Process Improvement: Making Big Savings with Small Changes

Most of us would agree there are countless opportunities to optimize processes all throughout our organization. But what often gets overlooked is the significant impact that even slight improvements can have on our bottom line. That’s why we created a Process Improvement Savings and Return on Investment Calculator. By using a tool like this, we can quickly see the dollar value savings associated with even the smallest process improvement throughout our organization.

Process Improvement Savings Calculator

You can access the calculator for free and at any time: https://thecrysler.club/process-improvement-savings-calculator/

How does it work?

We must first start with a specific process as our focus because we need to know a couple of key details that will lead to potential savings:

1. Current Time – This is the total time it takes to execute the specific process we have already identified.
2. Number of Times – This is the total number of times the process is executed.
3. Per – This is the unit associated with the Number of Times input.
4. Hour Rate – This is intended to be the fully burdened hourly rate (labor + overhead). Please note you can use only the labor rate if that is all you have available but understand the results will not accurately reflect the potential savings.
5. Investment – This is an optional field but will help you determine the ROI if an investment is required to achieve your anticipated Future Time.
6. Future Time – This is what you anticipate the time to take in the future given the ability to implement specific process improvements.

After inputting this data, the calculator will provide you with an estimate of the financial impact of the process improvement. This estimate only captures the anticipated cost savings, less any investment that will result from the process improvement. Depending on the specific improvement selected, you may anticipate additional revenues that would impact your financial statements as well.

Real-World Examples

To give you a better sense of the potential impact of small process improvements, let’s look at some real-world examples:

• Example 1: A distribution center has a process for unloading trucks that takes an average of 10 minutes per truck. By making a small change to their staging area, they’re able to reduce the time to 8 minutes per truck. With 30 trucks arriving per day, that’s a savings of 60 minutes per day, or 300 minutes per week. At an hourly rate of $65, that’s a savings of $350 per working weeks, or nearly $17,000 per year.
• Example 2: A manufacturing plant has a process for assembling a product that takes an average of 30 minutes per unit. By reorganizing the workstations, and providing additional training to the team, they’re able to reduce the time to 25 minutes per unit. With 100 units produced per day, that’s a savings of 500 minutes per day, or 2,500 minutes per week. At an hourly rate of $100, and a capital investment of $25,000, that’s a savings of nearly $4,000 per week, or over $191,000 per year. The estimated ROI for implementing the change is over 750%.

Final Thoughts

Improving efficiency and profitability doesn’t always require major changes or huge investments. By recognizing the value of small wins and using tools like the Process Improvement Savings and ROI Calculator, you can start making incremental improvements that add up over time. The potential savings and ROI associated with even the smallest of process improvements might surprise you – so why not start exploring the possibilities today?

That’s it for today.

See you all again next week!

Dave