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ROI

Traditional View
Flexibility for various components Now Output Quality, SPC

Production Cost Now


Production Cost

Quick changeovers Serviceability & maintenance M/c Foot print

Each Company has a different method of calculating the ROI. It also depends upon the Companys perspective or dominating reasons. The process followed by some companies are : 1. Machine hour Rate Method 2 Internal Cost ROI Model. 3. Cost / Component Model

MHR Model
This is a very common type of model followed by Small & medium Job shops. The MHR is market driven & if the Investment achieves it, the decision is made. Disadvantages: The overheads of every company is different & the MHR route will not give the required ROI. Older & Faster Machines give better ROI Varies from Component to Component High Tool cost parts give lower ROI

Case Study 1

Case Study # 2-Cycle time reduced by 10%

Case study # 3---Machine Price reduced by 10%

Conclusion

1.Offering an initial discount is a one Time benefit to customer. 2. Cycle time reduction gives higher MHR hourly 3, It also gives additional production capacity. 4. For a product manufacturer, it means that he can sell at a lower price . 5.The above does not apply in a cell where this machine is not the bottleneck machine.

Internal Cost ROI Model


This is generally done for existing companies who want to increase their capacity This assumes that all other overheads are already accounted for. This is considered as a revenue increase model without adding significant costs. This is also helpful when the existing manpower is expected to do additional tasks.

Cost per Component Model


This is generally practice in mass parts production unit. Once established, it is easy to calculate & monitor. Used where margins are very low & can affect the profitability since it is a number game. This method is very useful when there is a change in the process / part. This also helps in evaluating any improvement activities before implementing. This helps to optimise the running cost v/s the production output in a Cell / Line.

Case Study #4-Cost / Component

Bought good Machines

Hired people
Setup an Infrastructure

Detail
Quality

Parameter
Customer Complaint Customer Returns In-Process Rejection

Challenging Bench Mark UOM


Nil 50 100 Nos ppm ppm

Incoming material Rejection


Handling / Transit / Storage damages Delivery Inventory Delivery Sch. Adherence ITR Quality of Inventory - Red Quality of Inventory - Gray Quality of Inventory - Green SMED Productivity Safety Changeovers less than 10 mts VAPCO Accident Frequency Rate Accident Severity Rate 5S Absenteeism TEI OEE
5S Score - lowest score of any zone for any "S" - % of THAT Zone

100
100 100 35 1 3 96 100 10 0 0 75 5 1 80

ppm
ppm % No % % % % No ppm ppm % % No %

Total Absenteeism Suggestions/employee/month OEE (Plant)

To Improve OEE ,We have to take corrective Action for Major down times

1. SETTING 2. MACHINE BREAK DOWN


Major down times(Aug-Mar)
4000 3717 3500 2826 3000 2245 2500 2000 1500 1000 500 0
D S SE TT M B IN

3. INSPECTION
Time(hrs)

4. PROCESS PROBLEM 5. NO LOAD 6. NO OPERATOR 7. TOOL CHANGE / INSERT INDEXING 8. CHIP REMOVAL

1667 1633 1569 1099 1049 715

IIN

O P

RL

PR P

LD

Down time

TC H

Major down times(Aug-Mar)


4000 3500 3000 2826 2245 1667 1633 1569 1099 1049 715 3717

Time(hrs)

2500 2000 1500 1000 500 0

IIN

O P

R L

R P P

LD

M B

Down time

Reduce setting time by using technique like SMED

TC H

ET T

IN

Benefits:Customer
On Time Delivery 80% -95%.
TOTAL TIME(hrs)

Reduction in Setting time


SETTING
900 800 700 600 500 400 300 200 100 0
AUG
805 550 430 356 363 439 424 342

Company
Productivity increased @ 90%. Setting time reduced from 179min 76min. OEE Improved 50%-55%.

SEP

T OC

V NO

MONTH

DEC

JAN

FEB

R MA

SETTING DOWN TIME-MARCH 60


TOTAL TIME(hrs)

55 49

50 40 30 20 10 0

Self
Morale improved. Improved communication & Team Work Skills.
Different codes used while setting

30

27 21 19 19 17 8 4 0.58

T N D LE ET AL AL AL NG NG NG AR EN TIO DI VI FS DI OP OV OV OV C L F G L O ST E R M M E O IN P G HO HO L O NG P RE RE SP TT IN PR AP RK OO RK TT LIN SE OL TI NG T I O O E T A O S W T W LD SE OV OF OF HO PR NO G G K P N N R GA TI ILI WO IN UN DA TT E DOWN REASON MO S

Major down times(Aug-Mar)


4000 3500 3000 2500 2000 1500 1000 500 0 3717 2826 2245 1667 1633 1569 1099 1049 715

Time(hrs)

