Friday, August 9, 2013

5 Ways to Unlock the 'Hidden Factory' and Improve Capacity Without Huge Expenditures

Several recent articles surfaced surrounding Michigan manufacturing. American Axle needs 200 new workers, 100 more than originally anticipated . . . . .A Holland manufacturer set for $9 Million expansion, is adding jobs . . . Chrysler Group plans $52 Million dollar expansion . . . and so it grows. The only dissenting voice appears to be from Ford, which in the same email alert, says new plants unlikely. It’s not that Ford’s not growing, they are. The article indicates that instead of new plants, they are raising assembly speeds, adding shifts, and in some cases, buying new equipment and hiring more workers.

This works great if you’re part of a large corporation, such as American Axle, Chrysler or Ford, with the proverbial ‘money to burn’. Sometimes tax abatements and long-term commitments to the community can muster support and pave the way for expansion and capital expenditures, especially if you have a large order from a new customer in hand. It’s just not that easy if you’re a small to medium sized enterprise, particularly if you’re lucky enough to have a steady workload.

What if there were actions you could take to increase your capacity with a nominal investment?

MMTC has identified five areas that typically offer opportunities to increase capacity. Some will be familiar, all will be relevant to manufacturing. Hopefully, this will generate ideas and help focus activities when looking for throughput improvements, especially when you have limited investment dollars.

1. Quality. We all think of defective parts as a bad thing – it is waste in the plant or, if shipped, a failure in the field. But what we sometimes miss, and something that should provide an additional incentive to investigate and solve quality issues, is the fact that a bad part consumes available capacity.
So you get hit twice: You have the traditional expense associated with a defective part: rework, scrap, warranty claim, etc., and you have the added loss of your available capacity because at least some of it was consumed making a bad part. And that is capacity you can reclaim by reducing defects.
2. Equipment Utilization. Here we mean more than just keeping the equipment up and running. It’s good to have equipment available, but it’s just as important to make good parts (see our Quality comments in point 1) and to produce them at the expected rate or cycle time.
To see if improving machine performance is a significant opportunity for you, pick one of your pieces of equipment and answer these two questions:
  • How many good parts did I make during the day?
  • If we had been up and running perfect parts all day, how many parts could I have made during the day?
If that ratio is 75% or less, you can benefit from looking at your Equipment Utilization.
3. Product Flow. This is more than reviewing how material moves from work cell to work cell. We are also referring to the way the total product flow is managed, i.e., how do you run the product line?

Oftentimes, you can realize improved performance by analyzing the specific process elements, changing layout, and adjusting tasks, to better promote material flow. And secondly, optimized flow is achievable by managing production lines with specific attention to bottlenecks.

4. Scheduling and Execution of Work Orders. This is another area where a two-pronged look is beneficial. There are three things you need from a Scheduling and Execution system:
  • A schedule that reflects realistic throughput expectations
  • A disciplined floor that executes to the work order
  • The effective use of tools to optimize flow within the framework of meeting delivery commitments
One of the goals of a good scheduling and execution process is predictable throughput. If you can get to that point while not losing sight of optimizing the flow, you can realize significant increases in capacity, and by that we mean making the right stuff at the right time.
5. Support of Production. We typically see two supporting elements as providing opportunities for capacity improvement.
First is a close examination of suppliers, their performance and capacity flexibility. It doesn’t do much good to bump your capacity up when your key suppliers can’t keep pace.
Second is the Production Preparation Process for new or upgraded products. This would include both the product design (for manufacture and assembly) and the process design (the best arrangement of resources, tools, etc.).
By looking at the activities in the five areas covered, you may discover opportunities for improving capacity and discover what is called ‘the hidden factory’, i.e., additional, hidden capacity that you can realize without a significant investment.

To delve further into these issues, MMTC is offering a no-cost 90 minute workshop, as part of our Eye-Opener Summer Series. We support Michigan manufacturers and want your operations (and legacy) to continue and grow in Michigan. August’s offerings will be held at partner locations in Lansing and Troy.
For more information and to register, please visit our event registration website and look for Eye-Opener under Special Events.

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