthly installments as will permit meeting the requirements of the sales order. As the planning department is responsible for material from the time it arrives in the plant until the finished product is shipped, and as it must have absolute control of raw stock, a single form has been devised to give the needed bird's-eye view of material. It is shown in Fig. 12 and is called the " production stock and demand record." This provides a sheet for each part and shows not only each customer's requirements as to delivery but the exact condition of all of the parts of this kind. From the data on this form it is possible to tell quickly how much raw material for the part is in stock, how much is in process and how much is in finished stock. It tells in addition how many pieces have been rejected, how many reclaimed and how many scrapped. This is a most valu- able form in other ways which will be discussed in more details in later chapters on planning. A somewhat simplified form having the same application is shown in Fig. 13. It is self- explanatory. Non-productive Stores. So much for keeping track of the productive stores. The same forms and routine will do for the NEED FOR SYSTEMATIC STOCK KEEPING 33 4 2 2 i ! I 1 ( C 1 - 2 s Q - 3 g a 1 5 tj i i i < ] i | i 2 1 > i i ! 1 -imi j i 1 ^ < i 1 i I 1 i s j e J j T 3 \ t i j 8 "" " * i i T * 5 X | " I ( s 4 ! i \ I \ j ! i "- ? 5 1 5 i < 3 u 3 ^ J / a < 1 j & i i 1 1 P 1 1 i ; | I . c \ g * \ c J 1 p B I ' \ T. 1 , . i i | 8 s J* 1 e 1 S j ] i I i 5J i 3 i I 8 5 j 8 jj S 34 PRODUCTION ENGINEERING AND COST KEEPING non-productive stores or supplies. One thing addi- tional is worth consider- ing with them, however; that is the need to prevent buying of supplies which are obsolete or the use of which is declining. This can best be done by the clerk who keeps the store's record. When he sees from his ledger sheet or card that the use of a supply is falling off he should call the fact to the attention of an executive. Some shops find it well to have a committee on obsolescence which from time to time passes on the need for continued carrying of supplies. The Perpetual Inventory. Theo- retically a minimum stock record or perpetual inventory will do away with the need of that bugbear the taking of a complete physical inventory. But it seldom does. If the items are frequently counted and checked with the records, as here recommended, it is often possible to keep the discrep- ancy within 1 per cent and usually within 5 per cent. But that is not close enough. And after all, the goods in process must always be in- ventoried by actual count and it is that item usually which takes the time. Safety dictates that once a year all stock be inventoried and the records changed to agree with the actual. NEED FOR SYSTEMATIC STOCK KEEPING 35 The fact that it is so difficult to get perpetual stock records to agree exactly with the facts is one reason why so many manu- facturers throw up their hands and look on the attempt to keep records as useless. That is wrong. Even an approximate record of the stock on hand is better than none that is if the manufacturer wants to save himself production troubles. Whatever records for keeping track of stock are adopted, it is well to test the routine by asking how will it serve its purpose. It should prevent theft, over-buying, and delays to production caused by shortage. It should assure that all materials used will be accounted for in the costs, and it should make inventory- taking easy. It should make it easy to find stock that is needed. In short it should always facilitate, and never hinder, production. CHAPTER IV ENGINEERING THE PRODUCT Perhaps not even a majority of machine shops have set aside office space which they dignify with the name " engineering department." But in most shops it is safe to say there is someone who, as part of his duties at least, does some preliminary engineer- ing of the product. For simplicity's sake, therefore, we will use the term " engineering department." In small job shops, the customer sits down with the shop's foreman and describes the device he wants made perhaps amplifying his ideas with a rough sketch. The foreman passes these ideas on to the pattern maker and to the various machinists who build the device, solving their own problems of design, tooling and so on, as they come up. Until planning began to develop, that was the general practice. In shops, however, where production is highly planned, nothing is left to the discre- tion of the shop; it needs only to follow the directions issued to it. Every step has been engineered. Between these two ex- tremes nearly every degree of preparation by the engineering department may be found. Why Have an Engineering Department? The function of the engineering department is to study the product and the shop processes so that the design and manufacture may be most economical. It acts as a road roller, smoothing the way of the manufacturing departments. Completely accomplished, the factory will have nothing to do but perform productive work on the product. Methods will be previously determined for them. This function divides in two; first, designing the product and the