Calculating Daily Target using SAM Vs Cycle Time

An industrial engineer wrote me the following email with questions and asked for the clarifications. In this article, I will share my comments. We will try to understand the difference in calculating the daily production target of a sewing line using the standard time (SAM) and average operation cycle time.

I have read and understood well to your explanation about how to calculate SAM of a garment.

Formula:
Standard Time = Basic Time + various Allowance (around 20%)
where Basic time = Observe Time x Performance Rating.

Using the above formula, we get the Standard Time. So, we can set daily production target based on Standard Time.
My example: 
52 workers, 10 hours/day, SAM =34.25
Line Target per day = (52x10x60)/34.25 = 911pcs

My understanding, 911pcs/day is at 100% target of the standard time that we need to calculate it into 80% which to cover around 20% downtime in the production floor.

So, ((52x10x60)/34.25)x80% = 729 pieces/day

Question#1. Do you agree with this calculation?

But my boss's understanding is that I have added around 20% allowance to normal time (BT) and again 20% to Standard Time when setting the daily target that is too much allowance to operators.

So, he discussed with me to calculate by this following method:

Standard time = Average Cycle Time +20% (for all kinds of operation)

Example : Total Average Cycle Time = 2.72 minutes  (all operations)
Standard Time = 2.72 / 0.80 (it means he added 20% to the cycle time) = 3.40 minutes

Qestion#2. He said that 3.40 minute already added 20% allowance to the operators with unavoidable downtime in the work floor.

So as above all description, I need your help to explain the difference between these two methods and introduce some article which you may already be written. I am waiting to read your reply explanation in the nearest future.

Thanks for following OCS tutorials and writing an email to me with questions and asking for clarification.

My comment to your first question

In your calculation, the daily production target 911 units per day is correct. We say this target is at 100% of the SAM.

Reducing daily target to accommodate 20% downtime is not necessary. Whether to apply downtime in target calculation or not depends on the production environment. I would suggest, your target for the production should be given @100 per cent of SAM. You calculate line efficiency based on 100% of the standard time. Check the average line efficiency.

In case your average line efficiency is below 80% then you can consider setting up the daily production target at a reduced rate. If your line efficiency is more than 80% and they can easily reach up to 80% of the given SAM, than no need to add downtime.

Many factories still work at 35-50% efficiency level of the standard time. (Not sure how they establish the garment standard time). To them, it is necessary to plan daily production target at a reduced rate, like a target at 60% or 70 %.

My comment to the second question

The following statement is incorrect.

Standard time = Average Cycle Time +20% (for all kinds of operation).

In this case, you are not estimating the standard time of the operation. So, you can’t compare the time standard and cycle time for target calculation. Standard time and cycle time of operation are two different measures. Normally, the cycle time is greater than the standard time. But in some situations, operation cycle time can lesser than the standard time. The reason, in the cycle time, we don’t add allowances. We record operators’ cycle time when operators don’t take a break or no downtime happen.

If you want to set up the line target based on average cycle time – there is no issue. I would say, your target would near to the actual production data when to calculate target from average cycle time.

When you establish average cycle time for an operation or a style, adding 20% downtime for calculating daily target is acceptable.

Difference between the two methods, you get cycle time after you start the production. So, on the first few days, you would not get the accurate cycle time for the current operations. It is not a good idea for setting daily production target observing the operation cycle time from day 1. You cannot set a line target in advance.

You should also remember that the rating factor that is applied in calculating basic time is not downtime. That is a levelling factor for standardising the minutes recorded through time study. The allowances added to the basic time to establish SAM are like machine allowances, contingency allowance, personal fatigue allowances. Combined all these allowances 20% is acceptable. Though you know different allowances are given for different machines and different working elements.

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