IIN

O P

RL

PR P

LD

SE TT

M B

Down time

Reduce Machine breakdowns by using My Machine Campaign Method

TC H

IN

My Machine Annual plan


MACHINE
LCX 4 LT 2 F2 MCV 320 2

JAN
1st WEEK 1st WEEK 1st WEEK

FEB
1st WEEK 1st WEEK 1st WEEK

MAR
1st WEEK 1st WEEK 1st WEEK

APR
1st WEEK 1st WEEK 1st WEEK

MAY
1st WEEK 1st WEEK 1st WEEK

JUN
1st WEEK 1st WEEK 1st WEEK

COLT 1
LT 16 S COLT 2 CUB COLT 3 LT16 F1

2nd WEEK
2nd WEEK 2nd WEEK 2nd WEEK 2nd WEEK 2nd WEEK 2nd WEEK 1st WEEK 1st WEEK 3rd WEEK 3rd WEEK 3rd WEEK 3rd WEEK 3rd WEEK 3rd WEEK 4th WEEK 4th WEEK 4th WEEK 4th WEEK 4th WEEK 4th WEEK

2nd WEEK
2nd WEEK 2nd WEEK 2nd WEEK 2nd WEEK 2nd WEEK 2nd WEEK 1st WEEK 1st WEEK 3rd WEEK 3rd WEEK 3rd WEEK 3rd WEEK 3rd WEEK 3rd WEEK 4th WEEK 4th WEEK 4th WEEK 4th WEEK 4th WEEK 4th WEEK

2nd WEEK
2nd WEEK 2nd WEEK 2nd WEEK 2nd WEEK 2nd WEEK 2nd WEEK 1st WEEK 1st WEEK 3rd WEEK 3rd WEEK 3rd WEEK 3rd WEEK 3rd WEEK 3rd WEEK 4th WEEK 4th WEEK 4th WEEK 4th WEEK 4th WEEK 4th WEEK

2nd WEEK
2nd WEEK 2nd WEEK 2nd WEEK 2nd WEEK 2nd WEEK 2nd WEEK 1st WEEK 1st WEEK 3rd WEEK 3rd WEEK 3rd WEEK 3rd WEEK 3rd WEEK 3rd WEEK 4th WEEK 4th WEEK 4th WEEK 4th WEEK 4th WEEK 4th WEEK

2nd WEEK
2nd WEEK 2nd WEEK 2nd WEEK 2nd WEEK 2nd WEEK 2nd WEEK 1st WEEK 1st WEEK 3rd WEEK 3rd WEEK 3rd WEEK 3rd WEEK 3rd WEEK 3rd WEEK 4th WEEK 4th WEEK 4th WEEK 4th WEEK 4th WEEK 4th WEEK

2nd WEEK
2nd WEEK 2nd WEEK 2nd WEEK 2nd WEEK 2nd WEEK 2nd WEEK 1st WEEK 1st WEEK 3rd WEEK 3rd WEEK 3rd WEEK 3rd WEEK 3rd WEEK 3rd WEEK 4th WEEK 4th WEEK 4th WEEK 4th WEEK 4th WEEK 4th WEEK

WINNER XL
LT16 F2 LT 20 C LT 20 F2 LT 20 F1 LT2 F1

LT 2 F3
LT 25 MCV 400 S LT 16 J1 LT 16 J2 MVC 400 2 MCV 400 1 MCV 320 1 CHALLANGER

Employee Involvement in My Machine Campaign

Result:

By My Machine Campaign metodology, reduction in Machine breakdown

MBD DOWN TIME REPORT MONTHWISE

600 500
TOTAL TIME(hrs)

537

400 300 200 100 0


AU G

340 193

381 326 282 250

210

SEP

T OC

V NO

MONTH

DEC

JA N

FEB

R MA

4000 3500 3000


Time(hrs)

3717

Major down times(Aug-Mar)


2826 2245 1667 1633 1569 1099 1049 715

2500 2000 1500 1000 500 0

IIN

O P

RL

PR P

LD

SE TT

M B

Down time
Tool Presetting Improve 2S Better Planning

TC H

IN

Tool Change
200 180 160
Down time in Hrs

157.3

140 120 100 80 60 40 20 0 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Month

Down time trend for Tool Change


81.8 71.9 55.1 58.6 92.5 88.9 62.3

350 300
Down time(hrs)

Insert Indexing
297.1 298.2 267.8 252.4 176.1

250 200 150 100 50 0

129.7 125.9 95.0

Down time trend for Insert indexing

Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Month

1S DWM 2S

Suggestions

3S

Kaizens

Techniques

My Machine

Why-Why Analysis SMED

Poka yoke

Containerization

Rack removal

1.ITR
5.Company specifics

2.OEE

PROFIT

4.Product Quality/

TEI

3.VAPCO

2S

Why-Why analysis

OEE

SMED

MY MACHINE

2S

KAIZEN

VAPCO

MY MACHINE

SMED

Key Takeaways
Understand the Customer specified & unspecified needs before making a sale Give him a solution & not only a Product. Help him to realise what he wanted to achieve. Handhold him in this mission. Study his process & setup & suggest a best fit for his industry. Suggest some best practices to improve his productivity.

Shiv Khera

Be a Winner

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