tools with which it will be made; and second, furnishing the data which the planning department will use in planning the production. In some shops, of course, it is not feasible to plan the produc- tion in detail. It would be possible but not sensible. Strictly speaking, a job shop about to build a special intricate machine, which it has never made before and may never make again, can plan every step of the making. But the preliminary planning 36 ENGINEERING THE PRODUCT 37 itself would cost more than could be saved. We only favor planning when it increases profits. It is only, as a rule, when a product, with only slight changes, is to be run in quantities that the refinements of planning pay. Designing the Product. Although it would obviously be foolish to plan the manufacture of a single special machine in detail, the engineering department may even here prepare the way to a certain degree, leaving much to the discretion of the men in the shop. Among the duties of design which devolve upon the engineering department are the following: 1. To adapt the product to its use. 2. To design it so that material will not be unduly wasted. 3. To prevent labor waste caused by designs which are clumsy to machine or to handle. 4. To specify raw materials and test them when necessary. 5. To design the tools, jigs and fixtures which will serve best. 6. To make as many parts as possible interchangeable among several assemblies. 7. To design special machines needed by the shop and to consult on the purchase of new machines. 8. To decide whether parts shall be manufactured by the shop or pur- chased outside. How Savings Are Made. These are the customary duties of the engineering department, and yet they are often made promi- nent by being neglected. We could cite hundreds of instances where attention to these items has made great savings. For instance, in one plant where a plate had originally been made of J^-in. cast iron, the design was changed to copper, but the thickness was not changed. A sheet of J^-in. copper would serve the purpose equally well and when the change was made, almost $13,000 was saved annually. Some manufacturers take a costly pride in "making everything in their own shops." Frequently we find shops equipped with automatic machines which are not warranted. The small quantities of screw machine products used require that the set-up be changed at such short intervals that it would be much more economical to buy them outside. Whether to make or to buy can be determined to a fine point by the engineering department working with the purchasing agent and the cost department. Standardizing Design. Thoughtless designers waste much money by specifying a different screw or bolt for many new 38 PRODUCTION ENGINEERING AND COST KEEPING designs. Admittedly, screws, nuts, bolts and so on cost little. A $5 bill will buy a lot of them, which undoubtedly was the reason that one shop had in one year bought 37,400 screws of 184 varieties; an average of only 203 screws of each variety. It was easy to eliminate this. The sizes of screws, bolts, nuts, nails and so on most generally used were determined and those sizes made standard. Then, if a draftsman wanted something that was not in stock, he had to prove that nothing else would do. This standardization reduced the asset " General Stores" from $50,000 to $30,000. By merely reducing the varieties of sundry supplies, the quantity was so reduced that $20,000 was released from the store room. Here is another " horrible" but not unusual " example." This shop carried in stock nine sizes of square brass rods, 30 sizes of round and 12 sizes of hexagonal, besides much larger assortments of brass and german silver, wire and strips, most of which were unnecessary. After all of these items were checked against the designs the need for 77 per cent of them was elimi- nated. Four of the parts alone showed this condition: PART STOCK STOCK No. NAME OF PART MATERIAL USED RECOMMENDED 322A Binding post screw Brass ^ in. sq. T 5 ^ in. sq. 17B Special nut Brass -f$ in. sq. in. sq. 217A Binding post screw Brass in. sq. T V i n - sq. 912 A Binding post screw Brass \ in. sq. -jV in. sq. \\ in. stock used in no other part than 322A. j\ in. stock used in no other part than 17B. \ in. stock used in no other part than 217A and 912A. Note that in three of the four cases the size of the material used was reduced. The amount of money tied up in stock was not only reduced, but a saving of a few thousand dollars a year was made due to reduced material consumption. Very similar to this saving is the one that can be made by making the same part do for several assemblies. Too often the only difference between some of the parts common to two or more assemblies is a slight difference in a dimension which might well be the same. One shop which turns out a single type of product, to the customer's specification, formerly made every part to order. A study by the engineering department showed that more than half of the parts might well be standard. These ENGINEERING THE PRODUCT 39 parts are now manufactured to stock, and only a few go on special shop orders. This enables what is practically a job shop to plan a