“But Paul, it’s too expensive to put a computer at each of my work centers! I just can’t afford that. Right now my employees track their time with a shared computer we already have out in the shop.”
I hear this objection all the time when discussing what’s involved with going paperless and using ProShop. They are typically using just paper only, or another paper-traveler-based ERP and they have a couple of shared terminals in the shop to track time and log parts on their jobs. On the face of it, it’s a legitimate concern. If you spend $350 on a computer and mounting hardware for 15 CNC machines, that’s over $5K! That’s a good chunk of change. But let’s dig into the real numbers and see if it is actually that expensive
I’ll start by giving credit to Gary Connor for his awesome article on the “ROI of Lean“. His article was inspiring to me for being such a succinct and easy-to-understand approach to calculating the ROI of removing waste from an organization. I highly recommend you read it first.
Many shops have a paper-based ERP system, with shared terminals placed throughout the shop where employees can go scan into and out of a job, log the number of parts they made, etc. It’s a straightforward process and one they’ve done for years, so they are comfortable with it, and it’s kind of the expected behavior and cost of doing business. But, as Gary points out, if they crunch the numbers of the cost of this activity, they may think differently about it.
Let’s use a typical example of a shop with 18 machinists – 15 on days, and 3 on nights. (These numbers came directly from a Coastal Machine, a ProShop client who recently went fully paperless in the shop.) A low volume, high mix job shop. On average, each day, the employee has to go to the shared PC three times with an average of 2 jobs per day, once at the beginning of the day/job, and once at the end of the first job, where they also log into the second job, and then lastly once at the end of the shift. The process of walking from the CNC machine to the computer, doing the work at the terminal, and walking back only takes 3 minutes. (They say this is a very conservative number! We all know that those trips across the shop will invariably include stops to talk with someone, grab a coffee, or something else – and it could easily be 5-10 minutes before they get back to their machine!)
So those 18 machinists, running 5 days a week, with 3 round trips to the computer to track time/parts per day, multiplied by 3 minutes per trip, that’s 810 minutes per week, 13.5 hours per week, or 702 hours per year. At $30/hour per employee, you’re paying them a total of $21,060 per year just to walk back and forth to track time. And at $125/hour for machine time, that is $87,750 of lost revenue per year! So you’d be able to pay back the cost of the computers in about 3 weeks!
And this is just a drop in the bucket compared to the real cost of having machinists leave their machines to look for tooling, fixtures, job travelers, etc. By providing all necessary items, kitted, and prepped at a machine, along with digital visual work instructions, and digital inspection forms, it’s very possible to cut 50% or more out of a typical setup time. You can read a blog post about that here, and watch a webinar about it, and download a PDF guide here.
So in summary, the real cost of paper-based workflows, and shared computers is the mostly hidden cost of lost revenue and paying your employees to walk around your shop. You want them to keep your spindles turning as often as possible and making chips! Small investments to achieve that goal will always have a very positive ROI.