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Lean manufacturing for Management Consultants and Business Analysts
This document provides an overview of lean manufacturing techniques for improving production processes. It discusses concepts like overall equipment effectiveness (OEE), theory of constraints, continuous flow, standardization, 5S, kanban, and waste analysis. Examples are provided to illustrate how to identify and reduce different types of waste in production. The document also includes a case study example of improving processes in a sandwich factory by implementing divisions of labor, standardizing cycle times, and establishing kanban systems.
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Lean manufacturing for Management Consultants and Business Analysts
- 1. 1 Essential Lean Manufacturing forManagement Consultants Practical guide with cases and exercises
- 2. 2 Most treat productionas a black-box but if you want to be a great consultant you will have to get into details
- 3. 3 The knowledge aboutproduction you can use in many other businesses Factories Hospitals Call centers Airlines an MRORestaurantsLogistic companies
- 4. 4 In this presentationI will talk about all important issues that you should master OEE / OLE Theory of constraints Continuous flow Standardization 5S Kanban Zero defect rule SMED Critical chain Waste analysis Capacity management Production Planning
- 5. 5 Thanks to thispresentation you will be able to optimize production and estimate the potential impact of improvements
- 6. 6 This is partof my on-line course where I show step by step how find and analyze in Excel potential improvements in Production Click to check my course Essential Lean Manufacturing for Management Consultants $90 $10
- 7. 7 Basic methods ofimproving production
- 8.
- 9. 9 Most treat productionas a black-box but if you want to be a great consultant you will have to get into details. In this chapter I will show you how to improve production results and what it means in practice ▪ Produce as much as possible (maximize throughput) ▪ High quality products (zero defect rule) ▪ With as little waste and inefficiency as possible ▪ At lowest possible operational cost ▪ As fast as possible
- 10. 10 I recommend readingthe following books – click on the chosen cover to see details on each and every book Click for moreClick for moreClick for more Click for more
- 11.
- 12. 12 5 60 35 Adds value Doesnot add value and not obligatory Obligator but does not add value Due to different of waste we only use 5% to create value Source: Report Going Lean, P. Hines, D. Taylor; Lean enterprise research centre; Cardiff Business School; 2000 In lean manufacturing We have different types of waste: • Overproduction • Defects • Inventory • Over-Processing • Transport • Motion • Waiting Share in total %
- 13. 13 We will beusing the following techniques to optimize the processes Overproduction ▪ Overproduction is making too much or too early. This is usually because of working with oversize batches, long lead times, poor supplier relations and a host of other reasons. Defects ▪ You produce faulty things or not up to agreed standard. This may be due to errors done by production people, quality issues or faulty materials Transport ▪ Transport is the movement of materials, people, machines from one location to another. This is a waste as it adds zero value to the product. Waiting ▪ Long periods of no action due to lack of materials , resources, people Motion ▪ Unnecessary motions of workers due to the way working space is organized Inventory ▪ Too high inventory that cos t you money, space and causes operational problems Over-Processing ▪ When you use the wrong tools, procedures or methods you are creating waste as well You have not used the employee’s creativity ▪ If you waste peoples’ efforts and creativity you will stop developing Definition
- 14. 14 Below an exampleof identified in a retail chain waste Too much movement (people, resources, materials) Lower the need to move Move faster Change the timing of the movements Eliminate the movement Peak of activities Set priorities Assign specific people to perform the activity during peaks Decrease the difference between high and low periods Use different frequency for different activity
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- 16. 16 In production youwill know far less than the your customer’s team so you have to use smart ways to get to the bottom of the things. 5 Why is one of such methods Why we are not selling more? We are not able to produce more Why we are not able to produce more? Because we have reached our production capacities Why we have reached our production capacities? We do not have enough designers. Why we do not have enough designers? We have used up the budget for training? Why we have used up the budget for training? Financial Director cut it last year in order to save money
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- 18. 18 Let’s start bylooking at machine for cutting wood.