good share of its production with the ensuing economies. Some of these savings may seem small, but in the aggregate they are well worth while in any shop. Just recently there was an instance where nearly a hundred thousand dollars worth of new machine tools had been bought by the shop without con- sulting the engineering department. It was found out too late that changes in design of the product were under way which would make these tools useless in that plant. Stupidity? Not at all. That shop is unusually well run, but there was not quite close enough contact between the shop and the engineering department. Point 7 had been neglected. It is blunders like these which make us sure that even the obvious things may well be mentioned now and then. Departmental Cooperation. In all of the activities we have mentioned it is essential that the engineering department work closely with the shop and purchasing authorities. Sometimes informal contact when specific points come up will do, but this method offers chances for consultation to be overlooked. Regular meetings of representatives from each of these depart- ments often work well and tend to systematize the contact. When the practical obstacles which face the shop and the pur- chasing agent are known to the engineer, he can usually work out a design which will be a successful compromise between the ideas of the customer, the condition of the market and the limita- tions of manufacturing. Frequently the shop will find it expedient to change a design slightly to fit its equipment, although with proper contact the engineering department should have foreseen this need. But if such a change must be made, the shop must notify the engineer- ing department so that the drawings and perhaps the patterns may be changed and the obsolete ones destroyed. A hydro-electric plant was partly shut down for several days because this had not been done in the shop which supplied its waterwheels. Here, the shop had seen fit to make a slight change which resulted in lengthening a certain part. When one of these parts failed in operation, the hydro-electric concern wired the shop for a duplicate. The drawings had not been changed and a new part inches too short was made up by the shop. Keep Drawings up to Date. Unless changes are promptly 40 PRODUCTION ENGINEERING AND COST KEEPING reported, obsolete parts may continue to be made. Here is an instance typical of dozens: It had seemed desirable to change the location of bolt-hole drillings in a cast-iron door frame. When the stock was gone s Give Betw Seg Drawn:- Checked A ro over there was found two different frames in stock, each bearing the same part number. To the casual observer, it would have seemed that the stock of this part was 348. As a matter of fact, 186 were obsolete, having been made up from the old drawings which had not been changed until months after the design had actually been changed. Not only were there 186 useless castings ENGINEERING THE PRODUCT 41 tying up money and taking up room, but time and again produc- tion which had been planned on the basis of the quantity shown in stock, had been delayed until a sufficient quantity of the new design could be made up. Filing the Drawings. A good form of detail drawing, with proper places to show changes, is shown in Fig. 14. For con- venient handling and filing it is well to make drawings 8| by 11 in., or in multiples of that size, the larger ones being folded to the 8|- by 11-in. size. This permits all drawings to be filed in ordinary vertical letter files, is a good size for mailing and is an economical cutting size both for drawing paper and tracing cloth. It is customary to file blueprints in sets, all of the details of an assembly together. This is good practice, but sometimes it is well also to have a file in which all drawings of similar parts such as faucets, swivels, bolts, connecting rods, etc., will be together. This is for general reference and prevents designing a new part when an old one, or at least the patterns, tools and fixtures for making it, are already available. Before commencing to design, the engineer can review this file. So much for the design side of engineering. What the Engineering Department Should Do. In the "smoothing out" phase of engineering, which prepares an order for the shop we find that the engineering department should: 1. Assign part numbers to each part. 2. Furnish lists of all parts which make up an assembly. 3. Provide detail drawings of each part. 4. List the operations and their sequence. 5. Specify the jigs, tools and fixtures needed for each operation. 6. Provide tooling instructions. 7. Provide instructions as to speeds and feeds. With these points settled for each assembly, the planning department can go ahead and plan intelligently. It might seem that assigning part numbers is a strictly clerical job, but actually it can only be done to best advantage by some- one thoroughly acquainted with the product. If a part used in several assemblies is given a separate part number for each assembly, almost invariably several of the same part will be carried one supply for each number. Changes, too, are likely to be made which will often require a change in part number and the engineering department is the one to know first of these changes. 