How do you convert saved travel distance into $$$

[CI-Eng]

I know there is a standard to convert feet to steps and then to sec but I couldn't find it.

[mattf]

micromanaging:

Bad example, but its what I could come up with. Lets say you pay someone 20 dollars an hour. This person does X, and to set up the process he has to take 30 steps to get the job done. Each step takes about .5 to 1 second. Now lets say we figured out how to reduce his steps to complete the process from 30 to 20 steps, and lets assume each step takes one second. Per day lets say he also does X 30 times or so. Easy math from here:

Before:

30 steps x 30 times done = 900 seconds

900 seconds / 60 = 15 minutes

20 dollars per hour / 4 (15 minutes is a 4th of an hour) = 5 dollars

So it costs the company 5 dollars to pay for our worker to normally move through his/her normal process. If we reduce it to 20 steps:

20 x 30 = 600

600 / 60 = 10

20 / 6 = 3.33 dollars

Now lets say this is per day of course. If we see how much it would save per year, assuming there are 1920 hours of working hours for the individual since this person will get vacation and other stuff, we have:

1920 x 5 = 9600

1920 x 3.33 = 6393.6

So the company saves: $3204.60. Granted, I did not calculate how much MORE work that person can do with the added time he/she saves with this method, just how much time is saved and how much money the company saves with that reduced method of doing the same process.

If you want to get into even more specifics, per say deeper savings, you could also say because setup takes now 20 steps and it use to take 30 steps, we could potentially say that:

30 x 30 = 900

20 x 30 = 600

Thats 300 steps that are freed up because of the setup. And if we added those 300 steps into the 20 step method:

300 / 20 = 15

You can now do 15 more processes now because of the time you saved him/her from his/her normal process time. So instead of being only able to do 30 processes a day, the worker can do 45. MORE MONEY! I'm not going to get into more specifics because then that would make me think too much at this hour in the morning.

Hope this helps to get some ideas going. Maybe I'm doing this wrong and someone else has a better solution, but I try :P

[David Dodd]

I know there is a standard to convert feet to steps and then to sec but I couldn't find it.

I don't know of a generic and reliable formula for converting saved travel distance into dollars. There may be one, but I haven't seen it. Cost savings from reduced travel (movement) are process specific. For example, let's assume that the process involved is a press changeover (makeready). The current time required for the makeready is 20 minutes. Now, let's assume that you apply two lean tools to the press work area. First, you conduct a 5S project to clean and organize the work area. Then, you use SMED/Quick Changeover techniques to reduce the makeready time. After these projects are completed, the time required for makeready is 12 minutes. If the hourly cost rate for the press is $300, the "cost savings" produced by these two projects would be $40 per makeready. Not all of these savings can be attributed to the elimination of excessive travel, but the odds are that a significant portion of the savings did result from the elimination of unnecessary movement. (By the way, the hourly rate for your press is probably not accurate, but that gets us into a whole new discussion. At any rate the relative improvement would be accurate.) Also, the cost savings are not the most important benefit produced by these improvements. The most important benefits are improved throughput speed and the creation of "new" production capacity.

Hope this helps.