The belief prevalent in almost all companies is that "a resource standing idle is a waste" and managements strive to utilize all their resources to the maximum possible extent and in doing that they themselves create the undesirable effects (UDEs) which they are grappling with.
You dont believe that this is possible, right.
Well, read on to find how
The major undesirable effects (UDEs) that a lot of companies suffer from
1. Long lead times
2. High inventories in the warehouses
3. Poor due date performance
4. Bad human relationships
Now lets look at how this happens
Since, management is focused on efficiency and hence wants to keep the utilization of its resources in the high 90s (and even 100% if possible), the prevalent syndrome is that "A worker standing idle is a crime and if a worker is found standing idle, find him something to do"
In such a scenario, the prime measurement of people (operators, supervisors, managers, etc) is efficiency, it somebody meets achieves that, nothing else matters. A typical way of measuring efficiency is the no. of parts mfg / per hour.
lets look at what is the impact of this measurement:
The supervisor cannot allow his efficiency numbers to decline, so whenever he faces a dearth of orders, he pulls orders ahead and produces to forecasts (e.g. marketing gave a forecast that they will consume 1500 pcs in the next 3-4 months, so lets produce them now itself since we have capacity, etc) and this ensures that his resource utilization levels don't come down.
Now, in a plant there are setups to be performed, hence, one way of keeping utilization levels high and producing a larger no. of parts per hour is to minimize the no. of setups and as a consequence batch sizes are inflated to that extent.
Having larger batches leads to significant increase in the time a part spends waiting either to be processed or for the other remaining parts in that batch.
In fact, in such traditionally run plants, the actual processing time is less than 1/10 th of the total mfg lead time, hence 90% of the time is spent waiting.
Now, will you agree that having efficiency measurements is the reason for long lead times?
Will explain how efficiency measurements lead to the other UDEs in the next blog.
Keep watching this space for more.
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What about measuring efficiency for the most loaded resources?
ReplyDeleteMeasuring efficiency for the most loaded resources is necessary so that this constraint resource is fully utilized
ReplyDeleteIn reply to your question - yes, we need to measure efficiencies at the most loaded resource.
ReplyDeleteBut there are a few nuances here, lets say your most loaded resource has a utilization of 60%, then do we need to bother about efficiencies? No, we need not, we need to really start looking at the efficiency numbers when the utilization of the most loaded resource reaches 80% and beyond...and it can impact our ability to generate higher ans higher throughput.
The same principles do apply in a projects environment too (something like a fixed position layout type of plant, e.g. shipbuilding). but again some nuances exist.
I would be better placed to answer your question if you could provide me some details about your environment.