- 19. 19 Total time Preparation and Maintenance=0 Total available time Operating time Idle time due to organizational issues 100% 54% OEE = 100 % 54 % x x 98% Cutting 98% 37% Set- ups Idle time 70% Percentage of good products 70 % Below the OEE (Overall Equipment Efficiency) for the Cutting Machine. Only 37% of the time it is doing valuable works
- 20. 20 Removing bottlenecks -content marketing example
- 21. 21 Bottlenecks are dangerousas their hurt the efficiency of the whole system
- 22. 22 What is thethroughput of every system and where is the bottleneck? Example 1 7 5 7 Example 2 5 10 20 Example 3 5 5 3 x Stage capacity
- 23. 23 The are 4rules that you should follow when it comes to bottlenecks ▪ Identify what is the bottleneck ▪ Increase its throughput by lowering the time needed for everything that goes through the bottleneck ▪ Add new resources to bottleneck ▪ Adjust everything to the bottleneck – so it works at the same pace
- 24.
- 25. 25 Ideally you wouldlike to have a continuous flow of goods ▪ Each process “speaks” to each other and it is enough to say to the last one what you want. The rest will follow ▪ Pull process not a push process ▪ We produce only what the customer needs and exactly as much as he wants ▪ Hardly any inventory ▪ We use efficiently resources especially people
- 26. 26 In order toimplement it in real life we have to define some terms Hourly capacity ▪ Number of semi-products / parts that can be produced by a specific worker Cycle Time (CT) ▪ Time in minutes needed to produce 1 semi product /part by a specific worker = = Hourly Capacity = 60 Cycle Time (CT) Takt time ▪ Frequency with which the product is demanded by the customer= Cycle Time (CT) ≈ Takt time
- 27. 27 Continuous flow givesyou a lot of advantages Short cycle time Less inventory Higher quality Fewer inefficiency Better usage of people Less space Faster servicing of the customer Lower need for transportation Lower costs
- 28. 28 How not tomake continuous flow – sandwich factory
- 29. 29 Imagine that youhave a small factory producing sandwiches
- 30. 30 You have 4people. Each of them does the sandwich from beginning till the end Cut the bread Cut vegetables Fry vegetables Cut the cheese Assemble the sandwich Pack the sandwich 4 5 3 6 7 11 36 x CT in minutes
- 31. 31 This means thatthe customer has to wait 36 minutes for the sandwich to be prepared Cut the bread Cut vegetables Fry vegetables Cut the cheese Assemble the sandwich Pack the sandwich 4 5 3 6 7 11 36 36 x CT in minutes
- 32. 32 If you dividethe activities and give 1 activity per person you can lower the waiting time of the customer to 10 minutes Cut the bread Cut vegetables Fry vegetables Cut the cheese Assemble the sandwich Pack the sandwich 4 5 3 6 7 11 36 Cut the bread Cut vegetables Fry vegetables Cut the cheese Assemble the sandwich Pack the sandwich 3 4 2 4 6 10 29 All operations done by 1 person Division of work and specialization 10 x CT in minutes
- 33. 33 Yet since eachperson is not talking to each other you are creating a lot of work in progress (WIP) that you have to throw away Cut the bread Cut vegetables Fry vegetables Cut the cheese Assemble the sandwich Pack the sandwich 15 30 20 15 10 6 10 3 2 4 4 6 10 10 80 X Hourly Capacity in pieces CT in minutes Inventory in pieces 120 40 32 40
- 34. 34 When we comparethe 2 options we can see that there are some strong advantages of the division of work yet is causing lot of waste All operations done by 1 person Division of work and specialization ▪ 4# of people ▪ 6 ▪ 36 minutesTotal cycle time needed to produce the sandwich ▪ 29 minutes ▪ We are not using the people – no customer cannot do anything Type of waste ▪ We are wasting food that we have to throw out at the end of the shift ▪ 36 minutesTime the customer awaits for the product ▪ 10 minutes ▪ None; just raw materialsInventory of Work in Progress ▪ A lot . The biggest in vegetables – for 120 sandwiches
- 35. 35 How to makecontinuous flow – sandwich factory
- 36. 36 If we wantto limit the waste we will have to look at the cycle time of each and every operation. As you can see this is due to the fact that some process are much faster than the things that follow after them. You have to get even cycles 3 2 4 4 6 10 Cutting Bread Cut Vegetables Cut Cheese Fry vegetables Assemble sandwiches Pack the sandwich Takt time
