Full capacity utilization in production – an illusion – what to do?

You have a produc­tion. Multis­tage. There are diffe­rent areas. They have diffe­rent machi­nes. These machi­nes have been purcha­sed at diffe­rent times. And have diffe­rent capa­ci­ties. Run by people. With diffe­rent capa­bi­li­ties. Your produc­tion is filled with orders. Diffe­rent orders. Some are more labor inten­sive than others. Larger parts require diffe­rent hand­ling than smal­ler parts.

Theory now expects that the capa­ci­ties resul­ting from a mixture of plan­ning and history and the current order mix fit toge­ther perfectly, so that every produc­tion employee, every machine is fully utili­zed at all times. Unde­r­uti­liza­tion is taboo! At every point in produc­tion! The employees are far too expen­sive for that! We also employ (expen­sive) mana­gers who ensure that the employees are fully utili­zed. This atti­tude gives rise to a variety of side effects that are not visi­ble at first glance. They come from the fact that employees and their supe­ri­ors have to prove their full capa­city utiliza­tion. E.g. via company recor­ding systems. Some of these effects are:

1. Things going wrong. They are much harder to evaluate than sche­du­led dura­ti­ons. And they can effec­tively turn unde­r­uti­liza­tion into overutilization.

2. Over­pro­duc­tion. More is produ­ced than needed. Inven­tory is crea­ted. “We’ve done that before”. “Is not our problem if the others are too slow”.

3. Problem discus­sions. Long-stan­ding problems are discus­sed when there is unde­r­uti­liza­tion. Nobody can blame you for taking care of these problems. Unfort­u­na­tely, usually nothing comes out of it. Because others, who need to contri­bute, are less unde­r­uti­li­zed at the time.

The cause is descri­bed above. It is an illu­sion to demand full capa­city utiliza­tion from every produc­tion employee at all times.

A popu­lar stra­tegy is to keep one’s own capa­ci­ties low enough so that there is always and constantly more work available than one’s own capa­city. The rest is reple­nis­hed, with tempo­rary workers. How well this stra­tegy works can be seen simply by whether tempo­rary workers are used in all areas.

If not, then these areas are either unde­r­uti­li­zed or capa­city bottleneck.

Often such a large-scale use of tempo­rary workers is not possi­ble, e.g. for reasons of lack of quali­fi­ca­tion. Then it is much more expe­di­ent to expect unde­r­uti­liza­tion in diffe­rent places, and to convert this unde­r­uti­liza­tion into value-adding through inter­nal orders. Simple things are suita­ble for this:

1. Acknow­ledge that inter­mit­tent unde­r­uti­liza­tion is normal

2. A worklist of acti­vi­ties that are not order-rela­ted. These acti­vi­ties are carried out during underutilization.

3. The worklist should be public and trans­pa­rent, as should be the state of underutilization.

4. Multi­ple quali­fi­ca­tion of employees is a key factor to balance the uneven demand for capa­city within the organization.

The reward: fewer disrup­ti­ons, fewer discus­sions, more problems solved.

If you also want to embark on this path, I will be happy to support you, get in touch !