Why is it critical? The cost of unmanaged production.

The mismanagement of production rarely manifests itself as a dramatic collapse. It usually progresses as a silent leak: a little extra waste, a little overtime, a few delayed deliveries, a little inflated inventory. Each is small on its own; but the sum represents a significant portion of the business's profit.

Symptoms

  • A plan is just a piece of paper. A weekly plan is made, but it becomes invalid at the end of the first day. The field begins working according to its own priorities.
  • Product trees do not reflect reality. The recipe in the system differs from the application in the field; operators know the "real recipe".
  • Capacity is unknown. They say "we can do it"; only on the day of production does it become clear that it can't be done.
  • Stoppages are not recorded. When asked why the machine stopped, the answer comes from memory; the biggest cause of the loss is never measured.
  • Waste is absorbed into overheads. It is unknown in which product, in which operation, and for what reason it occurred.
  • Costs are determined at the end of the year. Product costs are revealed through the accounting department's end-of-period analysis; until then, pricing decisions are based on estimates.
  • Work-in-process inventory swells. Intermediate inventories are not planned; they are a result of bottlenecks and tie up working capital.
  • Critical knowledge resides in individuals. When a master craftsman retires, a portion of their production knowledge goes with them.

Hidden losses in production

Production losses are not limited to scrapped materials. Losses that are not systematically measured include:

Downtime: Malfunction, adjustment, material hold, operator hold.
Speed loss: The machine operating below its design speed.
Quality loss: Waste, rework, initial run loss.
Installation loss: Time and materials wasted in product replacement.
Energy loss: Idle equipment and inefficient work areas.

When these losses are measured, the picture that emerges in most facilities is surprising: instead of investing in increasing capacity, reducing losses in existing capacity is a far cheaper option.

The right question.

"Our capacity is insufficient, should we buy new machinery?" is not the right question. The right question is: "What percentage of our current machinery's theoretical capacity are we using, and what losses are we incurring with the remaining portion?" A significant portion of businesses that can answer this question gain substantial capacity without making investments.


The fundamental principle: The goal of production management is not to supervise the field, but to base decision-making on data . A well-designed system doesn't complicate the operator's job; it makes recording a natural byproduct of the work and, in return, demonstrates its own performance on the field.
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