Paying attention to minor issues can keep them from becoming major problems.
It's amazing the difference that a couple of years can make.
When you listen to the chatter of colleagues it is clear that our industry has come a long way from the recession of a couple years ago. We are not experiencing anything like the heady days of the late 1990s, but I believe we are experiencing a far more sustainable period of growth. To me, this rate of growth means that there will be enough of an increase in demand to improve capacity utilization but not enough of an increase to provide anyone with backlogs longer than the process cycle time necessary to produce the technology being purchased.
The emphasis will continue to be on the ability to manage little things as efficiently as possible. Management is even more challenging in an industry that designs and builds to customer specification. The temptation is to overreact by either investing in new "toys" (capital equipment), or hiring employees to get over a short-term hump or in anticipation of the next big order.
Overinvesting in capital equipment is one of the reasons so many companies have failed since the late 1990s. This costs companies in several ways. Obviously the equipment needs to be purchased/leased, which has the hard cost of using cash and/or servicing debt for both the equipment and installation. More significant and disruptive are the associated soft costs, such as the manpower to specify, install and debug any piece of equipment. An already overworked staff that is struggling to keep focus on product production usually supplies this manpower. When adding or replacing a piece of equipment that is really needed these hard and soft costs are a necessary investment. When adding capability to make a process easier albeit not faster, more reliable or less costly, these costs can be killers.
Similarly, overhiring can be costly and brutal unless the skill is really needed. Besides the hard costs of finding and hiring an employee, there are the underestimated soft costs of training the employees, making sure they fit in or doing damage control if they do not. The smaller the company, the more disruptive the new and unproductive people can be. However even the largest company can be quickly derailed by overhiring.
This goes back to the difficult task of managing. Increased demand conjures up images of buying and hiring. However, with increased customer demand not providing increased visibility, the first course of action should be to take advantage of some of the simple and obvious capacity opportunities all companies have.
When demand kicks up past the comfortable capacity, everyone starts pointing to problematic orders and difficult customers - with an eye toward throwing them out so the plant will run better. The problem is pricing; personality has nothing to do with capacity throughput. Higher pricing just makes everyone more comfortable when making the effort they always should be making to improve throughput.
Rethink how to best schedule your processes and facilities, assuming that offloading work to a qualified overseas or domestic partner is not a viable option. While not taking anything away from lean efforts or the philosophy of "just in time," there are times that you need to rethink how to load your facility with an eye toward level loading a manufacturing facility to maximize the overall capacity. Flexible level loading is best done when balancing a mix that includes some longer run "cover the overhead" jobs with the primary goal of making capacity available for lucrative quickturn or short cycle-time jobs.
Most companies can increase capacity when making the effort to continually adjust their scheduling practices based on the overall activity level, current mix, volume and available resources. Sticking to a static, inflexible scheduling approach will, however, cost the most at times it can least be afforded - ramping up or ramping down.
Flexible scheduling can be augmented by a flexible work force. If employees can be flexible with their work schedules and if management matches demand with available labor, significant added capacity can be realized at little or no additional cost. But too often, employee flexibility is not even considered.
Finally, capacity can be found in the obvious and the very subtle. An example of a subtle change that has had a huge impact on throughput is the increased use of cell phones at work. A few years ago people who owned cell phones used them sparingly at work. Today you see more people talking on cell phones outside your facility than you see people smoking. The number of employees taking daily (usually numerous and unauthorized) breaks is increasing dramatically. Not a big deal you say?
Two authorized 15-minute breaks costs a company 30 minutes each day. But if each employee also makes six unauthorized five-minute cell phone calls each day, it consumes an additional 30 minutes each day per employee. For a 16-person company that's eight hours of productivity, or one man-day, lost every day. In a 100-person company it's 50 hours lost daily!
It's amazing the difference a couple of years make. And yet it is equally amazing that it's still the little things - being flexible, paying attention to the subtle changes - that demand the most from management. PCD&M
Peter Bigelow is president and CEO of IMI ()www.imipcb.com; This email address is being protected from spambots. You need JavaScript enabled to view it..
