This document provides examples of how to monetize potential improvements from various initiatives. It shows how to calculate the estimated monetary value of reducing accidents, improving productivity, quality, on-time delivery, lead time, inventory levels, set-up times, travel time, motion time, waiting time, and processing time. For each area, it outlines the relevant factors to consider and provides an example calculation of the estimated monetary savings.

1. Monetizing Safety Example
Incidents Per Year 10
Estimated Accident Related Costs/Accident ($) $3,000
Estimated Safety Improvement (%) 50%
Estimated Safety Improvement Monetized $15,000.00

2. Monetizing Productivity Factors
Estimated Units/Year
Average Labor Hrs/Unit
Average Labor $/Hour
Average Benefit Rate
Percent OT per week
OT Premium %
Targeted Productivity Improvement %
Annualized Over Time Productivity Savings
Annualized Straight Time Productivity Savings
Total Monetized Productivity Savings

3. Monetizing Productivity Factors
If OT% > Prod Impr % If OT% < Prod Impr % If no OT in the area
Estimated Units/Year 20,000 20,000 20,000
Average Labor Hrs/Unit 2 2 2
Average Labor $/Hour $18 $18 $18
Average Benefit Rate 30% 30% 30%
Percent OT per week 15% 15% 0%
OT Premium % 50% 50% 0%
Targeted Productivity Improvement % 10% 20% 10%
Annualized Over Time Productivity Savings $140,400 $210,600 $0
Annualized Straight Time Productivity Savings $0 $46,800 $93,600
Total Monetized Productivity Savings $140,400 $257,400 $93,600

4. Monetizing Quality Factors
Production days/Year
Current Defects/Day
Material Scrap Cost/Unit
Labor Hours/Unit When Scrapped
Labor Cost/Unit When Scrapped
Total Cost When Scrapped
Rework Hours/Unit
Rework Labor $/Unit
% Quality Improvement
Monetized Quality Improvement

5. Monetizing Quality Example
Defect A Defect B Defect C
Production days/Year 230 230 230
Current Defects/Day 10 5 100
Material Scrap Cost/Unit $25 $0 $0
Labor Hours/Unit When Scrapped 0.50 $0 $0
Labor Cost/Unit When Scrapped $11.70 $0.00 $0.00
Total Cost When Scrapped $37 $0 $0
Rework Hours/Unit 0 2 0.25
Rework Labor $/Unit $0 $70 $6
% Quality Improvement 50% 50% 50%
Monetized Quality Improvement $42,205 $40,365 $67,275

6. Monetizing OTD Factors
Current OTD Performance
Best Competitor's OTD Performance
Sales Growth/Point OTD Improvement
Op Margin %
Annual Expedite Shipping Freight Fees
Targeted OTD Improvement (Points)
Annualized Monetized OTD Improvement

7. Monetizing OTD Example
Current OTD Performance 80%
Best Competitor's OTD Performance 95%
Sales Growth/Point OTD Improvement $100,000
Op Margin % 40%
Annual Expedite Shipping Freight Fees $40,000
Targeted OTD Improvement (Points) 5
Annualized Monetized OTD Improvement $213,333

8. Monetizing Lead-Time Factors
Current Lead-time (Days)
Best Competitor's Lead-time (Days)
Sales Growth/Day of Lead-time Improvement
Op Margin %
Targeted Lead-time Improvement (Days)
Annualized Monetized Lead-time Improvement

9. Monetizing Lead-Time Example
Relevant for Make to Order Business. If
Make to Stock, presumably Lead time is
not an issue regarding growth
opportunities
Current Lead-time (Days) 20
Best Competitor's Lead-time (Days) 15
Sales Growth/Day of Lead-time Improvement $150,000
Op Margin % 40%
Targeted Lead-time Improvement (Days) 5
Annualized Monetized Lead-time Improvement $300,000

10. Monetizing Inventory Factors
Relevant Area Inventory Value
Weighted Average Cost of Capital (WACC)
Targeted Area Inventory Reduction %
Monetized Cash Flow Improvement
Monetized Cost of Capital Improvement

11. Monetizing Inventory Example
Relevant Area Inventory Value $2,000,000
Weighted Average Cost of Capital (WACC) 13%
Targeted Area Inventory Reduction % 30%
Monetized Cash Flow Improvement $600,000
Monetized Cost of Capital Improvement $78,000