42 PRODUCTION ENGINEERING AND COST KEEPING The Parts List. Whether or not the production in a shop is closely planned, the first step when an order is received is to get from the engineering department a complete bill of material or list of the parts comprising the assembly. How often we have seen machines cluttering up the assembly floor waiting for a single part which some- one forgot to order into the shop weeks before! Leaving it to a foreman to take off a list of material from a blue print is a risky method of assuming that everything needed for an assembly will be made. Waiting for an as- sembly-floor shortage report to start production is an expensive procedure. The parts list shown in Fig. 15 is used by the Warner Gear Co. which has a highly- planned shop, making auto- mobile transmissions, gears, differentials and so forth, in large quantities to order. This bill of material which is filled in by the engineering department for each new order shows the part number, part name, whether the part in question is to be purchased or manufactured, the number required per assembly, the kind of material, the symbol for the material and the dimensions of the rough stock. The four blank columns on the extreme right hand side of the bill, are blacked in so as to show up white when blueprinted. These columns serve various purposes. The production department notes in them from the stock record the number of pieces required for the order, the number of pieces on hand, and ENGINEERING THE PRODUCT 43 the number of pieces necessary to be purchased. They are used by the cost department for figuring the final cost of the assembly; that is, by assigning to one column each of the follow- ing items: material, labor and the expense against each part. On the copy of the parts list which goes to the tool-designing department a section of the engineering department are noted any parts which are new or which require different machin- ing from previous parts. This aids the tool-designing depart- ment to determine what new tools are necessary. After going over the parts list and routings for the new parts, the tool-designing department lists up all new tools required with the part and operation number on which they are required. One copy of this list is sent to the production department, in order that the date each tool is required may be known. This list after being dated is sent back to the tool-designing department to determine the sequence in which the tools must be finished. The parts list is really the starting point for planning through- out the shop. We will see in detail how it is used in later chapters. We speak frequently of a " well-planned shop." By that we do not necessarily mean " completely planned" or "rigidly planned." Some shops can be completely planned; few can safely be rigidly planned. The well-planned shop is the one which plans every operation which can economically be planned. In many shops of the job type, the planning will be confined to smoothing the way for the order and most of the planning will be the preliminary preparation by the engineering department. It is evident from a glance at the duties already listed as having a bearing on planning, that many of the preliminary activities of the engineering department are based on time studies. Both the planning department and the engineering department use the records of the time study men, and it has always seemed to us that logically this activity should come under the engineer- ing. It is not, however, a matter of vital importance who the time study men report to, provided the engineering department is able to get quickly the accurate time studies that it needs. The instructions to workmen on speeds and feeds are of course based on time studies. Where a large number of a part is to be made, it is well to take time studies, from which the best tooling instructions can be drawn up, and which will serve as a guide in designing the best jigs and fixtures. 44 PRODUCTION ENGINEERING AND COST KEEPING Paving the Way to Production. It is not enough merely to have the proper tools, jigs and fixtures on hand. The engineering department must specif y in writing the ones to be used on each part. After foremen and toolroom employes waste hours at a time in a blind search for the right tools after the job is at the machine, and failing to find them, hold up work while some are made, while the wanted ones are likely to be around somewhere. If on the drawing, or on some instruction card numbered to correspond with the part, the tools, jigs and fixtures are listed, there can be no chance of such delays. We strongly recommend that the same number be given to the part, the drawing, the patterns and core boxes, the tools and fixtures. This will avoid much confusion and the delay that always accompanies confusion. In some plants the activities of the engineering department are about all the planning that can be done , in others much more is feasible. In either type of plant, it is up to the engineering department to determine what must be made, the methods