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Part 2: A New Approach to Manufacturing ROI (With Examples)

By: Simon Spencer

July 31, 2020

Part 2: A New Approach to Manufacturing ROI (With Examples)

It's impossible to calculate the ideal ROI in manufacturing without digital work instructions. The savings and benefits that work instruction software provides are miles apart from the regular standard way of using paper-printed standard operating procedures.

We're going to look at a few examples of measurable attributes that can be used to demonstrate and prove why any company must go digital.

Be sure to read Part 1 our ROI series: What Is ROI? And 4 Strategies to Use When Calculating It

Paper! Paper Everywhere!

Using digital work instructions you can eliminate a lot of paper from your shop floor. In addition, by using data capture and approvals you can also eliminate all those QA documents that have a habit of disappearing. In the examples below, we start with a medium-sized manufacturing company and then look at a large medical production company.

ROI Example #1: Sheet Metal Manufacturer

Company X is an accomplished contract manufacturer that provides sheet metal components for its customer’s products. They produce approximately 50,000 subcomponents each month, which roll up into about 150 sell products.

Each subcomponent starts its life as a routing. In turn, each routing consists of a drawing (or two), a list of operations, and a group of sign off boxes which demonstrate adherence to process.

Stacks of Papers An average routing has the following

  • 2 drawings printed on A3 paper
  • 3 operation pages printed on A4 paper
  • 11 work instructions & approval pages printed on A4 paper

Just for the subcomponents, this comes up to a total of 100,000 printed A3 sheets of paper and 700,000 printed A4 sheets of paper per month!

After subcomponents come the assemblies. There can be approximately 7,500 assemblies for each of the 150 sell items. Each assembly routing and sell item routings can have the following average paper usage:

  • 5 drawings printed on A3 paper
  • 1 operations page printed on A4 paper
  • 11 work instructions & approval pages printed on A4 paper

For the assemblies and the sell item routings, this is a total of 38,250 A3 pages and 91,800 A4 pages for each assembly.

Money Saved By Going Digital

If our Company X was to go paperless by switching to digital work instruction software, they would save 138,250 pages printed on A3-sized paper and 791,800 printed on A4-sized paper. This means they would save approximately:

$4,598.20 (A3) + $9,501.60 (A4) = $14,099.80 per month ($60 for 5000 A4 - $83 for 2500 A3)

That is a massive amount of paper. And that is based on everything being perfect each time around. It ignores the process improvements and the updates to routings and work instructions which happen on a daily basis.

Simply switching your paper routings and work instructions into a digital format provides the potential for saving a lot of money.

Again, this is just a straightforward paper to digital exercise. It ignores all the other benefits which come from cleaning up your shop floor. (Covered in more examples later)

Paper vs Digital Instructions

ROI Example #2: Medical Equipment Manufacturer

Company Z is an OEM medical equipment manufacturer. They provide equipment which must meet FDA requirements and produce approximately 15,000 products per month. Every product must have a full device history record, including approvals and testing documentation.

Each device can end up with a large pile of paperwork. Each product must have a full device history record, including approvals and testing documentation. Each device can end up with a large pile of paperwork (which in a best case situation is 150 A4 papers!) all of which have to be archived for future reference for the life cycle of the product.

In the case of Company Z, they go through several binders of paper for EVERY product and the cost of paper alone is approximately $27,000 per month.

The company then has to archive the documentation. They are safely packed into boxes which are stored in a Raiders of the Lost Ark type of storage facility. Basically, good luck finding anything there.

When you add the costs of the storage facility, a digital approach is only the logical solution. Unlike paper prints, digital work instructions can be safely backed up to another location.

Disadvantages of Word Documents & PDFs

Let's pretend that your company is now completely paperless and all of your work instructions are in digital format. The only problem is that you are using Microsoft Word, Google Docs, or any other similar program.

Now, this isn't optimal because you are likely doing a lot of copying and pasting to make sure everything is correct.

After adjusting your image sizes, adding your text and saving as a PDF, the document in unmodifiable. Now, you have a folder full of work instructions, but which one is the latest version?

It would be much easier to use a specifically-designed work instruction software with built-in version control and access. With each module of our software, for instance, image sizes are automatically adjusted to the best size and only the latest approved version of the work instructions is available for shop floor.

Explore each VKS software module: Lite, Pro & Enterprise

Work Instruction Software vs. Other Document Editors

Face Masks Must Be Worn IconLet's pretend our friend Bob builds baseball bats. And when he isn't busy doing that, he is instead working wonders creating work instructions and quickly distributing it onto the shop floor within just a few clicks of his mouse.

