Where to Focus your Scarce Resources - 4

The warning in the previous post still holds … do not try to address everything. Choose well!

What follows is the first part of issues from production environments. Have fun!

Is Production your Limiting Factor?

Does your production have a huge and growing backlog? Are your lead-times getting longer and longer – maybe so long that you are losing business? Is the sales organisation complaining about long lead-times and unreliability delivery promises? Is your OTIF (On Time In Full) performance indicator poor or declining? Are production priorities set by hot, RED HOT and DO IT NOW!!!? If so you certainly appear to have an overloaded production.

1. An item produced in your factory has a certain production time (not necessarily (and often not) equal to the production time found in your ERP system). That same item has a “touch-time” during which it is being worked on but the much larger part of production time is waiting in front of a machine until the item’s turn comes. In most factories touch-time is less than 10% of production time and often it is less than 1%. In many factories there appears to be considerable scope to reduce production times. The table below illustrates that by cutting production time in half we will still have a very large amount of waiting time for the article.
   
   
   
   
   
   
   In your factory, what % of production time are touch-time and waiting time for an item? Does your production have significant scope to reduce production time?
   
   
    
   
   
   
    
2. Your factory will have orders and raw material (or components) waiting to be started; it will have a number of orders somewhere within the factory slowly progressing to finished product; there will likely be a considerable amount of inventory (Work in Process) on the factory floor and there will be finished inventory ready to be shipped or in the warehouse, waiting for a (call-off) order.
   
   The amount of WIP (Work In Process) determines the waiting time your products experience as they move through your factory. WIP and lead-time are inextricably connected. Double WIP and lead-time will approximately double. Do the reverse and lead-time is cut by 50%. Whatever you do with lead-times or WIP the work to be done on items remains the same. If this last statement is true we can hold back orders for half the current lead-time and then start releasing work again, but with ½ the original lead-time. All we change is the lead-time, the amount of WIP and the confusion over priorities in the factory. Do this and only god things can happen
    
   In your overloaded factory how much WIP is actually in the factory (WIP is an indicator for lead-time; more means longer lead-time)? Is this too much? Should you launch even more production orders (and increase WIP and lead-time further)? Can you evaluate what is too much or what is just right?
   
    
   
   
   
   
   
    
   Production units are often measured by cost and efficiency measurements. This way of measuring performance means all units will strive to be as efficient as possible. They will seek work to make sure they are always busy. After all a resource standing idle is a major waste; correct? This kind of thinking must cause managers to seek work in order to keep their area, all their people and all their machines busy.
   
   Seeking work, keeping busy is, on the face of it, admirable. But, is it wise? The practice (unless the limiting factor in the factory is the first machine) will lead to more and more work in process – much more than the constraint can process. We have to ask – ‘What is the point?’
   
   In your factory, do your employees seek work to make sure they are always busy? Do managers seek work to make sure their machines and people are always busy? Is every local group measured by its performance rather than its impact on the factory (or business) as a whole? Does your factory optimise locally (each machine) or globally (the factory as a whole).
   
    
   
   
   
   
   
    
3. Too much WIP (as described above) leads to unclear priorities on the shop floor, a risk that important tasks are missed or forgotten and as a result production is more unreliable than it could be. Even with significantly less work in process the shop floor should have a clear view of what are the most important orders at any given time – always ranked in order of priority.
   
   Does your shop floor have an absolutely clear understanding of what should be worked on now? Do they have the necessary information to decide, without any management intervention, what they need to produce next? Is this in the form of a simple 1-page view of the currently highest priorities such that they can be read and understood at a glance?
   
    

 

 

To be continued!

 Our and the next Village!