Guest Column | June 18, 2015

Knowing Changeover Costs: First Step To Gaining Control

By John Henry,

John Henry

How much are you willing to pay to reduce changeover time by 30 minutes? If you don't know how much those 30 minutes cost, it is hard to give a meaningful response. If you don't know your changeover costs, you aren't alone.

I've been asking this question of clients and groups for more than 20 years. In my experience, less than 20 percent of companies know the answer. In my last column, I addressed the high cost of changeover and the benefit of using SMED (single minute exchange of dies, as explained in my last column) to reduce it.

Downtime’s Biggest Cost: Lost Sales

There are a number of costs associated with changeover in particular and downtime in general. Not all of them apply in all cases. If a process is running  24/7, any stoppage represents lost sales that will be difficult, if not impossible, to make up. A plant running 40 hours a week can make up lost production by running overtime. This incurs additional operational costs, which probably are less than the cost of lost sales. You need to decide how to apply and weight these various costs in arriving at a final dollar-per-hour figure that can be used for financial evaluations.

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