By Mike Hart
A core principle of lean manufacturing is to not overload your shop. Overloading the shop has the same negative impact on efficiency as overloading a freeway.
The Freeway Analogy
A freeway has an optimal carrying capacity in terms of the number of vehicles it can accommodate for maximum efficiency. Once that carrying capacity is exceeded, the freeway’s efficiency drops severely because of traffic jams and accidents. The optimum carrying capacity is a tipping point where it may take only a small number of extra vehicles to trigger a drastic decrease in efficiency.
When Order Volume Exceeds Capacity:
When your order volume exceeds your shop capacity, there are three possible remedies:
1. Increase your capacity
You can increase shop capacity by working overtime, running an additional shift, or adding workers or machines. You can expand or reduce your work center capacity settings to see the effect on work center queues.
2. Quote longer delivery times
If you are unable to increase shop capacity and you make items to order, you must quote longer delivery times when you accept new customer orders. This will not affect the time it takes to actually run the job, but the job will have to wait longer than usual before it gets released to production.
3. Increase finished good stocking levels
If you are unable to increase shop capacity and you make items to stock, you must increase your finished good stocking levels. This is because it will take longer than normal for stock to get replenished, which means that stock on hand must be boosted to cover expected sales over a longer period of time.
The point to keep in mind is -- you never want to overload the shop beyond its optimum capacity. When order volume exceeds that capacity and you are unable to increase capacity, you must quote longer delivery times or increase finished good stocking levels.
Do Not Give Jobs More Time
A common mistake is to give jobs more time between scheduled start date and finish date, thinking that this gives the job more time to get through the shop. This is counter-productive because it overloads the shop and decreases overall efficiency to the detriment of all jobs. Instead of lengthening job schedules, lengthen the waiting times before jobs get released to the shop floor.
Mike Hart is the co-founder and President of DBA Software Inc., a leading provider of manufacturing software for small businesses.
I like your analogy. It is easy to understand since all of us have been stuck in traffic at some point. There's no getting products out or in faster than your system can handle that flow.
Businesses crash when they don't pay attention to this rule. However business people who take the time to properly analyze how much volume they can realistically trade, free up their cash and are more solvent. This makes them more dynamic and better able to adapt and be more profitable.
Posted by: Terri@greatclubs | Dec 29, 2012 at 09:30 AM