A MIE SolutionsWhite Paper                                            12872 Valley View St, Suite #8                      ...
Contents         Introduction                                Accurate job shop estimating is a criticalIntroduction       ...
independent of the actual run time      Quoting and ERP packages should providebecause once a machine is setup it      the...
As you prepare your estimate keepin mind lag time because it will be      Total Estimating Operation Timeused in schedulin...
Now let’s assume that widget A isvery large and it takes a forklift to     ((Handling Time / Quantity Manufacturedmove eac...
does not allow more parts to be           time and cycle time with all its details.produced until the inspectionoperation ...
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Introduction To Job Shop Estimating a MIE Solutions White Paper

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Accurate job shop estimating is a critical task in order to win more work which is profitable. The process being when a request for quote (RFQ) or request for proposal (RFP) is received from a potential buyer. The process of replying to an RFQ is what we define as quoting or estimating. A reply needs to be accurate and take into account many factors to be competitive. You can estimate and quote jobs using paper and pencil, a spreadsheet or software specifically designed for estimating made-to-order or engineer-to-order products. In this very competitive market I suggest using an estimating software package in order to be most competitive. In this paper we will outline some of the definitions used during the estimating process and explain how they are potentially used to derive your quote.

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Transcript of "Introduction To Job Shop Estimating a MIE Solutions White Paper"