In the past, Bob used Microsoft Word, busily copying, pasting, and editing images. As Bob's main focus was and still is safety, he would place an OSHA picture on each page of his work instructions to ensure everyone knew which pieces of protective equipment they needed to wear, along with the dangers contained within each process. His bats used to go through 10 processes with each one requiring him to spend 3 minutes adding the OSHA pictures.

By using digital work instructions, Bob now takes 10 seconds to perform the same task. He saves 28 minutes per bat just when it comes to adding pictures.

Did I mention Bob builds A LOT of bats? He creates about 20 work instructions a day. That amounts to about one hour of time saved per day.

Can you imagine saving an hour every day you are at work?

In the example above, we focused on one of the advantages of creating a work instruction in a specifically-designed software. In most cases, using the right tool for the job saves about 75% of the time creating work instructions.

This is because many of the activities you have to do aren't just related to making the work instruction. When you use a fully automated system, you save a lot of time and energy. You no longer need to find and replace the old version or walk the shop floor letting everyone know there is a new one available. And, you no longer have to update the links and URLS in your other systems.

It’s all just done for you.

If we look back the first ROI example of the contract manufacturer, then each year, their company process about 50,000 subcomponents with each on requiring 5 operations on average.

That’s 200,000 individual tasks, with each one requiring its own work instructions. Using the old-fashioned way of creating work instructions, it would take them 60 minutes for each one. After going digital, they spend less than 15 minutes on each one.

That’s savings of about 150,000 labor hours a year!

Efficiency ROI Calculation

Switching to digital work instructions yields excellent savings when it comes to both time and paper reduction. But what about execution? There are several ways to save when using a fully digital solution. Your operators do not have to search for the right information as it is presented in an intuitive user interface. Let's have a look at what happend when a senior operator, well-versed in all the intricacies of building an assembly, went head-to-head with a beginner employee. The results aren't what you may expect them to be.

ROI Efficiency

Example #3: Senior Operator vs. New Employee

The magic of digital work instructions is that there are automatic confirmations to prompt the operator to validate a critical item during the assembly.

To demonstrate our example, we set up two operators in the following way:

First, we provided a new employee with digital work instructions and all the necessary parts clearly identified. This individual had never assembled anything in their lives until this moment.

Then, we also gave a long-serving and highly respected assembler old-fashioned drawings, routings, and clearly identified parts.

Both workers started the same job at the same time and we used a stopwatch to record how long it would take them to build the same product

The new employee busily made progress, closely following the work instructions. They performed validations, applied labels and packed finished parts into boxes. Meanwhile, although slow at first, the senior employee gained momentum.

Once both employees finished, we compared the results.

On-Screen Instructions

Who Assembled Faster?

The new employee achieved a piece rate of 10 minutes per part. Keep in mind that the software monitored both the time it took to perform the entire job and how long it took for each part.

The senior employee started slowly and then gathered pace. At the end of their production run, they achieved a piece rate of 11 minutes per part.

From an efficiency standpoint, a new fresh employee achieved at 10% improvement in efficiency using digital work instructions that were clear and easy-to-understand.

Imagine a 10% efficiency improvement across all your departments.

The part used in this example was a simple assembly. If you then increase the complexity of the products or the process, you can gain even more in efficiency improvements with digital work instructions.

We also ran a similar experiment using origami. One group was asked to fold a piece of paper into a paper crane by looking at printed instructions, while the other group was given digital instructions. Can you guess which group failed and which succeeded?

ROI for Quality Improvement

Quality is king and poor quality costs a lot of money! With digital work instructions, you can build quality directly into your processes. This can be done by adding seamless prompts to validate dimensions and confirming the right parts are assembled in the correct order.

The example here is easy to see. Remember the two employee’s above?

Once each employee finishes, the boxes were ready to be sent to the eagerly waiting customers. But instead of shipping them directly to the customers, we first ran a quality inspection. Let's look at the results.

Results from the Quality Inspection

The new employee, who followed concise digital work instructions with built-in quality checks achieved a fantastic 100% OK rate! The feeling of pride from that employee was great!

Quality ControlThe senior employee, unfortunately placed a label upside down on each part. All the parts had to be unboxed, the labels had to be removed (you know, those really difficult-to-remove labels…) and new ones had to be placed the right way.

Although the senior was displeased, they appreciated the value the electronic work instructions in demonstrating the error. Of course, this was not the employee’s problem!

Any self-respecting company must provide the best tools, so they can achieve great things with each and every one of their employees.

And this is why every company needs digital work instructions to maximize ROI.

On a different level, the digital work instructions provide a stable process in which you can continue to build better, higher quality products.

On average, companies that implement digital work instructions achieve improvements straightaway. It's also important to remember that different companies will see varying results. While a seasoned company already using some for of paper or digital work instructions may see improvements of up to 20%, a manufacturing company without any work instructions at all will see up to 90% improvements in quality.

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