to be used and to provide the best tools for doing the work. The manufacturing departments are thus left free to do what they are supposed to do make the product, and nothing else. CHAPTER V TOOL ISSUE Here is an actual conversation which is typical of what occurs daily in too many machine shops: Machinist (at toolroom window) "Give me a l^Q-in. reamer and socket." Storekeeper " Here's the socket. Get the reamer from John Jones. I think he had it last." Fifteen minutes later: Machinist "He hasn't got it and I can't find it." Foreman (who overheard him) "Well, keep lookin'. Ain't Jim told you he ain't got it?" The conversation grew acrimonious, leading to impolite reminders by the workman that he was on piece work and wouldn't give his time to the search and to vituperative com- ments by the allied storekeeper and foreman. Preventing Lost Time. Too frequently the time lost in changing jobs and obtaining new tools is not sufficiently con- sidered. The management may be conscious of the loss, but even in the most efficient plant the sum total of cost is seldom known. A study in this machine shop showed that the improper racking and follow-up of tools and the consequent loss of time amounted to 13 per cent of the productive labor payroll. If, under such conditions, the man's time were the only loss, it would be bad enough. But it isn't. First, an expensive machine is thrown into the non-productive list, piling up its many items of overhead expense. The production of the shop as a whole is decreased, throwing a heavier burden of general expense on every article manufactured. The rate of turnover is diminished, increasing the working capital needed. Then there is the moral effect on the men. The average work- ing man takes his cue from his leaders. If the foreman is efficient and dispatches his work to the best advantage, the men will generally do their share; but if the foreman is careless and does not attend to detail the men will become imbued with the same spirit and do their work in a listless "I'11-do-what-I-must" 45 46 PRODUCTION ENGINEERING AND COST KEEPING manner. Delays do not bother them and they lose the ambition to turn out their work quickly and efficiently. When this con- dition exists the quality of their work is also very apt to suffer. After considering the many phases of this question it will be realized that the initial labor loss is small in comparison with the ultimate. If a machine shop has the crudest vestiges of a cost system, its executives must realize the losses that such a waste of productive time causes. Yet the fear of system, which to many means "red tape," makes them prefer the loss to the cure. There is some cause for this feeling; but in the toolroom, as elsewhere, it is quite easy to have well-ordered handling and records without red tape. We would be the last to advocate routine for the sake of the routine. The Best Practice. There are certain rules which should be followed by a well-run shop and which allow of practically no exceptions. There are other points which must be settled by the individual shop. The absolute ones are: 1. The proper tools should be available when the workman is ready to start an operation. 2. The exact location of every tool should be known. 3. It should be possible to tell at once just which tools any man has. 4. No workman should be allowed to sharpen, repair or make tools. The questions which must be settled in the light of the peculiar needs of each shop are: 1. Shall workmen own any tools? 2. Shall tools be delivered to men or called for by them at the toolroom? 3. Shall men specify the tools needed? 4. Shall any tools remain permanently at the machine? We saw in a preceding chapter how the engineering department notifies the tool designers what is needed when a part is to be made for the first time. This is done early so that the tools, jigs and fixtures may be ready before the part is released to the shop. This can be done whether a single part is to be made or a hundred thousand. Figure 16 shows a form on which new tools may be ordered. A simple and obvious routine can be relied upon to follow the making of the tools through all the operations until they are delivered to the tool crib. The form shown in Fig. 17 may serve as a follow-up reminder whether the tool is made in the plant or ordered from the outside. The Double Check System. It is, of course, simple enough to TOOL ISSUE 47 know where tools are, if the customary single check system is used. But it is also desirable to know what tools are in the TOOL ORDER TOOLROOM. >.