Regardless of industry, manufacturing is about adding value to a product. However, measuring the value added to a product in process has proven challenging. Many manufacturers measure non-value adding activity instead, and use that as an indirect measurement of value. Others rely on the information generated by their ERP or accounting systems, but this data is not delivered in real-time and is often not empirical.
Value-Adding Activities (VAA) can be defined as any action that adds value throughout the production process. However, each industry measures value differently, which is why we have listed some industry-specific examples below.
To measure value-added activities, identify what actions add value to the product
For those in the welding industry, it is not uncommon for your value-adding activity to be the actual weld-time or the actual number of spot welds or tack welds made.
Within the CNC industry, spindle time is usually an accurate indication of value adding activity. Axis in motion, “machine in cycle” and “end of cycle” are often good secondary indications.
Through-beam sensors on a conveyor, part present sensors, test complete outputs – all could be indications of value adding activity being performed by machines or manual stations.
Value-added activity is measured either by:
Each industry will have a primary and secondary measurement for value-added activity which will always be measuring time or counting cycles.
Typically, the tool & die industry (CNC machine), custom shops, tooling, and mold shops measure using time as the primary method of measurement for an input such as spindle or axis. Measuring time is typically measured as a percentage value.
Calculations
To measure time as a percentage value, you typically use the following equation:
Running Time is made up of a sum of multiple run time segments, followed by one or more periods of inactivity, followed by more running time and inactive segments.
If you were to calculate “uptime” or “utilization” using the time option, the equation would look like:
Uptime (Shift)= Total Spindle Running Time (shift) / Scheduled Time (shift)
Uptime (last 60 minutes) = Total Spindle Time (last 60 minutes)/60
________
A secondary measurement for time can be:
The auto industry, production shops, injection molding, filling stations, bottling stations and presses performing repetitive operations typically use the cycle option as the primary method for measurement.
Calculations
Measuring cycles is typically measured by Rate using the following equations:
Rate = Cycles / Period of Time
Uptime = (number of minutes where cycle counter > set point)/time period
If secondary signals are available, yield can be determined:
Yield = Output (downstream) / Output (upstream)
________
A secondary measurement may represent value-added uptime using the input defined as count to determine what percentage of the day the machine was producing cycles in a value-added state.
FreePoint uses the Narrative Module to measure and visualize non-value-added activity using reason codes and reporting tools. Reason codes can be put in categories to help interpret the data and gain insights quickly.
Reasons for a machine not running generally fall into one of the following categories:
Manufacturers can typically expect to see additional productivity improvements ranging from 10-15%.
The key to FreePoint’s approach is to first make value-added work measurable and visible to everyone. This provides empirical data and makes everyone accountable for their “Value-Added Activity” today, this shift, this hour, or this period. Measuring and displaying value-added activity typically leads to productivity improvements by virtue of the ‘Hawthorne Effect’.
Everyone is accountable to themselves and their peers first, and then to management.
Accountability from measuring value-added activity typically results in improvements ranging from 10-15%.
Every manufacturing process has its own rhythm and cadence and it is important to know what “normal” or “healthy” looks like.
As far as Running Time, Uptime, or Utilization Time is concerned, a higher number is not always better. For instance, an old machine, running at a slower rate, will likely have a higher uptime and utilization time than a new machine. It is important to know why a machine is not running, and why its numbers may be low, whether it’s maintenance, no work scheduled, completed jobs early, or being set up for a new job.
Knowing the VAA (value added activity) of the machine is important. Knowing the reasons for the non-value adding activity is equally important.
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