Recently, I have made a change to my production area by aligning the packing machine section and this inturn reduced time, people. But, i am not very sure how to calculate this in terms of cost and present to my management as a Lean Initiative Saving Changes...
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Sromon DasSenior Project Manager| Mara ConsultingHalifax, Nova Scotia, Canada
did you calculate the cycle time prior to the change? easiest way would be to calculate reduction in cycle time, multiply that with an average hourly rate of resources and get a cost estimate.
if you have the data you can also show how cycle time compares to takt time before and after the change.
have you also reduced WIP as part of this initiative? would be good to show reduced WIP levels too
/sd
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2 replies by Muthukrishnan Ramakrishnan and Nancy Avila
Jan 30, 2018 10:10 AM
Muthukrishnan Ramakrishnan
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No I've not calculated yet. Thanks for your suggestions
Feb 14, 2018 3:31 PM
Nancy Avila
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I would also recommend you to add the cost saving from inventory carrying cost. Using your company product cost structure as a guideline would be very helpful with your quest to present the cost saving from the lean initiative.
did you calculate the cycle time prior to the change? easiest way would be to calculate reduction in cycle time, multiply that with an average hourly rate of resources and get a cost estimate.
if you have the data you can also show how cycle time compares to takt time before and after the change.
have you also reduced WIP as part of this initiative? would be good to show reduced WIP levels too
/sd
No I've not calculated yet. Thanks for your suggestions Saving Changes...
Anton OosthuizenSenior Business Analyst / Project Manager| Self EmployedPretoria, Gauteng, South Africa
+1 Sromon. This is where you find the value of modeling the AS IS and the TO BE processes. This normally also provides you with the motivation for a business case to implement a significant change. During the modeling, you do process validation, time, resource and cost analysis for both AS IS and TO BE.
As mentioned in earlier comments, you need to look into the Cycle time (now and earlier).
Some other aspects that could be calculated are
1. People - reduction in resources & reduction in cost
2. Floor Space/ Plant Layout - this ties in with the Plant Productivity
3. Process improvements - bringing the packing machine closer might mean defects get identified early etc etc.
did you calculate the cycle time prior to the change? easiest way would be to calculate reduction in cycle time, multiply that with an average hourly rate of resources and get a cost estimate.
if you have the data you can also show how cycle time compares to takt time before and after the change.
have you also reduced WIP as part of this initiative? would be good to show reduced WIP levels too
/sd
I would also recommend you to add the cost saving from inventory carrying cost. Using your company product cost structure as a guideline would be very helpful with your quest to present the cost saving from the lean initiative.
As mentioned in earlier comments, you need to look into the Cycle time (now and earlier).
Some other aspects that could be calculated are
1. People - reduction in resources & reduction in cost
2. Floor Space/ Plant Layout - this ties in with the Plant Productivity
3. Process improvements - bringing the packing machine closer might mean defects get identified early etc etc.
I would also recommend you to add the cost saving from inventory carrying cost. Using your company product cost structure as a guideline would be very helpful with your quest to present the cost saving from the lean initiative.
+1 Sromon. This is where you find the value of modeling the AS IS and the TO BE processes. This normally also provides you with the motivation for a business case to implement a significant change. During the modeling, you do process validation, time, resource and cost analysis for both AS IS and TO BE.
Thanks for your inputs Saving Changes...
Sanjeev NawaniGlobal Digital Services Leader for all Portfolio Companies | Public Investment Fund, RiyadhPune, Maharastra, India
Hi Muthu ,
Adding to all the above comments, along time difference analysis between AS-IS in TO-BE process & linking it to cost/ hr/ FTE , will suggest you to do risk assessment of new process to ensure sustainability of new process. Also no harm in capturing VoC , to full proof the entire study ...
