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Roi of ergonomic improvements
1.
ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. The 30-Inch View ® ROI of Ergonomic Improvements: Demonstrating Value to the Business Winnie Ip, CPE Director of Consulting
2.
ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. Agenda Topics ● Introduction ● Cost Justification Methods • Regulatory Compliance • Health and Safety Performance • Production Enhancement ● Creating Business Value ● Calculating ROI ● Summary and Question Period
3.
ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. Why Are We Here? ● Tough times ● Save money ● Weather the storm ● Measurable gains ● Demonstrate value ● Stay on course ● Reduce costs ● Cash is king
4.
ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. Designing for Human Performance Ergonomics ● If we design workstations within the limits of human performance, we will… • Eliminate work-related musculoskeletal disorders • Maximize productivity • Enhance process stability and product quality
5.
ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. ● Ergonomics is an Engineering issue, not a Health & Safety Issue. • The majority of ergonomic issues are typically rooted in process and workstation design. • Ergonomic issues only become Health & Safety concerns once an injury has occurred. • Long-term fixes for ergonomic issues are typically related to engineering controls. IntroductionWhy Does Everyone Need to be Involved?
6.
ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. The Ergonomics Maturity Curve™ EHS & Medical Engineers / Designers EHS / Lean / CI EHS & Human Resources
7.
ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. Agenda Topics ● Introduction ● Cost Justification Methods • Regulatory Compliance • Health and Safety Performance • Production Enhancement ● Creating Business Value ● Calculating ROI ● Summary and Question Period
8.
ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. Regulatory Compliance • Regulatory Compliance • Health & Safety Performance • Production Enhancement ● U.S. Standards • Federal OSHA • General Duty Clause "every employer must provide a safe working environment for their employees" ● OSHA approved state plans • California State Ergonomics Rule ● Outside U.S. Standards • European Union Directives • Non-European Union country standards
9.
ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. Regulatory Compliance ● Why it’s not effective: • If your site’s incidence rates are below industry standards, management may believe that they are in a “no or low” risk situation for non- compliance. ● Let’s consider another approach… • Regulatory Compliance • Health & Safety Performance • Production Enhancement (Source: BLS, 2001)
10.
ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. Health and Safety Performance • Regulatory Compliance • Health & Safety Performance • Production Enhancement Average Costs of WMSD Incidents
11.
ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. $4 TO $10 INDIRECT COSTS $1 • Building damage • Tool and equipment damage • Product and material damage • Production delays and interruptions • Legal expenses • Expenditure of emergency supplies • Interim equipment rentals 2003 SALCON, Inc. All Rights Reserved • Investigation time • Wages paid for time lost • Cost of hiring and/or training replacements • Overtime • Extra supervisory time • Clerical time • Decreased output of injured worker upon return • Loss of business and goodwill INJURY & ILLNESS COSTS • Medical • Compensation Costs (Insured Costs) Incident Cost Iceberg • Regulatory Compliance • Health & Safety Performance • Production Enhancement
12.
ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. Health & Safety • Regulatory Compliance • Health & Safety Performance • Production Enhancement ● Why it’s not effective: • If there are no previous injuries, management may not see the urgency to improve the job ● Let’s consider yet another approach… There were ergonomic issues when reaching to a torque wrench in this assembly operation.
13.
ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. Production Enhancements ● Ergonomic improvements are more likely to be supported and accelerated if they can fit into a cost justification process. ● Leads to cost savings in many areas including: • Quality • Delivery • Production (measured at the workstation level) • Elimination of non-value-added tasks • Reduction in motion waste • Regulatory Compliance • Health & Safety Performance • Production Enhancement
14.
ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. Quality Improvements ● Cell re-design project for drill process ● Chipped blank = $30,000 revenue loss ● Installed an articulating arm to transfer lens blanks • Regulatory Compliance • Health & Safety Performance • Production Enhancement
15.
ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. Delivery Improvements Fender Finishing Operation • 30 minute cycle time • Awkward postures (> 28” reach) • Multiple handling (24 lifts/cycle) • High scrap rate • Built freestanding fixture and redesigned workstation • Reduced reaches (< 15”) • Reduced handling (2 lifts/cycle) • Reduced scrap by 83% • Reduced cycle time by 50% • Regulatory Compliance • Health & Safety Performance • Production Enhancement 2002 ErgoCup Winner Applied Ergonomics Conference Baltimore, MD
16.
ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. ● Introduction ● Cost Justification Methods • Regulatory Compliance • Health and Safety Performance • Production Enhancement ● Creating Business Value ● Calculating ROI ● Summary and Question Period Agenda Topics
17.
ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. ● How are companies achieving ergonomics excellence? • Key activities • Communications • Tools and training Creating Business Value
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ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. 2007, 2009, and 2011 Benchmarking Studies ● Involved large companies in: • Aerospace • Automotive • Health care products • Diversified products • Computer systems • Semiconductors ● Looked at: • Methods • Roles • Training • Metrics • Construction equipment • Industrial products • Pharmaceutical • Aluminum products • Steel products
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ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. Ergonomics Excellence - What to Expect
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ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. Benchmarking Study: Success Metrics Leading Indicators Measures that describe the prevention of future incidents include: ● Percent of job conditions with medium or high ergonomic risk ● Number of countermeasures implemented ● Ergonomic risk reduction ● Conformance of new equipment with ergonomic design criteria
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ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. Process Characteristics ● “C” level support and sponsorship ● Management system in place • Policy & Guidance Document • Clear roles and responsibilities • Accountability for metrics at all levels in organisation ● Data driven with the focus on risk management ● Heavy on engineering and workplace improvement ● Engage the workforce in the process ● Integrated with other company initiatives ● VISIBLE demonstration of value to the business
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ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. Ergonomics Risk Management – Visible Change
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ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. Ergonomics Risk Management – Visible Change
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ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. Lean/Continuous Improvement – Data Driven
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ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. ● 23 sites have implemented process ● All facilities trained in ergonomics process and tools ● Over 3,600 workplace improvements in place ● 2 year Total Incident Rate (TIR) reduction: • 67% EU • 48% NA tire • 55% Globally 111.0 97.0 58.0 0 50 100 150 Q1-05 Q1-06 Q1-07 Baseline Creating Business Value - Example
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ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. ● IR & WC Costs Decrease as Ergonomics Is “Designed In” Creating Business Value - Example 1999 2000 2001 2002 2003 2004 2005 2006 2007 ESI Project Ergo Guideline Ergo in DA Incident Rate Camry Solara Avalon Camry Workers Compensation
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ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. The Ergonomics Maturity Curve™ EHS & Medical Engineers / Designers EHS / Lean / CI EHS & Human Resources
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ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. ● Using Digital Assembly • Clearance, Reach, Fit, Posture can be checked for each part and process Product Design
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ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. ● Introduction ● Cost Justification Methods • Regulatory Compliance • Health and Safety Performance • Production Enhancement ● Creating Business Value ● Calculating ROI ● Summary and Question Period Agenda Topics
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ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. Business Reality 101 ● In today’s business climate any initiative that does not deliver measurable value is an option. ● Ergonomic improvements are more likely to be supported and accelerated if they can fit into a cost justification process. ● Time can be converted to money
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ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. Ergonomic Projects that Result in ROI ● Are effective in reducing hazard exposures • Eliminate risk • Engineering controls • Administrative controls • Work practices ● Are efficient in reducing hazard exposures • Start with low cost/high impact
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ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. Cost Justification ● 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 challenge is quantifying financial benefit of reducing force, frequency and posture.
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ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. Motion Waste – Reaching and Walking
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ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. Motion Waste – Reaching and Walking
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ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. Time Penalties for Reaching ● The STEP methodology uses reach arcs to define 5 zones ● Each reach zone is separated by a 6" (15 cm) increment ● Time penalties for each reach zone vary by 0.2 seconds each and are based on round-trip movements ● Other data you’ll need: • Time savings per cycle • # of cycles per hour • Burdened labour costs • Current production and quality numbers
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ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. Time Penalties for Reaching - Example
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ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. Time Penalties for Walking ● Time savings are assigned for each step eliminated for walking tasks. ● The first step, using to begin walking, corresponds to 0.8 seconds time penalty. ● Subsequent steps correspond to 0.5 seconds each.