  1. 1. A MIE SolutionsWhite Paper 12872 Valley View St, Suite #8 Garden Grove CA 92845 (714) 786-6230 Website : http://www.mie-solutions.com Blog : http://jobshopestimating.wordpress.com Introduction To Job Shop Estimating David Ferguson President Date 7/20/2009
  2. 2. Contents Introduction Accurate job shop estimating is a criticalIntroduction 2 task in order to win more work which isWhat is Setup Time? 2 profitable. The process being when a request for quote (RFQ) or request forWhat is Lag Time? 3 proposal (RFP) is received from a potentialWhat is Cycle Time? 4 buyer.What is Handling Time? 4Handling Inspection Time? 5 The process of replying to an RFQ is what we define as quoting or estimating. A replyFinal Result 6 needs to be accurate and take into accountSummary 6 many factors to be competitive. You can estimate and quote jobs using paper and pencil, a spreadsheet or software specifically designed for estimating made-to-order or engineer-to-order products. In this very competitive market I suggest using an estimating software package in order to be most competitive. In this paper we will outline some of the definitions used during the estimating process and explain how they are potentially used to derive your quote. What is Setup Time? In order to begin a detailed look into quoting and estimating we will start by giving some definitions. Setup Time Setup time is the time it takes to make the first accepted piece which includes bringing all the tools, jigs and fixtures, setup those jigs and fixtures for a particular batch quantity. Operation run time or cycle time is the time spent to complete each unit through the machine. Setup time can be simple or complex and it really depends on the process being performed. Setup time is usuallyDate 7/20/2009
  3. 3. independent of the actual run time Quoting and ERP packages should providebecause once a machine is setup it the capability for these setup time variationscan be continually run without in order to allow your estimating , costingsetting the machine up a second and even scheduling to be as accurate astime. Setup time can actually be possible.broken down into a few categories. What is Lag Time?Staging Time The four areas that were spoken aboutThe time required to gather where staging time, setup time, transitmaterials, dies or any other time and tear down time. Each one of theseequipment required to get the 4 processes actually would add costs to anmachine running. Staging can estimate. Lag time does not add costs to anpotentially be performed during the actual estimate under most circumstances.running of another job through the When there are dependencies betweenmachine because it may not actually operations, delays in handling,require the machine to be available. transportation, transmission or thinkingA simple definition is time spent on time, etc. between operation steps we refera machine or process prior to a to this as lag time.manufacturing run. Lag time does not usually add costs to aSetup Time operation step because there is no activity actually being performed except for takingThe time required to bring this up space on the manufacturing shop floor.production batch quantity to an If there were large lag times you mayactionable state. consider putting a dollar value on the floorTransit Time space but this may be overkill during the quoting and estimating process.Transit time is the time to move aparticular batch quantity to another On the other hand lag time is a critical factorstep in the process. during scheduling of a job shop. This lag time is critical in ERP/MRP systems inTear Down Time order to properly handle dependencies between operation steps. The objective isThe time required to remove all the to minimize the time a job is sitting idle withequipment that was required to be no work being performed. Reducing cyclesetup on the machine making it ready time by decreasing the queue time betweenfor the next process. A job may manufacturing steps is a basic principle ofcontinue to the next operation during lean manufacturing to reduce work inthe tear down time because this time process inventory.does not affect the actual job, onlythe machine. A simple definition is Quoting and Estimating is not an areathe time to take down a machine or where lag time is usually considered becauseprocess after a manufacturing run. there are direct costs that could be attributed.
  4. 4. As you prepare your estimate keepin mind lag time because it will be Total Estimating Operation Timeused in scheduling the job shop. Setup Time + Cycle TimeWhat is Cycle Time? orOne of the most difficult aspects ofestimating is figuring out what the (Staging Time + Setup Time + Transit Timecycle time may be for a process. + Tear Down Time) + (Handling Time *There are many factors which affect Run Time) * Quantity To Be Producedthe cycle time which are not fixedincluding skill level of the person Estimating your cycle times is a critical arearunning the machine, reliability of for any manufacturer to be profitable.the machine, maintenance of themachine, inspection of the parts What is Handling Time?being run, the quality of the materialand others. Handling time is defined as the time it takes during the cycle time phase of production toCycle time is defined as the handling move the material in place to begin a step and the time to remove the material at thetime + run time. end of the step.Handling time is the time spent as The basic formula for estimating cost isthe operator loads and unloads thepart being manufactured from the Cycle Time Per Piecemachine. (Handling Time + Run Time) Under many situations there is a one-to-oneRun time is the time the operator relationship between the run time and thespends at the machine running the handling time.part or the time the machine isrunning by itself, i.e. a cnc machine. Examples Let’s say you are fabricating 1000 widgets.Some operations require the operator Each widget must go through the step ofto be present during the running of forming, which is basically bending thethe part and others do not. material. If it takes an employee 30 seconds to form each widget, the estimatedThe basic formula for estimating an run time would be 30 seconds per piece.operations cost is The handling time is in direct correlation to the run time because you are forming a single widget at a time. In this situation you include the handling time into the runCycle Time Per Piece time or keep it separate for more accurate reporting.(Handling Time + Run Time)
  5. 5. Now let’s assume that widget A isvery large and it takes a forklift to ((Handling Time / Quantity Manufacturedmove each piece into the forming Per Handling Time) + Run Time)machine. In this situation the runtime may be 30 seconds because that Handling Inspection Time?is the time it takes to form widget Aonce it’s in the machine. The Inspection is a category of the cycle timedifference is the handling time is which is not normally considered during themuch larger because it may take 5 quoting process. I mentioned earlier thatminutes to setup and remove widget the following formula which is normallyA from the machine. Separating the used for machine time quoting which is forhandling time and run time out in sheet metal, machine manufacturing,this situation becomes a bit more assembly and pretty much any other process.valuable because the handling timetakes such a large portion of the Cycle Time Per Pieceactual cycle time. (Handling Time / Quantity ManufacturedLast example is you have a widget A Per Handling Time) + Run Time)that needs to be cut on a laser. Alaser machine in my example is a One piece of information that is missingmachine where you put a sheet of from this formula is how to handleraw material onto it which then the inspection time. Inspection time can belaser can cut out 1 or more widget included on the estimate in a variety ofA’s on a single sheet. Let’s say to ways.cut widget A the run time is 3minutes per part. Each widget A 1. Inspection time could be included in thetakes the same amount of time to cut run time because the employee may be ablebut in this situation the handling time to actually inspect the parts beingis not one to one with each widget A. manufactured as the machine is running. In The reason for this is the laser cuts the machining and sheet metal type ofmultiple pieces of parts out of a machinery this would work for lasers,single sheet. The handling time is turning machines, mills and lathes. Theseactually the time it takes to load the machines usually do not require 100%sheet into the machine and then the dedication of the employee as they watchtime to remove the widgets from the the part being processed by the machine.sheet and machine when the widgetshave been cut. Handling time is 2. Inspection time could be included as partactually the time it takes to load the of G&A overhead. There could be a basicsheet divided by the number of parts markup that is added to the quote to handlea sheet makes. inspection time.The new cycle time formula is 3. Inspection time can be a separate operation. In this situation while theCycle Time Per Piece inspection operation is being performed it
  6. 6. does not allow more parts to be time and cycle time with all its details.produced until the inspectionoperation is complete. An example The setup formula again isin the sheet metal and machiningorganization would be first articles. (Staging Time + Setup Time + Transit Time First article inspections are required + Tear Down Time)before the production run could bestarted. This ensures that the parts The cycle time formula isare made accurately. (Handling Time * Run Time) *( Quantity To4. Inspection can also be done Be Produced)+(Inspection Time*Quantityduring the actual production run for Of Parts Inspected)SPC. The operation formula becomesEstimating software for industriessuch as metal quoting, machine shop (Staging Time + Setup Time + Transit Timequoting, sheet metal quoting, + Tear Down Time)stamping need to be able to handle + (Handling Time * Run Time) *( Quantitythese different situations. If these To Be Produced)+(Inspectiondifferent situations. If these Time*Quantity Of Parts Inspected)scenarios are handled by yourestimating software you will be able Cost estimating using good estimatingto manage any time of quote that software tools makes producing accuraterequires inspection. quotes much simpler. The formula given is only the first step in learning how toFinal Result estimate.Calculating the entire operation costs Summarydepends on both setup and cycle MIE Solutions provides software for thetime. In order accurately estimate manufacturing industry including quotingyour costs to complete a job you and estimating, ERP, asset management andmust be as accurate as possible B2B supply chain software. You canduring the estimating process. If download a trial version of the quotingyou spend too much time estimating software MIE QuoteIt at the following webyou will be burning a lot of cycles addresswhich costs money. If you do notaccurately estimate you are http://www.mie-solutions.com/mie/index.php/MIE- QuoteIt/potentially losing jobs and or losingthe job you one because it costs more Please visit my blog at the following addressto produce then you have estimated. where we talk about everything dealing with quoting and estimating.It is now time for the final formula tobe realized which includes setup http://jobshopestimating.wordpresssolutions.com

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