OCTOBER 20219MANUFACTURING TECHNOLOGY INSIGHTSThis model is not meant to be exhaustive, but it gives a good starting platform to work from.The opportunity foundation is made up of Operational Expense, Manufacturing Throughput and Inventory.What is Operational Expense exactly? I a nutshell it is the cost of material, labor, indirect and fixed cost. This on itself works as an eye-opener when properly looked at. What do I mean with this? Well it is critical to understand how your product cost is built up % wise across these. What is the Pareto breakdown of these categories and within each of these categories. By the way Pareto (also known as ABC) is my all-time favorite how to look at things separating the trivial many from the important few. Then deeper investigate the possibilities and opportunities. What other operational expense can be scrutinized by monitoring actuals versus budget by example, what are the material variances or performance variances versus standard hours of work, target utilities and so on ... What is value-add versus non-value add activities or cost in your operations?Increasing Manufacturing Throughput is a matter of process flow across your production floor or rather on a broader scale of your Operations. Value Stream Mapping (VSM) is a powerful LEAN tool to get a grip and overview on things, identify gaps and to use as a basis for optimization. We are always measured through the eyes of the customer or at least we should be mindful we are. How good is your customer service level really from the customer perspective and expectations? How strong are you versus your competitors? More technically we get into the domain of OEE (Overall Equipment Effectiveness) where we often focus on machine breakdowns but don't forget to definitely look as well at overall stoppages and their reasons (for instance material shortages, product process issues, waiting for QC, ...). Are there opportunities around improving cycle times? A lean organization cannot function without stabilizing your capacity and output. Your production system needs to be a true reliable apparatus.Inventories have a direct impact on cash-flow and which is why companies are always looking for improvements around it. Have you done an ABC portfolio analysis (50% of items contribute to 5% of profit)? Think about it what is the best driver to work down inventories, is it A or C items? Well, actually, it is A items that have more frequent deliveries in and yet often have the same number of safety stock days than any other item on a far more important volume. Needles to say C items need to be worked on as well but more with regards to sanitizing the tail end of your business. Work with your A suppliers on lead times, who caries the stocks, call of agreements, JIT deliveries ... And finally there is SLOB (Slow Moving and Obsolete) the one category that everybody wants to forget about instead of having quarterly review and true action meetings on it.
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