** mm TNI f 6868 rumor MTC_ FIG. 16. Tool order form. 9 10 11 It 13 14 18 1 17 IS 10 10 SI ** S4 IB t t7 * SO at TOOL FOLLOW-UP CARD RgQ. He. TOOL ORDER No. DATE OF ORDER WHtR MADE AMOUNT ORDERED DATE PROMISED DATE COMPLETED IMOUNT COMPLETED PARTS A PtJINT FIG. 17. Follow-up card on new tools. possession of any man. This can be accomplished by the double check system, under which not only is a brass check with the workman's number hung in place of the tool, but a check bearing 48 PRODUCTION ENGINEERING AND COST KEEPING the tool number is hung on a board under the workman's number. Thus, if a workman leaves the company, the exact tools in his possession are known. This method can be improved upon as will be indicated later. The favorite gossiping place in any shop is the grinder. Here men congregate and have a perfect alibi, for they "are waiting to get at the wheel." It's amusing, in shops which subdivide operations to the last hair, to see men who are little more than machine tenders, sharpening their own tools. The management does not consider them all-round mechanics, but apparently feels they are toolmakers. Tools should be kept in condition by men who do nothing else. This saves the time of productive men and assures that the tools will be ground to give the best cutting results. In every shop employing 50 or more men it would pay to have at least one man to keep tools in condition. When tools are turned in to the crib, they should be examined and repaired, if they need it, before being issued again. Should a Man Own His Tools? As a rule it proves best for the shop to furnish all tools used. This, however, will depend to a degree upon the nature of the work and the kind of men em- ployed. If a shop is fortunate enough to have a few tempera- mental, all-round mechanics it may be wise to " compromise" and let the men use their own tools if they want to. The big objection to a man owning his own gages is that he will not usually provide a sufficient range, nor are the gages he possesses always well adapted to the work he is doing. He may have a micrometer, a pair of calipers, a depth gage and so on. In up-to-date ' shops on repetitive work, snap gages are used, which, of course, the men cannot be expected to furnish for every job they may be put on. If a man furnishes some of his own tools, it is, of course, out of the question for whoever inspects his kit when he leaves the plant to tell which tools belong to him and which to the company, unless, as seldom is done, the company tools are stamped with the company name. In the planned shop, it is, as a rule, best to have tools delivered to the men a short time before a new job is started. This is handled by the planning department which knows not only what tools are needed, but just when they will be needed. In job shops where it is not feasible to forecast the approximate time TOOL ISSUE 49 when a new job will start, it is best for the workman, or perhaps the foreman, to get the tools. It is always possible to determine what tools will be needed for a job. This should be done by the engineering department. Of course if no engineering department exists, the judgment of the workman or his foreman will have to govern. As a rule it is best to have the tool turned in to the crib when an operation is finished. There is no great objection, however, to having certain standard cutting tools for lathes, planers, etc., remain permanently at the machine. Wasting Tools and Time. However these questions are answered, we want to impress the importance of having a close control of tools exercised by the tool crib. If this is not done, great wastes can go on. Take, for instance, the case where it was possible to cut, at pre-war prices, the investment in tool steel $13,000. It was evident, on casual observation, that the investment in tool steel was too high. There was no real system in use for handling tools, nor were there any standard prints from which they could be made. Each foreman, as he needed, or thought he needed, tools, or even at times the operator on the machine, would go to the stock room and get sufficient steel to make such tools as he wanted. He would then take this stock to the blacksmith who would forge them up for him in the way he described. If he had a pre- ference for a tool with a large clearance or rake angle, the tool was made up that way. Frequently another foreman was observed requesting a tool for identically the same work, but with a different angle. Sometimes a foreman from one of the outlying buildings would send in a written order for a quantity of a certain tool which he would describe roughly. If he did not receive them he might send in another order, not mentioning the first at all. In due time he would receive just twice as many tools as he ordered and that would probably be about three times as many as he needed. Saving $4,200. The investigation was started in the tool crib. There did not seem to be a very great congestion in the tool cribs, although there were seemingly a few more tools there than necessary, but on going out into the shop to the machines considerable trouble was observed A night and day turn was employed, and as the tools were 50 PRODUCTION ENGINEERING AND COST KEEPING ground by hand by the operator himself, no man was ever satis- fied with any other man's grinding; consequently, the night man on a job always tried to hold his tools away from the day man and vice versa. There was always a duplicate set at a machine and frequently sets for several jobs which the operators had collected and never turned in. At 10 machines was found an average of 30 tools weighing on an average, 5 Ib. apiece. These were all of high-grade tool steel, costing at that time about $6 a pound. One can easily see that here was a lot of money tied up in tools that only a few operators could use: 30 tools at 5 Ib. each = 150 Ib. per machine. 