Return on Investment of Ergonomic Solutions

Express Singled  2Many manual material handling (MMH) operations managers wait until a problem arises before he or she seeks out ergonomic change. This mistake is not only more expensive in the long run to fix, but it also costs the company valuable production time that could be saved through ergonomic improvements. According to “ROI of Ergonomic Improvements: Demonstrating Value to the Business” a presentation by Winnie Ip, Director of Consulting at humantech, reacting to ergonomic-based problems is the least effective way to run a business. Reactive and preventative ergonomics simply manages musculoskeletal disorders. The most efficient and effective warehouse and manufacturing operations are those run by managers who have proactive and advanced ergonomic systems.

As with anything, justifying the cost of such change is what makes managers more likely to advance beyond the reactive and preventative levels of ergonomic change. Ip’s presentation outlines several considerations when figuring ROI.

Time

As stated in previous articles and in the humantech presentation, time is converted directly into money. Even achieving a savings of a few mere seconds per task will add up. Ip wrote in her presentation, “In the manufacturing environment time is the dominant currency. And we know that awkward postures, high forces and repetitive movements take more time to complete.” The two examples Ip gave were reaching and walking.

For reaching, she diagrammed a person and his reach zone. The closest zone is 0-6 inches from the body. The remaining four are 6-12, 12-18, 18 -24, and 24-30 inches away from the body. As a person reaches farther away, a round-trip movement costs an extra .2 seconds per each new zone. This may not seem significant, but in a case study presented by Ip, taking .8 seconds off of one task provided a total time savings of 32 minutes per shift.

With walking, time spent is more obvious. Every unnecessary step wastes valuable seconds. Time lost from walking can occur when: there is not a continuous product flow, multiple trips with product can be condensed, product/object moved is too heavy for number of people moving it, too many people are taking time to do one task, and more.

Examples of Improvement

There are many ways that companies can ergonomically redesign a task or workstation that will cost little to nothing. The question is whether doing more than that – and likely making an investment in equipment – is really worth it.

Ip highlights a case study in which an assembly operation required the worker to reach to use a torque wrench. Injury had not yet occurred (though it very likely will later), so the company had not made any ergonomic changes to the task. The ergonomics team that analyzed the task came up with short and long-term solutions.

The short-term solutions consisted of simply lowering the wrench and moving the screw bin closer. Point four (.4) seconds were saved with each improvement, and the plan cost nothing. This resulted in a time savings of 32 seconds per shift.

The long-term solution was to purchase a self-feeding driver, costing $2,500. This saved 128 minutes each shift.  This resulted in an annual savings of $6,162, meaning that the payback took less than five months. In this example, the three-year ROI was 639%.

Other successful examples offered in Ip’s presentation:

  • Honda’s fender finishing operation – 30 minute cycle time. They reduced reaches, handling, and scrap to improve their cycle time by 50% (15 minute cycle time).
  • Dow Corning was losing $30,000 in revenue from chipped blanks because of a certain drill process. After investing in an articulating arm to transfer lens blanks, they reduced their defect rate by 75%.

Remember, none of the three examples above were measures taken in response to an injury. Ergonomic improvement shouldn’t be on hold until there is a worker’s compensation issue.

Calculating ROI

Page 40 of the presentation gives equations to calculate the ROI from ergonomics.  They consist of:

  • For projected productivity impact, divide the total time savings by the total operation time. Multiply this by 100 for your percentage. [(total time savings)/(total operation time)] x 100 = %
  • For annual savings, multiply productivity impact by annual direct cost. (productivity impact) x (annual direct cost)
  • For the payback period in years, divide the cost of improvement by annual savings. (cost of improvement)/(annual savings)

For more details on this presentation, visit http://www.asse.org/practicespecialties/ergonomics/docs/ROI%20of%20Ergonomic%20Improvements.pdf

If you’re looking for equipment that reduces certain reaching and walking, look into a Load Mover power tugger. These machines are used in multiple industries for pushing and pulling tasks (often of heavy bins/items). They are popular with companies who switch to lean, green, and just-in-time operations; they are reported to spare employees of injury and improve productivity significantly. Their applications vary immensely. For more information on Load Movers, search this site, email info@loadmoverinc.com, or call 952-767-1720.