India - Value Creation Model for Industrial Engineering Through Productivity Engineering

Industrial Engineering ONLINE Course on Cost Reduction Methods, Information and Case Studies

A post graduate in industrial engineering expects  a salary of Rs.1.5 lakhs per month.

He can direct 5 graduate industrial engineers under him. Their salary is RS.2.5 lakhs per month. (Rs. 50,000 each)

They require 5 diploma holders/ITI trained technicians in the department. Their salary is Rs. 1.25 lakhs per month (Rs. 25,000 each)

Additional department expenses will be there. So take total department expense as Rs. 7.5 lakhs per month.

The cost reduction through productivity improvement expected per month from this department is 37.5 lakhs per month. This is equal to Rs.7.5 lakhs per month per graduate engineer team (5 teams in the department)

For 12 months the total cost reduction/productivity benefit goal is  Rs. 4.5 crores. This should be achieved on total manufacturing expense of Rs.125 cr. Each IE team has to study processes involving cost of Rs. 25 Cr. per year. Taking 50 weeks in a year, they need to study operation costing Rs, 50 lakh/year in a  week. It means the operation alone costs Rs. one lakh per week and brings in revenue of Rs. 2 lakh per week.

Each IE team studies an operation per week that has annual cost of Rs. 50 lakh/year.

Each team will study in 50 weeks, Rs. 2500 lakh that Rs. 25 cr/year.

The cost reduction benefit expected is Rs. 90 lakh.

Per week the cost reduction is Rs. 1.8 lakh.

Updated on 11 July 2020, 16 April 2020.