to invest or not to invest in a capital equipment

8/12/2019 To Invest or Not to Invest in a Capital Equipment

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ROI

• Traditional View Production Cost

• Now

Now

Production Cost

Output Quality,

SPC

Quick changeovers

Flexibility for various

components

Serviceability &

maintenance M/c Foot print



• Each Company has a different method of

calculating the ROI. It also depends upon

the Company’s 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 manpoweris 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



To Improve OEE We have totake corrective Action forMajor down times



Reduction in



Benefits:-SETTING

342

363430

550

356

805

439424

0

100

200

300

400

500600

700

800

900

A U G S E P O C

T N O

V D E C JA N F E B MA

R

MONTH

T O T A L T I M E ( h r s )

SETTING DOWN TIME-MARCH

55

49

3027

2119 19

17

84

0.58

0

10

20

30

40

50

60

S E T T I N G

S T A R T

S E T T I N G

E N D

P R O O V I N

G

M O U N

T I N G O

F W O R K H

O L D I N

G

W O R K

H O L D

I N G R E M O

V A L

S E T T I N G

A P P R

O V A L I N S

P E C T I O N

T O O L

O F F S E T

N O S E T T I N G

P E O P L E

D A I L I N G

O F W O R K H

O L D I N

G

A P P R

O V A L

T O O L

R E M O

V A L

DOWN REASON


Reduction in

Setting time

Different codes

used whilesetting

Customer

On Time Delivery 80% -95%.

Company

Productivity increased @ 90%. Setting time reduced from 179min -

76min.

OEE Improved 50%-55%.

Self

Morale improved.

Improved communication & Team

Work Skills.



Major down times(Aug-Mar)

3717

2826

2245

1667 1633 1569

1099 1049

715

0

500

1000

1500

2000

2500

3000

3500

4000

S E T T

M B D

I N S I I N

N L D

N O P

C R L

P R P

T C H

Down time

T i m e ( h r s )

Reduce Machine breakdowns

by using

My Machine Campaign Method



MACHINE JAN FEB MAR APR MAY JUN

LCX 4 1st WEEK 1st WEEK 1st WEEK 1st WEEK 1st WEEK 1st WEEK

LT 2 F2 1st WEEK 1st WEEK 1st WEEK 1st WEEK 1st WEEK 1st WEEK

MCV 320 2 1st WEEK 1st WEEK 1st WEEK 1st WEEK 1st WEEK 1st WEEK

COLT 1 2nd WEEK 2nd WEEK 2nd WEEK 2nd WEEK 2nd WEEK 2nd WEEK

LT 16 S 2nd WEEK 2nd WEEK 2nd WEEK 2nd WEEK 2nd WEEK 2nd WEEK


CUB 2nd WEEK 2nd WEEK 2nd WEEK 2nd WEEK 2nd WEEK 2nd WEEK


LT16 F1 2nd WEEK 2nd WEEK 2nd WEEK 2nd WEEK 2nd WEEK 2nd WEEK

WINNER XL 2nd WEEK 2nd WEEK 2nd WEEK 2nd WEEK 2nd WEEK 2nd WEEK

LT16 F2 1st WEEK 1st WEEK 1st WEEK 1st WEEK 1st WEEK 1st WEEK

LT 20 C 1st WEEK 1st WEEK 1st WEEK 1st WEEK 1st WEEK 1st WEEK

LT 20 F2 3rd WEEK 3rd WEEK 3rd WEEK 3rd WEEK 3rd WEEK 3rd WEEK


LT2 F1 3rd WEEK 3rd WEEK 3rd WEEK 3rd WEEK 3rd WEEK 3rd WEEK


LT 25 3rd WEEK 3rd WEEK 3rd WEEK 3rd WEEK 3rd WEEK 3rd WEEK

MCV 400 S 3rd WEEK 3rd WEEK 3rd WEEK 3rd WEEK 3rd WEEK 3rd WEEK

LT 16 J1 4th WEEK 4th WEEK 4th WEEK 4th WEEK 4th WEEK 4th WEEK

LT 16 J2 4th WEEK 4th WEEK 4th WEEK 4th WEEK 4th WEEK 4th WEEK

MVC 400 2 4th WEEK 4th WEEK 4th WEEK 4th WEEK 4th WEEK 4th WEEK

MCV 400 1 4th WEEK 4th WEEK 4th WEEK 4th WEEK 4th WEEK 4th WEEK

MCV 320 1 4th WEEK 4th WEEK 4th WEEK 4th WEEK 4th WEEK 4th WEEK

CHALLANGER 4th WEEK 4th WEEK 4th WEEK 4th WEEK 4th WEEK 4th WEEK

My Machine Annual plan



MBD DOWN TIME REPORT MONTHWISE

326

381

193

340

537

282250

210

0

100

200

300

400

500

600

A U G S E P O C

T N O

V D E C JA N F E B MA R

MONTH


By My Machine Campaign metodology,

reduction in Machine breakdown

Result:



Major down times(Aug-Mar)3717

2826

2245

1667 1633 1569

1099 1049 715

0

500

1000

1500

2000

2500

3000

3500

4000

S E T T

M B D I N

S I I N N L

D N O

P C R L

P R P

T C H

Down time

T

i m e ( h r s )

Improve 2S Better Planning

Tool Presetting



DWM

Suggestions

Kaizens

Why-Why

Analysis

Containerization Rack

removal

SMED

Poka

yoke

My Machine

3S

2S

1S

Techniques



5.Company

specifics

4.Product Quality/

TEI 3.VAPCO

2.OEE

1.ITR

PROFIT



Why-Why

analysis

MY MACHINE

SMED

2S

OEE



KAIZEN

SMED

MY MACHINE

2S

VAPCO



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 toachieve. 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 hera”

Be a Winner

to invest or not to invest in a capital equipment

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