- 37. 37 The are numberof ways in which you can try and get the even cycle times ▪ Combine two operations ▪ Divide 1 operation into many ▪ Speed up the operation ▪ Put Kanban between the 2 process or FIFO lane and limit the time of specific worker spend on the working station
- 38. 38 We know thatcustomers want to eat 6 sandwiches during the hour. It means that we need cycle time of 10 for every process 106
- 39. 39 Let’s see whatwe can do with our cycle times 3 2 4 4 6 10 Cutting Bread Cut Vegetables Cut Cheese Fry vegetables Assemble sandwiches Pack the sandwich Takt time
- 40. 40 We can combinesome of the processes to get to the pace required by the customer for every processes 7 6 6 10 10 Cutting Bread & Cut Cheese Cut Vegetables & Fry vegetables Assemble sandwiches Pack the sandwich Required by customer demand
- 41. 41 In this welower down the inventory drastically and have fewer people Cutting bread & Cut Cheese Cut & fry vegetables Assemble the sandwich Pack the sandwich 10 8,6 10 6 10 7 6 6 10 10 0 X Hourly Capacity in pieces CT in minutes Inventory in pieces 11 21
- 42. 42 Let’s see howthe 3 options compare with each other All operations done by 1 person Division of work and specialization ▪ 4# of people ▪ 6 ▪ 36 minutesTotal cycle time needed to produce the sandwich ▪ 29 minutes ▪ We are not using the people – no customer cannot do anything Type of waste ▪ We are wasting food that we have to throw out at the end of the shift ▪ 36 minutesTime the customer awaits for the product ▪ 6 minutes ▪ None; just raw materialsInventory of Work in Progress ▪ A lot . The biggest in vegetables – for 120 sandwiches Continuous Flow CT 10; no limiting lanes or kanban ▪ 4 ▪ 29 minutes ▪ 6 minutes ▪ 21 sandwiches are thrown and 11 sets of vegetables for sandwiches
- 43. 43 Now let’s tryto lower down the inventory drastically Cutting bread & Cut Cheese Cut & fry vegetables Assemble the sandwich Pack the sandwich 10 8,6 10 6 10 7 6 6 10 10 0 X Hourly Capacity in pieces CT in minutes Inventory in pieces 11 21
- 44. 44 If we putFIFO lanes and kanbans we can further improve the customer experience and lower inventory Cutting bread & Cut Cheese Cut & fry vegetables Assemble the sandwich Pack the sandwich 10 8,6 10 6 10 7 6 6 10 10 Hourly Capacity in pieces CT in minutes Lane limiting the inventory FIFO Lane Max 1 FIFOLane Max2 FIFO Lane Max 2 FIFO Lane 2 Kanban
- 45. 45 Let’s see howthe options compare with each other All operations done by 1 person Division of work and specialization ▪ 4# of people ▪ 6 ▪ 36 minutesTotal cycle time needed to produce the sandwich ▪ 29 minutes ▪ We are not using the people – no customer cannot do anything Type of waste ▪ We are wasting food that we have to throw out at the end of the shift ▪ 36 minutesTime the customer awaits for the product ▪ 6 minutes ▪ None; just raw materialsInventory of Work in Progress ▪ A lot . The biggest in vegetables – for 120 sandwiches Continuous Flow CT 10; no limiting lanes or kanban ▪ 4 ▪ 29 minutes ▪ 6 minutes ▪ 21 sandwiches are thrown and 11 sets of vegetables for sandwiches Continuous Flow CT 10; lanes and Kanban ▪ 4 ▪ 29 minutes ▪ 0 minutes ▪ 2 packed sandwiches ▪ 2 almost ready sandwiches ▪ 2 sets for sandwiches
- 46. 46 For more examplesand templates in Excel go to my on-line course where I show you step by step how to find and estimate improvements in production Click to check my course Essential Lean Manufacturing for Management Consultants $90 $10
- 47.
- 48. 48 You quite oftenhave situation when people perform at different pace and with different results. You have to standardize them 1 2 3 4 5 6 7 8 9 10 11 12
- 49. 49 Standardization gives youa lot of advantages Faster time of execution Lower waste Bigger predictability Easier management of the production floor Easy to replace workers Gathering of knowledge
- 50. 50 If you wantto standardize the work I recommend the following approach Pick a process you want to standardize Divide it into small activities Measure them among many executions Find best practices and describe them Implement standard (trainings, procedures, tools)
- 51.
