XeBUSINESS REAL TIME PRODUCTION CONTROL SYSTEM
Below are detailed some of the benefits of installing the XeBusiness Real Time Production Control System together with examples typical cost savings/ROI that can be expected to accrue from these benefits.
The main areas of cost saving can be summarised as follows:
The actual cost savings will obviously vary depending on the size of factory and their current efficiency, performance and utilisation costs together with their levels of staffing, work in progress and payments to operators.
The cost savings are those which can typically be expected based on a UK factory employing 100 operators each working 2340 minutes per week (single shift) with an average performance of 90%, an average efficiency of 80% and an average utilisation of 90%
The typical investment in deploying the XeBusiness Real Time Production Control System covering Software, Implementation Services and RT hardware (100 data capture terminals one for each machine operator plus Capdrive concentrator devices) would be approximately £45,000. Plus recurring software support and maintenance costs of £4,500 per year.
|Clocking on at the Needle Point||7,000|
|Reduction in Downtime||3,100|
|Savings in Supervisory Checks||4,900|
|Quality Control Savings||620|
|Accurate Payment of Operator Savings||6,300|
|Administration Cost Savings||10,000|
|Overtime Working Savings||3,900|
|Reduction in Work in Progress||2,000|
|Total Estimated Annual Quantified Savings||69,120|
The chief cost justification in installing a Real Time System comes from overall improvements in the efficiency of the factory; this comes from better management control and increased motivation of operators.
The benefits associated with the system in these areas are many:
Successful manufacturing strategies require that you have timely, useful information on how your company is performing. The use of the XeBusiness Real Time System provides an up to the minute method of acquiring this.
Employees will benefit from less paperwork, more accurate information, Real Time help and most important of all motivational feedback. Users of the XeBusiness Real Time System have assessed that the performance of their labour force has increased by between 10% and 25%.
The XeBusiness method of implementation (based on many years of experience) ensures that all the Labour Force understand the system to the full and are able to use it to monitor both their current pay and performance and their expected pay and performance.
The motivational benefits to the operator are immense. If, for example, an operator can see she is a 100% performer in the morning but drops to 60% in the afternoon she will also be able to see the financial benefits of performing at 100% all day. She will also accept in her own mind that far from being an 80% performer on average (as she would appear under a manual system), she is in fact capable of performing at a rate of 100% and hence in practice she will try and maintain this.
As important in terms of increasing efficiency, in addition to motivating the operators and hence increasing their performance, the Real Time System will also give management teams the information they require to improve work flows and service the operators better.
Line Balancing: - Operators performance is monitored against skill groups not just as an overall performance for the operator. It is also monitored on an on going basis and the current performance over recent time as well as the performance so far during the day can be checked.
This helps to ensure that operators are maintaining work rate and also allows a balanced line to be created and maintained in order to ensure a fast, smooth flow of work through the factory.
Some of the basic information available with Real Time concerns: -
Who is in? who is absent ?
Line balancing facilities
Current production against targets
Work In Progress down to operational level, where is each job? where will it be in two hours ?
Stock levels, Finished Goods.
The extra, up to the minute, information should allow management to control the day to day running of the factory floor far more closely and improve overall efficiency thus reaping cost savings and benefits for the business.
The removal of the use of work tickets improves operator productivity by reducing handling and external time.
If (based on the initial assumptions) the factory experiences an increase in efficiency of only 5% per operator, this means the production of standard minutes per operator will increase from 1,872 per week to 1,965.
For 100 operators working 45 weeks per year this means there will be an additional 418,500 standard minutes produced per year. If the contribution per standard minute is 7.5p without an increase in factory overheads this 5% increase in efficiency results in an additional contribution to profit of approximately £31,300 per year.
A Real Time System means that operators clock on, on the Real Time Terminals, this removes the need for clock cards and also ensures that the time spent between clocking in (i.e. going to the cloak room, early morning discussions with friends, etc.) is kept to a minimum. Operators not sat at their machines are not clocked in and this creates a move away from the idea that operators work their set minutes regardless of the fact that they may shave total attended time by taking un-authorised breaks or not starting work straight away after clocking in, or queuing at the clock ten minutes before their actual Finish Time.
It has been estimated that the fact those operators will now clock on at their place of work rather than a clock will reduce the walking and queuing time per operator by 5 minutes each day (from experience of factories that have already installed the system).
