AIMCO Global - Productivity

Increased Productivity Means Increased Profits

Provide a faster cycle time per fastener One hand operation Reduce number of steps Reduce wasted time or downtime
SAVE TIME PER WORKPIECE
This reduces your labor content per workpiece. This enables the manufacturer to lower their price or increase their profit margins.
PAYBACK: Multiply the time savings per workpiece times the number of pieces in a year. Multiply the time savings per year by the overhead or labor cost per hour to get your yearly cost savings. Divide the investment cost for your solution by the yearly cost savings. This is your payback in time in years. Many companies strive for a payback period of less than 1.5 years or 18 months.
(time saved per piece) (yearly time savings) (solution costs)	X X /	(pieces per year) (overhead hourly cost) (yearly cost savings)	= = = =	yearly time savings yearly cost savings payback time in years less than 1.5 years or 18 months

ASSEMBLE MORE WORK PIECES PER TIME PERIOD
The manufacturer can produce more products to sell. This may reduce their labor cost per unit, but also increases their profit per day.
PAYBACK: There are two steps here. For the time savings, multiply the time savings per workpiece times the number of pieces in a year. Multiply the time savings per year by the overhead or labor cost per hour to get your yearly cost savings. For the increased profit, multiply the increased number of pieces per year times the approximate profit per item. Add these two dollar amounts together. Lastly, divide the investment cost for your solution by the yearly total savings. This is your payback time in years. Many companies strive for a payback period of less than 1.5 years or 18 months.
TIME SAVINGS:
(time saved per piece) (yearly time savings)	X X	(pieces per year) (overhead hourly cost)	= =	yearly time savings yearly cost savings
INCREASED PROFIT:
(increased product per year)	X	(approx profit per product)	=	yearly additional profit
TOTAL SAVINGS:
(yearly cost savings)	+	(yearly additional profit)	=	yearly total savings
PAYBACK TIME:
(solution costs)	/	(yearly total savings)	=	payback time in years

EXAMPLE
A ULT-70 pulse tool saves 2 seconds per fastener on a product with four fasteners per piece. They make 20 pieces an hour, 2 shifts per day, at an overhead cost of $25 per hour. The pulse tool costs about $2,000. TIME SAVED PER PIECE = 2 sec X 4 X 20 X 16 X 200 day/year X 1 hr/3,600 seconds = 142 hours saved X $25/hour = $3,555 yearly savings PAYBACK TIME = $2,000 / $3,555 = 0.56 years or under 7 months. *This means that the purchase of the pulse tool will pay for itself in less than 7 months!*
WHO IS INVOLVED WITH PRODUCTIVITY?
Production management and operators Production or manufacturing engineers Purchasing