- 52. 52 5S in shortis about cleaning your working station, putting everything in order and keeping it this way
- 53. 53 5S consists of5 stages Sort Set in order ShineStandardize Sustain ▪ Remove things that you do not need ▪ Arrange essential items in such a way that it is easy to access them ▪ Create set places for them ▪ Keep your working station, tool, machines clean and keep the order set ▪ No trash and dirt ▪ Establish rules, checklists standards and procedures to keep everything clean and in order ▪ Turn 5S into habit ▪ Use visual language and prompts to sustain the habits
- 54. 54 Examples of visuallanguage used to maintain the order
- 55. 55 Some signs thatwill show you that 5S is not implemented in the factory Machines are dirty People leave their working station without cleaning A lot of unnecessary things just lying around Dust on tools A lot of movement by workers caused by number of things surrounding him No set places for tools and materials Everybody dress differently No procedures / checklist / visual controls
- 56. 56 Examples of whatwe mean by lack of 5S
- 57. 57 Get rid ofunused things
- 58. 58 Why it makessense to get rid of unused things? Slows down Takes the place that can be used by good things Mental pressure Distracts you You lose track Costs money
- 59. 59 Since you operateon many platforms and levels you can create multiple messes. On all of them you should introduce order and simplicity Desktop Browser Folder structure To-do list Kanban shelf House Desk Computer
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- 61. 61 Since each personis not talking to each other you are creating a lot of work in progress (WIP) that you have to throw away Cut the bread Cut cheese Cut the meat Assemble the sandwich 20 15 10 6 10 X Hourly Capacity in pieces Inventory in pieces 14 9 4
- 62. 62 By introducing Kanbanyou limit the work in progress / inventory Cut the bread Cut cheese Cut the meat Assemble the sandwich 20 15 10 6 10 X Hourly Capacity in pieces Inventory in pieces Kanban
- 63. 63 Below some examplesof kanban
- 64.
- 65. 65 Consulting is aplace where the work is very volatile – one day you work 15 hours and next day you have nothing to do. What you want to do is use the time of low activity to somehow prepare yourself and absorb periods of high activity 1 2 3 4 5 6 7 8 9 10 11 12
- 66. 66 Therefore you shouldcreate a shelf of tasks to be done once you are free. This to-dos should be properly selected and structured and can have the form of a Kanban
- 67. 67 Below you havean example of defining of to-dos for the Kanban shelf Product development Read articles Read 5 articles Read 5 articles Read 5 articles Read book Read 50 pages of 1 book Read 50 pages of 1 book Read 50 pages of 1 book Product proposal Draft in pencil Draft in PP Fill in 5 slides Fill in 5 slides
- 68. 68 Tasks from theProduct development exercise you put into the Kanban Education Product development Sales
- 69. 69 There are numberof things that you can put on the shelf Learning new tools Learning new skills Improving skills Project preparation Knowledge base preparation Training preparation Conduct training (esp. lesson learnt) Business development Template preparation Product Development
- 70.
- 71. 71 Zero defect rule Findthe error as soon as possible and eliminate it from the flow
- 72. 72 Below example formmanagement consulting. In order to make sure that the value is delivered we put in some places checkpoints Write in pencil presentation Template in Power Point Conduct analysis for the slides Fill in slides Person performing the task Overview and modifications Additional analyses Visual modification Final overview PM / Associate 1 day sb x day Duration of task performance Business Analyst 2 days Business Analyst 14 days Business Analyst 4 days PM / Associate 1 day Business Analyst 2 days Visual Assistant 2 days PM / Associate 1 day Additional checkpoints
- 73. 73 Poka Yoke isthe name given to all clever ways in which you can protect people from making mistakes
- 74. 74 Below some examplesof Poka Yoke used in office and home
- 75. 75 For more examplesand templates in Excel go to my on-line course where I show you step by step how to find and estimate improvements in production Click to check my course Essential Lean Manufacturing for Management Consultants $90 $10
- 76.