The saving of 5 minutes per day in terms of time available for productivity, at the proposed increased efficiency rate will mean an additional 4.2 standard minutes per operator per day or 94,500 standard minutes per year for the factory. If the contribution per standard minute is 7.5p without an increase in factory overheads this increase in productivity results in an additional contribution to profit of approximately £7,000 per year.
The system will provide, on a Real Time basis, all the information required to allow management to spend time controlling the floor rather than correlating information.
Areas such as Off Standard Labour Analysis, i.e. who is on Down Time, what categories are they on, what is this costing, how is this affecting performance, can be monitored and dealt with as and when they happen.
It has been estimated that unproductive downtime in a factory can be reduced by 20% by the introduction of Real Time monitoring systems. If downtime were paid at 6p per minute reducing it by only 5% would result in a reduction in downtime of 52,650 minutes and a cost saving of approximately £3,100 per year.
System removes the need for two hourly checks
The system removes the need for un-necessary two hourly checks on performance and balancing. In addition the tracking of production problems should become more efficient.
If 3 supervisors were employed it should be possible to save 10 minutes per hour per supervisor. This will result in a saving of 19.5 hours of supervisory time per week or approximately £109 per week. This equates to a saving of £4,900 per year.
Greater supervisory control will allow a factory to decrease its quality faults and also ensure that garments with quality problems can be quickly traced back to the operatives who caused those problems.
Such a reduction can save un-necessary payment for repairs; this should result in a further saving of at least 5% of downtime payments associated with repairs. This will result in a saving of approximately £620 per year.
The introduction of a Real Time System means that the company only pays for garments which are actually completed. If a garment is removed from a bundle all subsequent operators are paid for one less.
The improved level of information to operators ensures that everybody knows what their pay will be without spending costly productive time keeping their own records.
This knowledge lessens the amount of time spent in costly minor disputes which occur weekly while operators re-negotiate their wages.
Within the Real Time System there is no possibility of operators saving or holding back tickets and no possibility of paying for work twice.
The accurate payment of operators and the associated savings in operator time resulting from providing them with more accurate, timely information has been estimated to save at least 1% of the total wage bill. If calculated as only 1% of the pay for standard minutes based on a yield rate of 7.5p this will result in a saving of approximately £6,300 per year.
The introduction of a Real Time System will vastly reduce the administration time required to process work tickets and build up the gross to net payroll.
The associated savings on overheads include the elimination of clock cards and any paper work currently associated with the payment process, together with the reduction in time spent printing work tickets.
This should result in the cost saving associated with the salary of one wages operative and the saving on the elimination of clock cards and adhesive work tickets. This is estimated at £10,000 per year.
The correct handling of production scheduling, line balancing and down time made possible by Real Time, will reduce the need for costly overtime working.
Absenteeism is highlighted and can be reacted to, the absence of key workers can be costly in terms of work flow, bottlenecks and overall productivity, the system allows immediate reaction to such problems, this will also reduce the costly need for overtime working.
In addition future Production Planning due to increased feedback should be more efficient also reducing the need for overtime working.
If we assume that the average factory in an effort to meet customer deadlines works 5% of its contracted time as overtime experience shows that the introduction of an efficiently run real time system will reduce this by up to 50%. If overtime is reduced by only 25% this will mean a reduction of 131,625 minutes per year. If the overtime premium is 3p this will save approximately £3,900 per year.
The more effective scheduling and line balancing available through the system reduces the need for high levels of Work In Progress to keep the Labour Force fed with work.
The tracking of production problems should become more efficient (utilising fewer staff) and should prevent bottlenecks from occurring.
The Real Time information regarding Payroll and Stock will mean that the costs incurred through payroll claims in error and through lost stock will be vastly reduced.
The implementation of a highly accurate Real Time System will reduce the need for stock taking due to accurate stock and Work In Progress information being generated by the system.
The savings resulting from the above are hard to quantify but the reduction in Work In Progress will free up capital and the reduction in stock taking costs will give definite savings. In our example experience shows it would not be un-realistic to estimate a saving of £2,000 per year.
It can be seen from the above figures that a payback figure of in excess of £69,000 for the first year is feasible for a factory employing 100 machinists.