Manufacturing Breakthrough Blog

Rethinking Manufacturing Efficiency

Tuesday February 3, 2015

In my last posting, we discussed the problems associated with running all steps in our process at maximum capacity and how the constraint/bottleneck controls the output.  We also presented a cost effective way to increase the throughput of our process by approximately 15% by simply relieving the constraint during breaks and lunches.  So our process capacities now look like the figure below where we see the new output on Step 3.

Rethinking-manufacturing-efficiency-diagram1

WIP explosion

Because excessive WIP has such a negative impact on overall cycle time, and because excessive WIP unnecessarily ties up cash, we must find a way to reduce the amount of WIP being generated within this process.  If we don’t do this, we could end up with a WIP explosion that would look like the following after running this process for just 1 week:

Rethinking-manufacturing-efficiency-diagram2

How fast should non-constraints be running?

In the above figure, we see the number of parts produced in a week at each of the process steps and the amount of new WIP inventory that will accumulate if we run each process step to its full capacity.  This is one of the negative consequences of using the performance metric of manpower efficiency that is so prevalent in organizations that run their business according to a cost-centric philosophy.  I’ll write more about this subject in future blog postings, but for now the question becomes, “How fast should the non-constraints (i.e. Steps 1, 2 and 4) be run?”  The answer to this question is actually quite simple.  They should be running at the same equivalent speed as the constraint.  In the Theory of Constraints world this is known as subordination to the constraint.  That is, once we have identified the constraint, all of the non-constraints should be forced to run at the same speed as the constraint.  This, of course means that we must abandon the use of efficiency as a performance metric.  As I said, I’ll write more on this subject in later posts, so let’s get back to how we can increase the capacity of our process.

Focus

We have identified Step 3 as our capacity-constrained resource and this is important because, if we don’t do things to increase the capacity of our constraint, we will never increase the output of our total process.  An important point to remember is that we need to move our focus away from increasing the output of each process step to a strategy of increasing the output of the total system or process.  So if Step 3 controls the throughput of this process, then doesn’t it make sense that we focus our improvement efforts on that part of the system that is limiting it?

Focused Improvement

In Lean Manufacturing we are taught about the 7 wastes that must be identified and reduced. But rather than attacking the entire process as many Lean efforts teach, what would happen if we focused our waste reduction efforts only on the constraint?  Likewise, in Six Sigma we are taught that we must identify excessive variation and then reduce it and control it.  Again, rather than attacking variation in every step of the process, what would happen if we focused our variation reduction and control efforts only on the constraint and on those steps feeding the constraint?  The point here is that if we focus our waste and variation reduction and control efforts on the constraint, the payback in terms of increased process output happens at a much faster rate than attempting to remove waste and variation everywhere within our process or system.

Next time

In my next posting we’ll take a look at Lean’s 7 wastes and how we can use them to increase the output of our simple four-step process.  We’ll also take a look at the negative impact of excessive variation on our process.

Thanks for reading. See you next time. 

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