This document ranks potential profit improvement opportunities for a company by estimating the annual waste in dollars associated with each opportunity. It provides formulas to calculate waste from unplanned downtime, process changeovers, excess inventory, transportation inefficiencies, defects, non-value-added processing, and underutilized capacity. The document aims to help companies quantify opportunities and prioritize areas that could save the most money annually if waste was reduced.

1. Rank Your Profit Improvement Opportunities in Dollars ($)
Company/Area Team Date
'www.RobertLWebb.com
Patrick. A. Ferguson, copyright 2010
Rank Waste Type Estimate Formula Annual Waste in ($)
Unplanned Downtime Average Hourly Process
Months per Year Waste ($) per year
Waiting Hours per Month Rate ($) Machines+Labor
(Unplanned Downtime) X X 12 =
Process Change/Setup Average Hourly Process
Months per Year Waste ($) per year
Waiting Hours per Month Rate ($) Machines+Labor
(Process Change/Setup) X X 12 =
Total Number of Average Annual Cost ($) Estimated Percent (%) of Time
Waste ($) per year
Waiting Process Support Personnel per Support Person in Waiting Waste
(Support Personnel) X X =
Total Current On-Hand Calculated Inventory Level ($) Hard savings estimate from
Waste ($) per year
Inventory ($) Raw+WIP+FG at your target Turn Rate inventory reduction (30%)
Inventory
( - ) X 0.30 =
# of Forklifts (or similar) Annual Total Cost ($) Measured or Estimated
Waste ($) per year
Transportation in operation per Lift w/Fuel+Drivers Waste Level (%)
(On-Site Material Moving) X X =
Shuttling Costs ($) per yr. Cost ($) of Transportation Expedited Freight surcharge
Waste ($) per year
Transportation Transport + Labor + Ovrhd. Errors and Delays per yr. Cost ($) per year not billable
(Shuttling, Error/Delay, Expedite) + + =
Packaging discards & trash Excess Utility & Natural Resource Environmental impact or
Energy & Waste ($) per year
handling+ disposal Cost ($)/yr. consumption Cost ($) per yr. related Costs ($) per year
Natural Resources + + =
Estimated Scrap Average Cost ($) per Lb./Pc. Scrap Handling, Disposal
Waste ($) per year
Defects (Lbs. or Pcs.) per year including added value and Other Costs ($) per yr.
(Scrap) ( X ) + =
Average Rework Time Total Cost ($)
Annual # of Items Reworked Waste ($) per year
Defects per Item (Hours) per Rework Hour
(Rework) X X =
Total Number of Average Annual Work Time (%)
Waste ($) per year
Defects Inspection & Test Personnel Cost ($) per Specialist not billable
(Inspection & Testing) X X =
Annual Cost ($) of Service Annual Warranty Credits & Annual Cost ($) of Returns
Waste ($) per year
Defects and Field Repair not billable Forgiveness Discounts ($) and Lost Business
(Customer Received) + + =
Average Annual Cost ($) Est. Percentage (%) of Time
Total Number of Employees Waste ($) per year
per Employee Spent in Motion Waste
Motion
X X =
Extra Processing Hours per Average Hourly Process
Months per Year Waste ($) per year
Processing Month above known method Rate ($) Machines+Labor
(Process Inferiority) X X 12 =
Run Hours per Month on Average Hourly Process
Months per Year Waste ($) per year
Processing process steps not billable Rate ($) Machines+Labor
(Non-Value Added) X X 12 =
Operating Waste Reduction Opportunities Total = $ per year
Module inventor: PatrickFerguson@charter.net CPA, Editor, Contributor, assistance contact: Bob@RobertLWebb.com
Market Share Waste Editor, Contributor: chuck.beasley@tennessee.edu Products: www.AnythingLean.com Discount code: WEBB
Underutilized People, Total Attainable Attainable Market Share Average Target
Waste ($) per year
Market Volume ($) per year Available (%) to Capture Profit Margin (%)
Capacity, Special Skill
or Innovation X X =