With the economic upturn, the times of low volume and rationalization are over. Volume is steadily rising for many, and manufacturers are now dealing with a different problem than cost-cutting—how to meet increasing demand after resource cuts and no new investments in productivity improvement in recent years.
With your manufacturing operations already running close to capacity, the traditional ways of gaining new capacity is to make large capital investments, or to outsource some of the new manufacturing demand. These are challenging tactics as getting new resources in line will take time and there’s no guarantee that the numbers will continue to climb.
You do, however, have a third option available to you. You can meet the increased demand by freeing up needed resources within your current operations. The key is identifying areas of improvement within your existing operations by accessing real-time manufacturing information, and utilizing actionable insight for manufacturing improvements.
Step 1: Reduce Unplanned & Operational Downtime
In an industry where reliability is key, and unplanned downtime can cost thousands of dollars per minute, reducing unplanned and operational downtime can yield great results. In addition to financial savings, reducing changeover time and operational downtime leads to proportional increases in manufacturing capacity. Best practices implemented on a single line can be easily transferred to other similar lines, multiplying the impact, and resulting in creating even more needed capacity. Efforts to reduce unplanned and operational downtime are routinely have a high probability of success. Sometimes it is possible to eliminate an entire loss category with a simple change in work practice. For example, many companies have discovered that it can be very effective to stagger break and lunch intervals; others have eliminated a specific loss category entirely by replacing small parts, or increasing the frequency of routine maintenance.
Step 2: Reduce Minor Stops
Minor stops are short-duration hesitations and stops, usually less than five minutes— short enough to be “unnoticed” but long enough to disrupt the business and productivity. These can add up to significant loss of manufacturing time, especially if you don’t have visibility into the number of and reasons for minor stops. If you have the necessary tools in place, it is reasonable to expect a high level of success when attacking minor stops: 50-75% reduction. However, remain cautious because minor stops can reappear. To sustain gains, world-class manufacturers use root-cause analysis and continue to make adjustments as necessary.
Step 3: Eliminate Production Variability & Quality Loss
Production consistency translates into a more reliable and predictable supply chain, increasing the rate of first time ‘perfect orders’ while cutting time lost due to rework. Stable lines run at higher production rates consistently, resulting in higher volume. Quality loss and rejected product has a double impact: material and labor. A standard overall equipment effectiveness (OEE) calculation includes a production reject as a lost opportunity for production which impacts on capacity. Therefore, when calculating OEE, it is important to consider the cost of both material and labor. There is no “typical” operation, and the range of quality variation can be from 1% to 5% or even as much as 10% of total production. Consider this: the cost of material can be four times the cost of labor. From a pure cost perspective, a 1% first-pass reject rate translates to 4% loss. You can vary the analysis to reflect production improvement, cost reduction and probability of success.