You now have a number: what one hour on your constraint is worth. Here is how to spend it this week. None of these require a project, a budget, or anyone’s approval.
1. Should we take the line down for the planned work?
This argument usually runs on instinct and organizational politics. Operations does not want the downtime. Maintenance does not want the failure. Both positions are reasonable and neither is quantified, so the loudest voice wins and the decision gets remade every month.
Reprice it.
A four hour planned intervention on our packaging line costs $24,000 in contribution margin. That is the cost of saying yes.
Now the other side. Pull the history on the failure mode you are trying to prevent. If the unplanned version has historically run eight hours, it costs $48,000 each time it occurs. If it has occurred twice in the last twelve months, the expected annual exposure is $96,000.
The comparison is now arithmetic, and it can be documented, revisited, and defended. Sometimes the answer will be to defer, and that is fine. A deferral you can justify is worth more than a shutdown you cannot.
2. Is the spare part worth stocking?
Inventory arguments are among the longest running and least resolvable disputes in most plants, because the two sides are measuring different things. Materials management is measuring carrying cost and working capital. Maintenance is measuring the wait.
Price the wait.
A critical part with a six hour lead time on a constraint asset is protecting $36,000 every time the failure occurs. A $9,000 part with a two year expected life, against a failure mode that occurs annually, is not an inventory decision at that point. It is obviously correct, and it takes one line to show.
The reverse also applies, and you should be willing to run it. Plenty of parts sitting in stores protect assets with protective capacity, where the wait costs nothing. Pricing the hour cuts both ways, which is exactly what makes it credible when you use it in your favor.
3. Was the overtime worth it?
Every plant approves recovery overtime and almost none of them measure the return.
An overtime shift that genuinely recovers five constraint hours returns $30,000 against a few thousand dollars of premium labor. That is a decision worth repeating and worth telling your plant manager about.
An overtime shift spent on an asset that was never the constraint returns nothing, regardless of how much work got done. That is also worth knowing, and the honest version of this analysis is what makes people trust the favorable version later.
Run last month’s overtime through the rate. Whatever the answer is, you will have learned something your plant did not previously know.
The pattern
All three of these are decisions your plant is already making, repeatedly, using judgment. None of them are bad decisions. They are simply unpriced, and unpriced decisions drift toward whoever argues most persistently rather than toward whatever is worth the most.
You are not adding a process. You are adding a number to a conversation that was already happening.
This week
Take one real decision from your own plant this month and reprice it with your rate. Write down the before and the after.
Bring that repriced decision into next week, because next week we stop estimating and start counting, and you will want an example of what the rate is for.
