How do you balance demand and capacity using production leveling?

1 What is production leveling?

Production leveling is a method of scheduling and sequencing the production activities to match the demand and capacity of the system. It involves dividing the total production volume into smaller batches of different products or variants, and distributing them evenly over time and across the available resources. This way, you can reduce the fluctuations in demand and capacity, and avoid the problems of overloading, underutilization, and idle time.

2 Why is production leveling important?

Production leveling is essential for improving the efficiency and quality of the production system. It helps to reduce waste and costs, increase flexibility and responsiveness, and enhance customer satisfaction and loyalty. Production leveling minimizes the waste of materials, labor, energy, and space that result from overproduction, inventory, waiting, and defects. It also lowers the costs of storage, handling, transportation, and maintenance. Furthermore, production leveling enables you to adjust to changing customer needs and market conditions quickly and easily. You can produce a variety of products or variants in smaller batches, and switch between them without causing disruptions or delays. Additionally, it helps you to deliver the right products or variants to the right customers at the right time and quantity. Moreover, it improves the quality and consistency of the products or variants, as well as reduces the risk of errors or defects.

3 How to implement production leveling?

To implement production leveling, you must first analyze customer demand and production capacity to identify patterns, trends, and variations. Then, you need to determine the production cycle, which should be shorter than the demand cycle. The production leveling factor should be as close to one as possible. After that, you must create the production leveling board, a visual tool that shows the production schedule and sequence for each product or variant. Finally, you must execute and monitor the production leveling according to the board and follow a pull system. Additionally, you should monitor the performance and results of the production leveling and make adjustments as needed.

4 What are the challenges and best practices of production leveling?

Production leveling has its own set of challenges and difficulties, such as demand variability, capacity constraints, and communication and coordination. High demand variability can make production leveling difficult, as it requires frequent adjustments and changes in the production schedule and sequence. To cope with this, you should segment and prioritize customers, products, and variants, as well as use demand smoothing techniques like buffer inventory or safety stock. Capacity constraints can hinder production leveling, so you must identify and eliminate the root causes of the constraints, and use capacity leveling techniques like cross-training or load balancing. Poor communication and coordination can hamper production leveling too, so you should use visual management tools such as kanban cards or production leveling boards to improve communication and coordination. Additionally, regular feedback and review mechanisms should be established to ensure successful production leveling.

5 How to measure and improve production leveling?

To measure and improve production leveling, key performance indicators (KPIs) should be used to reflect the objectives and outcomes. Common KPIs for production leveling include inventory turnover, cycle time, and on-time delivery. Inventory turnover measures the efficiency and effectiveness of inventory management, while cycle time measures the speed and productivity of the production system. On-time delivery indicates customer satisfaction and loyalty. Monitoring these KPIs can help you evaluate performance and identify areas of improvement. Additionally, the Plan-Do-Check-Act (PDCA) cycle is a continuous improvement method that can be employed to optimize production leveling.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?