Tag Archives: planning

Three keys to unlocking production capacity…

…little-known “secrets”… hidden in plain sight!

Like other complex systems, factories don’t always behave in the way that we might expect them to. It’s not that factories are capricious, or that the people who work in them are bloody-minded. It’s just that “common sense” approaches to increasing throughput often overlook the complexity. The keys to unlocking capacity are actually very simple, but simple solutions do not come from glossing over the complexity… they come from understanding it.

Let’s look at what’s going on here:

1. Constraints to capacity are real…

Understanding this provides the first key to maximising throughput. Why? Common sense tells us that asking for just a little bit more than we want out of the system will create the incentive to do more. But because capacity constraints are real, this simply overloads parts of the process or areas of the factory, creating bottlenecks. The effect of bottlenecks is delay – almost always disproportionate delay.

So, the first key to unlocking production capacity is this:

The factory will produce most if it is loaded just below its demonstrated maximum capacity – which will typically be between 80% and 90% of its theoretical maximum.

2. Resources are valuable – so use them well…

Which means maximising utilisation, right? Larger batch sizes, to keep those machines and operators busy… think of those utilisation “KPIs”! Well… maybe not! What if the batches are too big? What if batch sizes are bigger than the numbers actually needed? Tying up machines and operators on work that is not yet needed creates a bottleneck of a different sort. Everyone is busy, but they’re not producing what’s wanted right now. So choose batch sizes that fit with what is actually required.

Which means that the second key to unlocking production capacity is this:

Choose the right batch sizes. Even if machine and operator utilisation is lowered, smaller batches sometimes increase throughput.

3. Lead times are also real…

But do the lead times that you use for planning match the lead times that you actually experience? When supply or throughput of a particular area is not keeping up with demand, the reaction is often to increase the planned lead time for the related item or process, to give more time to the activity. But this creates an immediate increase in planned demand, burdening procurement or the workload in the related area. The problem is not about time, it is about capacity and no amount of extra time will make up for lack of capacity. Worse still, if the original delay was caused by a planned lead time that was already longer than necessary, then the existing problem has just been made even worse!

Leading to the third key to unlocking production capacity, which is this:

Planned lead times need to be long enough to get the job done and ensure people don’t keep running out of work – but not longer!

The common link between these three keys is that they are subtle and counter-intuitive. You may be imagining the potential responses: “What? You’re saying we should plan to make less!” or “This component is always takes ages and you want to shorten the lead time” or “How can we possibly make more, if we lower utilisation?”… and those are just the polite versions!

Taking counter-intuitive action requires trust and confidence, especially when others are sceptical. Evidence, sound theory and examples of successful practice will all help with this, as will effective personal and communication skills. MML emphasises the importance of all these areas in its Production Planning and Control Course – next date 16-18 September – click the link to find out more. Alternatively, if you would just like to know more about these ideas, or share your own with us, please contact us through our website, give us a call on 0870 438 1201 or post a reply to this blog. We hope to hear from you soon!

Business Performance Improvement: Building on the basics

‘Business Performance Improvement’, something that all companies should strive to achieve but without the basics firmly in place, the challenge is having something stable enough to improve on!

The fragmented nature of many business structures often leads to miscommunications and misunderstandings between the various divisions. Each of them pushing to achieve their own targets, often in isolation and with a lack of knowledge of the business processes as a whole. More often than not, it is the operations team who gets it in the neck! How do we balance such concepts as delegation, empowerment and local knowledge with the necessary controls over the overall business approach, and very necessary financial controls? How do we create an integrated and flexible approach to long-term success?

If the sales team sells more than their target, surely that is a good thing, right? Of course, but only if the company’s initial strategic plan was based on that target from the outset and the correct resources were put in place to achieve the initial plan. If not, the customer will be severely disappointed by delivery failures caused by the classic failure to set realistic expectations and the company’s inventory will be too high – all this without achieving the expected payback.

It all seems pretty straightforward stuff but it is surprising how many companies fail to get it right. The question is; how do you make it work for your business? Here are three tips to consider:

1. Build a knowledgeable and co-operative team

  • Education and the understanding of the interdependencies of their skills and capabilities is key.

2. Work together on making the vital business decisions

  • Create an open environment about the overall business processes and goals.
  • Encourage reinforcement of relationships and the delegation of the right decisions to the correctly trained individuals and teams.

3. Avoid spending unnecessary money on quick fix operations systems

  • Without strategic planning, good sales and operations planning, an understanding of capacity planning and pragmatic measurement that allow operations to do their job, no integrated system will work effectively.

Once the vital business processes are understood and the basics put in place, companies then face the dual challenge of getting increased productivity from employees without putting too much emphasis on creating optimised, streamlined processes.

Successfully building an environment where creativity, ideas and energy can be fostered requires careful integration of people and processes without falling in to the trap of becoming an inflexible mechanism.

Since the nineteen fifties, the logic of running a successful business has been well understood. Unfortunately there has been a continual attack on limited business budgets from consultants, vendors and internal champions, who know a little of the story, but attribute the success of the business to their own contribution, without understanding the foundations that had to be in place first. You only need to read the discussions to see how many organizations fail to gain the benefits they expect from their spending on techniques like six sigma, lean manufacturing and other ‘flavours of the month’.

Join us in person to find out more about bridging the gap between people and process to maximise growth. Our next interactive seminar will give top tips and equip you with a toolbox of techniques. Click here to read more and register your place.

Here we discuss the vital foundational building blocks, the strategies and the way to create a successful road map that joins business strategy, through ‘Sales and Operations Planning’ to excellence in operations. With a history of success in taking businesses of all sizes along on this journey, MML is proud to offer this seminar.