- 77. 77 If you havespecialized workers you end-up not using most of available resources Research topics for a post Write a post Create illustration Edit and modify post, add illustration and schedule 20 5 7 10 # of post that can be done in a week by 1 person xx ▪ 75% ▪ 0% ▪ 29% ▪ 50%▪ % of time when they have nothing to do
- 78. 78 If you havespecialized workers you end-up not using most of available resources Research topics for a post Write a post Create illustration Edit and modify post, add illustration and schedule 10 8 8 8 # of post that can be done in a week by 1 person xx ▪ 20% ▪ 0% ▪ 0% ▪ 0%▪ % of time when they have nothing to do ▪ Comments ▪ We need our researcher to be able to write also posts ▪ The person edits the posts will have to be taught also to create illustration
- 79. 79 1 worker -2 machines
- 80. 80 Quite often youhave one operator per one machine. This is often not efficient as machines just need feeding in the goods 1 2 3 4 5 2 3 10 5 10 15 Working station Worker 15 15 Cycle time for the whole process How often in minutes the customer needs a product
- 81. 81 There are plentyof problems with such a layout It’s not flexible – difficult to slow down or speed up Requires a lot of space You have to invest more in transportation Big percentage of time the workers do nothing Invites more inventory Bigger waste
- 82. 82 You can movefrom the presented 1 machine 1 operator set-up to more flexible one….. 1 2 3 4 5 2 3 10 5 10 15 Working station Worker 15 15 Cycle time for the whole process How often in minutes the customer needs a product
- 83. 83 …if you stickto the cycle time of 15 minutes you can go down 2 workers. Below show how to organize it 3 4 5 Working station Worker 15 15 15 15 Cycle time for the whole process How often in minutes the customer needs a product 15
- 84. 84 If the demandis bigger and you have to produce a product every 10 minutes then you have to reorganize the production line and add 1 worker more 3 4 5 10 10 10 10 Working station Worker 15 15 Cycle time for the whole process How often in minutes the customer needs a product
- 85. 85 Alternatively you canuse a bit different set-up of machines that enables you delivering product every 15 minutes…. 15 15 15 Working station Worker 15 15 Cycle time for the whole process How often in minutes the customer needs a product
- 86. 86 …or every 10minutes, depending on the demand 10 10 10 Working station Worker 15 15 Cycle time for the whole process How often in minutes the customer needs a product10
- 87. 87 Let’s see howthe options compare with each other 1 worker – 1 machine Manufacturing cells for takt time 15 ▪ 5# of people ▪ 2 Manufacturing cells for takt time 10 ▪ 3
- 88. 88 Advanced methods ofimproving production
- 89.
- 90. 90 Open hours Maintenance Machineuptime Uptime utilizationIdle time 60% 60% OEE = 60 % 60 % x x 98% Proportion of good quality products 98% 35% It means that we used only 35% of machine paid time In the case of machines you can measure Overall Equipment Efficiency. Similar concept can be used to measure efficiency of people
- 91. 91 Similar to OEEthat is designed for machines you can define the Overall Labour Efficiency (OLE) for people ▪ Estimated for machines ▪ Shows you what percentage of the machine is used to create value for which you are paid by the customer ▪ It makes sense to analyze it especially for expensive machines and bottlenecks OEE ▪ Estimated for people ▪ Shows you what percentage of the people is used to create value for which you are paid by the customer ▪ It makes sense to analyze it especially for people that are representative of a big group of your employees OLE
- 92.
- 93. 93 Before you startanalyzing the waste you have to somehow group it by stages of occurrence and type of waste Type 1 Type 2 Type Z Stage 1 Stage 2 Stage X…. ….
- 94. 94 For finding thepotential improvements in waste I propose the following approach Measure and allocate waste by stages and type of waste Pick specific type of waste and the stage you want to tackle Find the root cause Find the improvement Calculate whether it makes economic sense or not
- 95. 95 There are somestandard reasons for high waste Reasons for high waste Faulty machines Lack of procedures and processes Poor training Lack of measurement Change of technology Lack of preventive maintenance Badly applied technology / procedures
- 96.
