Capacity and Utilization
Manufacturing, Business, Production, Industrial, Process, Equipment
Capacity
Capacity is the sum of what your organization can create,
given its resources,
to meet sales, demand, and product mix changes.
Often it can’t react as quickly as you’d like. You have noticed that.
Read on for specific, cost effective actions to enable your
organization to react quickly to changing requirements; in many industries over
a wide range of business circumstances.
Choose the actions that fit your objectives, that can be effective
within your organization’s culture and capability.
Take actions to balance resources to changing requirements
It may not be easy.
Address first the high cost issues, and those that affect customer service, profitability, cash flow, return on investment. Prioritize both issues and actions. Be sure to delegate accountability as well as responsibility.
Take out the wasteful activity, the lost time, the extra inventory, the non-valued-added functions all
across the organization chart.
Given the economy, sooner is better than later.
Find and manage constraints, whether they are in process, equipment, people, facilities, or technology.
As you match labor to the current requirement, do it objectively with work measurement. The resulting
balance will be more efficient.
Cut cycle time and inventories concurrently. Reduce changeover and its cost and negative impact on
capacity and utilization. These actions tend to interfere with each other; take care.
If you have the special case of several people working closely on an assembly line type operation,
use line balance to equilibrate the work each performs. Line balancing can be very effective where close
coordination is necessary.
Match facility size and location to the current customer base and volume. Should you rent or own?
Consolidate or relocate? Outsource work or perform it in-house?
Set expectations, communicate, measure, report progress.
Know the low cost configuration of your process, keep it loaded.
Consider parting with underloaded, high cost equipment. This may be a time to move away from
obsolescent technology.
JPR Services
JPR has practiced all of the tactics presented here, and more. Call on us to zero in on the most
appropriate solutions for your unique capacity circumstances, timetable and budget.
Objectively and quickly, we can help to correct a particular capacity problem, or match input to
varying sales demand, phase up or trim down, or relieve and manage constraints.
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please call to discuss options
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Jack Greene at 843-422-1298. There's no cost or obligation.
Insights and Tricks of the Trade
Many actions are cost effective; choose what fits.
1. Take out the wasteful activity, all across the organization chart.
What is waste? A March 2009 "Business Week" article presents this test:
Will a customer pay for this activity?
Will my service fail without this activity?
Will I go to jail if I eliminate this activity?
Answer "no" to all three, and the activity can essentially be defined as waste.
Sounds good to me.
2. Set expectations, communicate, measure, report progress.
Until you establish objectively what output to expect from employees, you'll never know how you stand,
they'll never know how they are doing.
Formal work measurement will yield the most reliable results. Time study will also identify any work activity
that is not value-added; it will point out the constraints; it will allow balanced workloads; it will define crew sizes.
Calculate expectations for all equipment but especially for constraints. Publish an official manning chart,
to assign people according to output and product mix scheduled.
3. Find, reduce, and manage constraints, whether they are in process, equipment, people, facilities, or technology.
Capacity and output will be controlled by one or more constraints, usually equipment, or process, or people;
or by a combination if operator action is necessary in addition to an equipment function.
Identify constraints, and quantify the values. Then reduce the cycle time for the first constraint until it no
longer limits. Reduce the cycle time for the next constraint, and so on. Micromanage all of the limiting factors carefully.
Capacity will always depend on product mix of output desired, as different products use different machines, at
different speeds, with different crews. The accuracy with which you plan for these variables will affect output and costs. To be sure, minimize the need for changeovers, then change quickly when necessary.
Does overall cycle time vary by crew size, for instance is a cycle shorter if more people are utilized? Determine
the most cost effective crew size, depending on output required.
Highlight any "external" time, when a machine is waiting on the operator. Reduce the external operator time to cut
the machine cycle, either by using more operators, changing assignments, eliminating work, or doing the work during
the machine cycle as "internal" time. Determine also if the machine index time can be lowered.
4. Product Quality
Keep product quality up. Let me rephrase that; keep necessary quality up. Just because extremely
high standards are necessary in pharmaceuticals and space ships doesn't mean they are necessary for sunglasses
and kitchen cabinets. Be sure to get the accelerator and brakes and steering system in your product line right;
recalls are bad news. And remember the old adage that quality is built in, not inspected in. The capability of
your process drives the quality level, not the other way around.
5. Provide your highly skilled people more hours in the day
Pull out work activities and tasks from your key employees, which can be adequately performed by less skilled.
This will not only cut costs, it will provide the scarce trained people more hours to perform their skills.
6. Balance lines, balance workloads
If you have the special case of several people working closely, perhaps on an assembly line type operation,
use line balance to equilibrate the work each performs. Line balancing can be very effective where close
coordination is necessary.
7. Consider your assumptions
Match facility size and location to the current customer base and volume. Should you rent or own?
Consolidate or relocate? Outsource work or perform it in-house?
Consider parting with underloaded, high cost equipment. This may be a time to move away from obsolescent technology.
8. Capacity Study for Vendors, or Merger Candidates
Consider capacity for vendors or prospective vendors, or merger / acquisition candidates.
Define problems and costs; strengths and potential; any constraints, show-stoppers and deal breakers,
for the unique circumstances of each situation.
Now What?
Thanks for the attention; I hope this was useful. If you need to correct a particular capacity problem, or match input to varying sales
demand, phase up or trim down, or relieve and manage constraints,
to inquire. We'll be glad to discuss your circumstances as well at 843-422-1298.
Either way, there is no cost or obligation.
JPR has practiced all of the tactics presented, and more, and we’ll objectively help to zero in on the most appropriate solutions for your unique circumstances, timetable and budget.