Performance Improvement: When Conditions Change, Find a Hidden Factory

Manufacturers are always eager to balance efficiency, reputation, and the many other factors that affect overall business performance.  Everyone agrees that performance improvement in manufacturing operations is one powerful tool companies leverage to achieve their strategic business objectives.  Even when there’s a status quo in market conditions, regulatory requirements, and other factors, nearly every manufacturing enterprise is doing something to improve manufacturing performance.  When something happens to disrupt circumstances — whether it affects just your business, many companies, or an entire group — there’s no doubt you’ll respond to your company’s best advantage.  But will you also use the experience to uncover “the hidden factory,” and discover new ways to create capacity without adding equipment?

Decision Making Around Constraints: Sometimes More Complex

At the outset of 2020, many manufacturers of essential items had to adapt to demand spikes rapidly.  The demand for consumables soared, including hand sanitizer, face masks, soap, toilet paper, diapers, rice, yeast, butter, and bottled water.  The more shelf-stable and low-cost, the more consumers loaded their pantries.  The situation forced manufacturers to amp up production and put their constraints-based decision-making capabilities to the test.

Major manufacturing constraints include equipment capacity, skilled labor availability, materials availability, logistics footprint, and a short time window to adjust.  In the first half of 2020, many manufacturers made the decision to run their equipment longer, faster, and with less downtime, resulting in record output, often at levels that far exceeded expectations.

Considerations and actions among those that chose to schedule more equipment hours per week often included:

• Add people to existing equipment through overtime and extra shifts, in some cases ramping up to run 24x7
• Inability to fully exploit available equipment capacity due to constrained labor availability
• Recommission older mothballed equipment and in some cases add new equipment
• Reallocate floor space from non-existent finished goods inventory for additional equipment
• Reduce or relocate inventory to make space for additional equipment

Some manufacturing companies were also able to increase output by speeding up machines:

• Run machines faster than company thought possible
• Tap into any speed available from operators setting sub-optimal rates for cushion
• Quickly and economically remove process bottlenecks by adding minor equipment or additional workstations
• Establish longer run times to reduce changeovers
• Take advantage of less unscheduled downtime as equipment ran more reliability (a result of less frequent starting and stopping)

Among companies that responded to increased demand by reducing planned downtime (to increase runtime), we see some combination of tactics:

• Simplify product mix and perform fewer changeovers
• Offer fewer production variation choices to consumers
• Perform faster changeovers
• Switch to quick-change parts and examine changeover processes for improvement opportunities
• Invest in powerful production scheduling technologies to achieve robust sequencing, eliminate unnecessary changeovers, and group similar products to utilize minor changeovers for similar products
• Apply production scheduling algorithms to convert all non-productive planned downtime into uptime (meaning all time not specifically needed for maintenance or changeovers)

Constraints Triggered New Tactics to Achieve Performance

During the early 2020 surge, it became abundantly clear that most manufacturers had to take a multi-faceted approach to keep pace with demand spikes.  There was a limit to how much additional equipment they could commission.  There was a limit to how many skilled laborers companies could add.  Furthermore, such investments would not have been prudent due to the short-term nature of the spikes.  These constraints left most manufacturers to do more and produce more with what they already had.  Organizations successful at navigating the constraints leveraged the waste in processes and converted it to productive capacity.  They found ways to run equipment faster and with less downtime.

Productivity improvements were not without cost.  In many cases, more production meant higher risk, lower customer service levels, or both.  Most manufacturers had to choose among several difficult trade-offs.  The old manufacturing adage is true: increased volume drives increased efficiency.

However, it is also true that if a company doesn’t institutionalize improvements, as volume recedes, so does efficiency.  The experiences in 2020 likely exposed opportunities in your organization, and perhaps your company even uncovered a hidden factory.  Any time your organization faces and responds to tremendous change, the question that may have the greatest impact is, what will you do with the newfound knowledge?