- 97. 97 Let’s start withthe definition of a setup ▪ Setup is all activities required to switch production from part/operation A to B ▪ Setup time is time between the last produced part A to the first good part B
- 98. 98 When we lookat any machine you will see that a lot of it’s time is taken required set-ups Production time Set up time Other downtimes Break- downs Preventative maintenance Machine open hours
- 99. 99 If you reduceset-ups you have 2 types of benefits 1 2 Increase production capabilities Increase production flexibility Now After SMED* Efficiency: 100 parts/hour Margin on 1 part – 0,80 PLN 2 h 0,5h Product A Product B Setup Extra capabilities Additional margin: Extra production time (hour) Productivity (part/hour) Extra production (part) Unit margin (USD/part) 1,5 100 150 0.80 Additional margin (USD) 120 X X Now After SMED* ▪ Lower inventories (lower cost of capital) ▪ Decrease production lead time Advantage Production: 2* 1000 parts = 2000 parts Production: 4* 500 parts = 2000 parts *Single Minute Exchange Die
- 100. 100 Setup consist of2 types of operations ▪ Transportation of dies, blades and other parts ▪ Check and repair of dies, blades and other parts ▪ Tools collection ▪ Pre-heating of die ▪ Securing of raw materials ▪ Setting some operation conditions ▪ Attachment and removal of dies, blades, etc ▪ Centering, dimensioning, setting operation conditions ▪ Trial processing attachments Operations during setup Internal operations External operations ▪ All operations that can be performed while a machine is in operation ▪ All operations that can be conducted only when machine is stopped* Examples
- 101. 101 For more examplesand templates in Excel go to my on-line course where I show you step by step how to find and estimate improvements in production Click to check my course Essential Lean Manufacturing for Management Consultants $90 $10
- 102.
- 103. 103 Stages of SMEDprocess Internal External Internal Internal External Internal External Internal External Internal External External Internal External Stage 1 Stage 2 Stage 3 Stage 4 ▪ Gathering information ▪ Separating internal and external setup operations ▪ Converting internal to external operations ▪ Streamline all aspects of the setup operation
- 104. 104 SMED – SingleMinute Exchange of Dies Typical “changeover”: 5 – 10 minutes Typical “changeover”: 5 – 10 seconds
- 105. 105 Stages of SMEDprocess Stage 1 Stage 2 Stage 3 Stage 4 ▪ Gathering information ▪ Separating internal and external setup operations ▪ Converting internal to external operations ▪ Streamline all aspects of the setup operation ▪ Production and analysis performed with stopwatch ▪ Workers interview ▪ Videotape the entire setup operation ▪ Performing function checks ▪ Improving transportation of dies and other parts ▪ Improving tools availability ▪ Re-examine operations and convert internal to external operation ▪ Preparing operating condition in advanced ▪ Function standardization ▪ Radical improvements in external setup operations ▪ Radical improvements in internal setup operations Methods and Tools:
- 106. 106 The optimization canbe divide into 2 streams ▪ Separate external and in internal operations ▪ Add operator ▪ Move parts / dies’ warehouse ▪ Prepare tools in advance ▪ Clean machine regularly ▪ Standardize screw ▪ Simplify method of fixing die ▪ Preheating of die Improvements Technical improvements Organizational improvements
- 107.
- 108. 108 Apart from productionpeople you will have a lot of so called maintenance guys that are fixing the machines 3 4 5 Working station Worker 15 15 15 15 Cycle time for the whole process How often in minutes the customer needs a product 15 Maintenance
- 109. 109 TPM consists of8 big streams. The most important is planned maintenance and autonomous maintenance TPM Planned Maintenance Focused Improvement Quality maintenance Autonomous maintenance Cost Deployment Training and Education Early Equipment Management ▪ Operators ▪ Maintenance Safety Health Environment
- 110. 110 Autonomous maintenance meansthat some of the things are executed by Production Maintenance activities Routine Maintenance Reaction to breakdowns Preventive maintenance Predictive maintenance Cleaning / Set-ups Lubrication & tightening Daily inspection Daily equipment care Creation of maintenance programs Time based changes Following trends and measuring Condition based servicing Fast & effective repairs Improvements Operators Maintenance Source: Operational Excellence Consulting ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
- 111. 111 There are somesigns that the company has more or less functioning TPM They have predictive and preventive maintenance A lot of maintenance is done by production Machines are clean and taken care of Availability is high There is low percentage of quality problems due to machines
- 112.