12. Monetizing Set-Up Factors
Production Days/Year
Set Ups/Day
Average Time Saved/Set Up (minutes)
Set Up Time Saved/ Year (Hours)
Average Benefit Rate
Percent OT per week
OT Premium %
Annualized Set Up Over Time Savings
Annualized Set Up Straight Time Savings
Total Monetized Set Up Savings

13. Set-Up Monetization Example
Remember to Monetize
OTD or Lead Time if
applicable
If Improvement Is from OT
If Improvement Is from
Straight Time
Production Days/Year 230 230
Set Ups/Day 3 3
Average Time Saved/Set Up (minutes) 15 15
Set Up Time Saved/ Year (Hours) 172.5 172.5
Average Benefit Rate $18.00 $18.00
Percent OT per week 30% 30%
OT Premium % 50% 0%
Annualized Set Up Over Time Savings $6,054.75 $0.00
Annualized Set Up Straight Time Savings $0.00 $4,036.50
Total Monetized Set Up Savings $6,054.75 $4,036.50

14. Monetizing Travel Factors
Production Days/Year
Distance Saved Per day (feet)
Distance Saved Per year (feet)
Walking or Driving Speed (feet/second)
Travel Seconds Saved Per Year
Travel Hours Saved Per Year
Average Labor $/Hour
Average Benefit Rate
OT Premium %
Monetized Travel Savings

15. Monetizing Travel Example
Production Days/Year 230
Distance Saved Per day (feet) 1,000
Distance Saved Per year (feet) 230,000
Walking or Driving Speed (feet/second) 5
Travel Seconds Saved Per Year 46,000
Travel Hours Saved Per Year 13
Average Labor $/Hour $18
Average Benefit Rate 30%
OT Premium % 50%
Monetized Travel Savings $449

16. Monetizing Motion Factors
Production Days/Year
Units/Day
Motion Time Saved Per Unit (Seconds)
Motion Time Saved Per Year (Seconds)
Motion Time Saved Per Year (Hours)
Average Labor $/Hour
Average Benefit Rate
OT Premium %
Monetized Motion Savings

17. Monetizing Motion Example
Remember to
Monetize Safety if
applicable
Production Days/Year 230
Units/Day 120
Motion Time Saved Per Unit (Seconds) 15
Motion Time Saved Per Year (Seconds) 414,000
Motion Time Saved Per Year (Hours) 115
Average Labor $/Hour $18.00
Average Benefit Rate 30%
OT Premium % 50%
Monetized Motion Savings $4,036.50

18. Monetizing Waiting Time Factors
Production Days/Year
Units/Day
Waiting Time Saved Per Unit (Seconds)
Waiting Time Saved Per Year (Seconds)
Waiting Time Saved Per Year (Hours)
Average Labor $/Hour
Average Benefit Rate
OT Premium %
Monetized Waiting Savings

19. Monetizing Waiting Time Example
Production Days/Year 230
Units/Day 120
Waiting Time Saved Per Unit (Seconds) 15
Waiting Time Saved Per Year (Seconds) 414,000
Waiting Time Saved Per Year (Hours) 115
Average Labor $/Hour $18.00
Average Benefit Rate 30%
OT Premium % 50%
Monetized Waiting Savings $4,036.50

20. Monetizing Processing Factors
Production Days/Year
Units Per day
Processing Savings/Unit (seconds)
Processing Savings/Day (seconds)
Processing Savings/Year (hours)
Average Labor $/Hour
Average Benefit Rate
OT Premium %
Annualized Processing Labor Savings
Est Tooling/Supplies Savings per Day ($)
Est Maintenance Savings per Day ($)
Monetized Processing Savings

21. Monetizing Processing Example
Production Days/Year 230
Units Per day 120
Processing Savings/Unit (seconds) 20
Processing Savings/Day (seconds) 2,400
Processing Savings/Year (hours) 153
Average Labor $/Hour $18.00
Average Benefit Rate 30%
OT Premium % 50%
Annualized Processing Labor Savings $5,382.00
Est Tooling/Supplies Savings per Day ($) $15.00
Est Maintenance Savings per Day ($) $10.00
Monetized Processing Savings $11,132.00