Cost ReductionCost ReductionWater Tank ManufacturingWater Tank Manufacturing

Date: 17 June 2009

By:

Sunil V Raithatha

5 Rs/Lit

3 Rs/Lit

1980

2008

Vinodrai Engineers Vinodrai Engineers Welcomes YouWelcomes You

Goal Of Presentation

1)1) To highlight importance of cost reduction in To highlight importance of cost reduction in Tank Industry & to understand factors Tank Industry & to understand factors involved.involved.

OverviewOverview

1)1) Historical Background.Historical Background.

2)2) Market Price Trend.Market Price Trend.

3)3) Importance of Cost Reduction.Importance of Cost Reduction.

4)4) Understanding Cost Structure.Understanding Cost Structure.

5)5) Understanding Manufacturing Cost.Understanding Manufacturing Cost.

6)6) Different Methods – Pro & ConDifferent Methods – Pro & Con

7)7) Conclusions.Conclusions.

HistoryHistory

• Plastic Water Storage Tank introduced in Indian market Plastic Water Storage Tank introduced in Indian market by Digvijay Textile Mills. Brand by Digvijay Textile Mills. Brand “Sintex”, “Sintex”, 1975.1975.

• Initially Product was marketed with Initially Product was marketed with

Govt. Supply as focus.Govt. Supply as focus.• Prices were high as compare to Prices were high as compare to

traditional cement built up tanks.traditional cement built up tanks.• Over a period Price of Steel, cement Over a period Price of Steel, cement

and Labor went up and Prices of Plastic and Labor went up and Prices of Plastic

tank came down.tank came down.

Market Price Trend.Market Price Trend.

18 Rs/Kg. 90 Rs/Kg.

5 Rs / Lit. 3 Rs / Lit.

Future Trend

Tank Weights Trend.Tank Weights Trend.

1980 2008

28 Kg. 18 Kg.

Fuel Price

18 Rs. / Lit

35 Rs. / Lit

Transportation• Transport cost is going up.

0

2

4

6

8

10

12

14

16

1990 1995 2000 2003

Per Lit

Margins

• Profit Per Liter Going Down

• Market is becoming Competitive, Prices coming down.• Polymer Prices –• Fuel Prices – • Labor Cost – • Fuel Cost –• Transportation Cost –• Overheads Cost -

Why Cost Reduction.Why Cost Reduction.

Fittest will Only Survive.Fittest will Only Survive.

Understanding Cost Structure.Understanding Cost Structure.

• Value Chain of the Water tank.

Understanding Cost Structure.Understanding Cost Structure.

70 %70 %3.6 %3.6 %

0.6 %0.6 %

0.8 %0.8 %

1.4 %1.4 %

4.0 %4.0 %

8.0 %8.0 %12.5 %12.5 %

Rejections & Rejections & ReturnsReturns

1-5%1-5%

• Raw material.- Accounts for 60 – 80 % of total cost of tank.

• Optimizing the weight of Tank.

• Double and Triple Layer Tank.

• How to get Uniform Distribution of Material during process. X-Y ratio, Mould Design, Powder Quality,

• Reduce Rejections by Power Failure etc.

Raw Material.Raw Material.

• Convert to LPG or Natural Gas if viable.• Select Correct Machine Size.• Make Small Tank of Small Machine or Multiple Mould

Mounting. • Keep burner tuned for efficiency. Clean filter, Nozzel,

replace pump if pressure is below 8 Kg/cm2.• Switch off burner before cycle time ends.• Keep Lowest possible moulding temp.

Fuel.Fuel.

• Electric Power.• Extrusion, Pulverizing & Moulding.• Extrusion - Use higher capacity- Gas Heating – Higher batch size.

Measure Power Consumption regularly.• Pulverizing – Use higher capacity - Measure Power Consumption

regularly. • Rotational Moulding – Use as small machine as possible, or run

multiple moulds. Switch off re-circulating blower. Use Mist Cooling fan or Air Cooler.

• Remove Tank in Hot condition.

Electric Power.Electric Power.

• Good Shop-floor Layout.• Use higher capacity machines, like EN-1000x2 or Three

Arm.• Cultivate Habit of multi-tasking.• Maintain Motivated work culture.

Manpower.Manpower.

• Eliminate Wastages & Breakages.• Keep track of replacements.

Lid & Fittings.Lid & Fittings.

• Optimize Order Quantity.• Develop transport contractors.• Purchase transport vehicle depending on your business.• Don’t concentrate on long distance market at the cost of local market.

Transportation.Transportation.

• Keep functioning of factory very simple.• Keep minimum staff. • Utilize existing staff to maximum by making them responsible.

Believe in your people.• Regular Preventive Maintenance of machines

Overhead.Overhead.

• Keep Record of Rejections.• Wastages during Extrusion.• Wastages during Pulverizing.• Rejection because of Power Cuts. Keep Backup Generator.• Study market rejections.

Rejections.Rejections.

• Fittest will only survive and Grow in long run.• Focus on every aspect of cost reduction Don’t neglect small

savings.• Use latest technology, methods.• Invest in energy efficient technology.• Keep track of Rejections.

Conclusions.Conclusions.

Thank YouThank You

Any Questions.Any Questions.