150 Ib. at $6 per pound = $900 per machine. $900 X 10 machines = $9,000. Then at 42 other machines we found the following conditions : 5 tools at 4 Ib. each = 20 Ib. per machine. 20 Ib. at $5 per pound = $100 per machine. $100 X 42 machines = $4,200. A lower priced steel was used on these machines. These figures do not include tools in use at the machine at that time. Here is a total of $13,200 tied up in tool steel which was being used only a small portion of the time, as only a maximum of eight tools was ever used at one time on one job, and many jobs used considerably fewer. While one job was running on the machine, the tools for all the other jobs were idle in the workman's tool box. Had they been handled from a central crib they might have been in use on some other machine. Several of the men's tool boxes were so heavy that it was impossible to move them to take them into the crib, and the tools had to be taken out and piled on a hand truck. These tools were all taken into the central tool crib, and all similar tools were placed in the same bin so that the complete stock of any tool could be immediately ascertained. After sufficient data had been obtained as to the usage of the different types, a minimum limit and desirable amount to order was placed on the bin tag and the stock was kept within these limits by requisition on the tool stock. Keeping Track of the Tools. A brass check system was in use at this time for keeping track of the tools that were out; but as there were two turns it necessitated turning tools out and in both night and morning. If this was done, there was constant TOOL ISSUE 51 trouble between the two turns; consequently a system of written slips was installed. This operated as follows : A tool list was written in triplicate for all tools ordered out, one list remaining in the crib, while the other list would be given out one to the day man and one to the night man. Then if the tools were given out to the day man, the night man, when he came in, checked over the tools with the list given him. If any were missing, he reported the fact to his foreman for adjustment. If he did not report it, and turned in the tools later with one missing, a charge was made against him. At the same time a central tool-grinding department was started where all similar tools might be ground the same. The Cost before Toot Room was organized. Cost after Tool Room was organized. Jan. Feb. Mar. April May June July Aug. Sept. Oct. Nov. Dec. FIG. 18. Chart showing saving in taps and drills. tools in the crib were kept ground, and when a man had a dull tool, he turned it in and received a new one. This not only saved time but assured that each tool was so ground as to give the best possible service. This central tool department also maintained a stock of forged 52 PRODUCTION ENGINEERING AND COST KEEPING tools on a minimum and desirable amount to order basis, so when requisitions for tools came in they were filled from stock. B-l - Cosf before Tool Room was orqanized \IQ\- B-= Cost after Tool Room was rganized. Jan. Feb. Mar. April May June July Aug. Sept. Oct. Nov. Dec. FIG. 19. Chart showing saving in files and handles. This tended to standardize the tools used and tool numbers were placed on all which were necessary. Keeping Tools in Repair. Worn-out tools were returned to this department and it was decided there whether or not they TOOL ISSUE 53 could be reforged into another shape. This alone effected a saving of about $152 a month in scrap tool steel. The chart, Fig. 18, shows the saving made in taps and drills in one plant by making only elementary betterments. The manage- ment was so afraid of red tape that it would not countenance a really modern method of handling tools. But even with the rudi- mentary changes made, the saving in the one item of taps and drills amounted to $180, and in files and handles $987, in one year. The latter item is shown graphically in Fig. 19. Formerly, nearly all of the shop tools were allowed to remain in the care of the operatives at their benches or machines. Many workmen accentuated this semi-ownership by keeping the tools under personal lock and key. As no record existed showing what tools belonged to the company, it was a very common occur- rence to find that tools had vanished where to, no one knew. In an effort to determine where these tools were or how they had been disposed of, an examination of every operative's tool stand or bench drawer was made. The result was that drills and taps, in quantities ranging from 50 to 150 per size, were found at the benches, 1 The majority were usable, only a small expenditure being required to put them in shape. The men in the shop, when questioned, admitted that if a drill or tap became damaged, they went at once to the shop office for another. The assistant foreman would give the tools out; even suggesting "better take two or three and you won't have to bother me again so soon." Summed up, the unnecessary investment and subsequent loss in stolen, mislaid, idle or needlessly discarded tools was due to the common carelessness of the foreman