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ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. 2 1 3 4 5 6 7 8910 Time Penalties for Walking – Example ● BEFORE: Poor Layout • Lack of continuous product flow • Excessive walking with product Current OQA/FQA Area Layout
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ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. Time Penalties for Walking - Example ● AFTER: • "U" – shaped work cells • Improved product flow • Reduced prolonged/ multiple handling • Motion savings = 34.8 seconds/cycle New OQA/FQA Area Layout
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ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. Check the Effects - Calculating Ergonomics ROI
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ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. Cost Justification – An Example ● There were ergonomic issues when reaching to a torque wrench in this assembly operation. Because there was no previous injury, management didn’t see the urgency to improve the job.
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ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. Cost Justification – An Example
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ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. Cost Justification – An Example ● After brainstorming, the ergonomics team came up with several solutions ● Short term solutions • Move bins closer • Relocate tool lower ● Long term solution • Self-feeding driver
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ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. Cost Justification – An Example • The ergonomics team was able to illustrate a 0.4 second time savings that would result by lowering the tool, in addition to improved working postures • In addition, the screw bin was relocated closer resulting in an additional 0.4 second time savings. • Cost: $0 Before After 0.4 seconds saved Short term solution: Relocate driver and parts bin closer
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ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. Cost Justification – An Example Reduce time on tasks by 0.8 seconds Total time savings = 32 minutes/shift
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ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. Cost Justification – An Example • The ergonomics team wanted to continue with improving the job and investigated installing a self-feeding driver • Cost: $2,500 Long term solution: Self-feeding driver
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ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. Cost Justification – An Example Eliminate 3 tasks = 3.2 Seconds Total time savings = 128 minutes/shift
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ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. Cost Justification – An Example ● Self-Feeding Driver • Elimination of 3 non-value-added tasks saves a total of 3.2 seconds • Cycle time is 12 seconds
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ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. Cost Justification – An Example ● Self-Feeding Driver • Conservative productivity impact is 17% • Direct labor cost = $29,000 / year • Benefits burden = 25% • Cost of the improvement = $2,500 = 17% (productivity impact) x $36,250 (annual direct cost) = $6,162 = $2,500 (cost of improvement) $6,162 (annual savings) = 0.4 years (4.8 months)
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ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. Calculating Return on Investment 3-Year ROI = 3-Year Savings – Initial Investment Initial Investment X 100% ● Self-Feeding Driver • Annual savings = $6,162 • Cost of the improvement = $2,500 3-Year ROI = (3 x $6,162) – $2,500 $2,500 X 100% = 639%
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ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. Cost Justification – An Example • The ergonomics team wanted to continue with improving the job and investigated installing a self- feeding driver • Cost: $2,500 • Payback is less than 4 months! • 3-year ROI of 639% Long term solution: Self-feeding driver
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ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. ● Introduction ● Cost Justification Methods • Regulatory Compliance • Health and Safety Performance • Production Enhancement ● Creating Business Value ● Calculating ROI ● Summary and Question Period Agenda Topics
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ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. What Have We Learned? ● In today’s business climate any initiative that does not deliver measurable value is an option. ● Ergonomics is an engineering issue, not a safety issue ● Most effective way of cost justifying ergonomic improvements is through production enhancements (quality, delivery, productivity) ● Engage all levels of the organization (management, union, engineering, design, procurement) ● Critical elements for success: • Risk based. Data driven. • Focus on engineering controls. • Cost justification and Return on Investment are key.
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ROI of Ergonomic
Improvements: Demonstrating Value to the Business © 2012 Humantech, Inc. Winnie Ip, CPE Director of Consulting 734.663.3330 x147 wip@humantech.com Thank you! ROI of Ergonomic Improvements
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