- 113. 113 In more andmore cases you have to find way to replace or support people with machines to lower down production costs Machines automating almost fully specific actions I.e. CNC Transportation I.e. Kiva – self driving robots that bring the stock to you Semi automatic solutions Fully automated lines
- 114. 114 For automation analysesI propose the following approach Measure current costs Find automation solution that has similar capabilities Analyze the payback time of such a machine Check how it influence the operations If it makes sense propose the change ▪ Minimal batch size ▪ Setup time ▪ Variability of products that can be produced on the machine / line ▪ Maintenance needed ▪ You may need to switch the whole line for some time ▪ You may need to build additional space ▪ Most new machines / lines are underperformi ng in the first period
- 115. 115 There are someclues that something is a good candidate for automation When you have chances to make big impact with automation? Demand for the product is erratic and seasonal A lot of people are involved Long setups are needed to move from product to product
- 116.
- 117. 117 One of thebiggest problem for efficiency is the so called Parkinson’s Law – Work expand so as to fill the time available for its completion
- 118. 118 People when askedto evaluate the time certain things will take build in buffers A B C A + B + C A + B + C A B C Central buffer Declared time Buffer time Real execution
- 119. 119 I recommend readingthe following books – click on the chosen cover to see details on each and every book Click for more
- 120. 120 Why you needto do capacity management
- 121. 121 Why do youneed to manage capacity? Factories take time to build Market leaders want to build ahead of time capacity no to loose market share Cash flow management You may want to increase your responsiveness New capacity = New technology New capacity may help you lower your cost Managing capacity means also closing down some facilities
- 122. 122 How to managecapacity?
- 123. 123 When managing thecapacity you will have to answer some questions Managing capacity What will be the operational impact of the change in capacity? When to create new capacity? Where and what? What capacities to close down?
- 124. 124 Why do youneed to manage capacity? 0 500 1 000 1 500 2 000 2 500 3 000 3 500 4 000 4 500 1 6 11 16 21 0 500 1 000 1 500 2 000 2 500 3 000 3 500 4 000 4 500 1 6 11 16 21 0 500 1 000 1 500 2 000 2 500 3 000 3 500 4 000 4 500 1 6 11 16 21 In the market Ahead of market (lead market( Follow the market (lag market)
- 125. 125 The right approachto capacity will differ depending on the market characteristics In the market Ahead of market (lead market) Follow the market (lag market) ▪You want to preserve your share ▪Building too early the capacity is too costly and you do not see extra value in it ▪Growth of the demand is pretty predictable ▪There is some value in responsiveness (you may get higher prices for shorter lead time) ▪Demand is pretty difficult to properly predict ▪You can use this tactic to increase your share in the market ▪Keeping extra fee capacity is expensive ▪Margins in the business are low ▪The market is experiencing slow grow ▪Demand is pretty difficult to properly predict
- 126. 126 There are afew ways in which you can expand your capacities What options you have for capacity increase Subcontract some of the processes or production Squeeze more from current assets Expand current facilities Build new facilities Buy existing facilities
- 127. 127 For more examplesand templates in Excel go to my on-line course where I show you step by step how to find and estimate improvements in production Click to check my course Essential Lean Manufacturing for Management Consultants $90 $10
- 128. 128 Check my presentationthat will help you get into consulting How to get into consulting Practical guide how to pass the case part presentation
- 129. 129 Check also myother presentations Production for Management Consultants Practical guide presentation
- 130. 130 Check also myother presentaions Management Consulting Presentations Practical guide how to prepare a great presentation presentation
- 131. 131 You can alsofind useful some tips on Excel Essential Excel for Business Analysts and Consultants A practical guide presentation
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- 133. 133 I recommend alsolooking at some techniques to improve your business. Click on the cover below to go to the presentation How to become world class analyst A practical guide presentation
- 134. 134 ….and how toperform market research Market research Practical guide for startups and entrepreneurs presentation
- 135. 135 Check my presentationon starting and running consulting company How to create management consulting presentations? A practical guide presentation
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