and his assistant. Centralizing Tool Storage. The first step was to centralize tool storage in a crib. As tools are taken from this and given to the workman they are listed on a standard card, and filed by the man's number (in a 3 by 5-in. card file) in the toolroom. Drills and taps were given out only upon the return of the shank end of the tool originally supplied. Files and handles could be secured only by returning the old ones. Bolts and machine screws were not given out by the box as before; but according to the quantities specified on the bill of material. Additional tools were issued only upon presentation of a tool check. All locks were removed from bench drawers and a standard 54 PRODUCTION ENGINEERING AND COST KEEPING lock used throughout the shop. Each workman was given his key, a master key fitting all locks being placed on the key board in the toolroom. A Simple Tool System. The following simple tool system indicates a routine that can easily be adapted to nearly any needs. It assures economical handling of tools. Briefly, these are the points: 1. Give all tools a number. 2. Classify all tools as jigs, fixtures, gages, tools, dies, etc. 3. List tools needed on operations for every part manufactured, showing the tool number, name and size. 4. Arrange the tool cage into sections, each section to be divided into bins and drawers for all tools and gages. 5. Install an "in and out" tool cage record and use this for each tool. It is a card which shows the tool number, name, location in the tool cage, what part it is used for, what operation, the maximum and minimum stock required and the operator who has the tools out, with his name and number. Whenever a tool is used or broken, it is entered on this card, thus showing at all times the balance on hand. 6. Use a tool requisition for the issuing of all tools, showing the operator's name, number, department in which he works, the tool name, number, size and number of each kind needed. 7. Tools to be repaired to be entered on a repair order in triplicate by the man in charge of the cage. The original remains in the cage, the duplicate goes with the work to the toolroom, and the third copy is sent to the layout man in the planning department for his planning. Each copy shows the tool name, number, size, nature of repair and when wanted. Handling Tool Requisitions. On all productive operations the tool requisitions are handled entirely by the control board operator, in the central planning department. On all other work the tool requisitions are handled by the foreman. The tool requisition is made out in duplicate, signed by the foreman and then sent to the tool cage. The tool cage man first sees if the tools are in by looking on the "in" file of the tool cage record. If they are in the tool cage, he enters all tools called for on the requisition of the "in" cards and places the cards in the "out" file. The requisition is then filled, and the original is filed against the operator's number and the duplicate sent with the tools to the operator so that he can check the tools. Filing the tool requisition, Fig. 20, against the operator insures that he will return all tools before being paid off, if he is discharged or quits, as the tool cage man must sign his "tool release order" (shown in Fig. 21) before he is paid. TOOL ISSUE 55 When the tools are returned by the operator, they are checked against the tool requisition to see that all the tools called for on the requisition are returned. They are then sent to the tool inspector to determine their condition. SHOP SUPPLIES. Charge Acct ^~ /faffs Dp , ?- 7"/9 Sfocfe Delivered Only on rftw Order, Store Keeper: Please deliver the following Supplies : Amount Size MATERIAL Rai Amount / "7^f/'7 r^*>t ^x^^ O^t-^-^1 $ L^f 1 v *>* To be used for the following purpose : New Work Repiin Operator NAME OF DEPARTMENT Smbol A // Kta- .ar^/f NOTE:-Ma*e a cross In Block A/^^CX^CX*W< lolls to be used. S Foreman. FIG. 20. Tool requisition. Tool Release Order *5 *}& Please Release Check No, * ' 7 on the following: No. SIZE ARTICLE BROKEN DAMAGED COST X X ;r" : x It >/ NOTKt Mark X in column denoting condition. Pate 7' 7-' 9 f It. ?&eS Deot. [SJ /V^ ' Foreman,; C Foreman-^ FIG. 21. Tool release order. After the tool inspector approves their condition, he signs the tool requisition and turns it over to the clerk in the tool cage who enters the tools returned on the "out" card of the tool cage record. This card is then placed in the "in" file. 56 PRODUCTION ENGINEERING AND COST KEEPING In any shop where the tools to be used for an operation are specified by the engineering department, it is well to have a copy of the parts list or of the shop order, Fig. 22, sent to the toolroom. This may show simply the tool number, as does the one illus- DATE MOVED PRODUC rive SERVICE CA FORM 12t RD ' ""${1 PIECES WANTED OPERATION Drill, ream^fc & cut off. form ORDER NO. LOT 1718 1 COMPLETED REJECTED 5919 CREDIT TOOL NO. M-A-77 OPER. 1 MACH. DEPT. N '493 Ma MOVE DATE ' AL P. PRICE .0158 TO DEPT. M ELAPSED HOURS CHANGE MACH. TO MACH. 382 V -31-19 HOURLY HATE FIG. 22. Job ticket giving tool set-up. MACH NA MACH NO fcMH NAME size SYMBOL LOCATION,