Why setup time matters
Every minute a CNC machine sits idle between jobs while an operator swaps fixtures, resets offsets, or reestablishes work zero is a minute it is not cutting parts. In job-shop environments running many small batches, changeover time can eat up more of the schedule than the actual machining does. SMED (Single-Minute Exchange of Die), developed by Shigeo Shingo for automotive stamping lines, reframes changeover as a process that can be systematically shortened rather than an unavoidable cost of switching jobs.
How the numbers are calculated
Time saved per setup is simply your current setup time minus your target setup time. Multiply that by how many setups you run in a typical month to get the monthly time saved, then convert those hours to dollars using your shop rate to see the monthly cost savings. Run the numbers before committing to a setup-reduction project, since the payback is often larger than it first appears once it is multiplied across a month of changeovers.
Common ways to cut setup time
Most SMED gains come from converting internal setup steps, which require the machine to be stopped, into external ones that can be done while the previous job is still running: pre-staging tooling and fixtures, standardizing workholding so offsets do not need to be re-zeroed, using quick-change tool holders, and keeping a setup checklist so nothing gets rediscovered mid-changeover.