Significantly Increased Factory Output Without Capex in a span of 3 months!!

One of our recent clients, an engineering company supplying to electrical industry, had severe delivery pressure from their customers. A chronic problem they have been trying to solve for over a year. The company identified one of the operations as a bottleneck and claimed the utilization at this operation to be near 90%. They had close to 2-months worth inventory waiting at this operation. Which meant any new order they start now will only be available for dispatch in about 2 months.

The management team believed the only way to increase output is by adding more resources (man & equipment).

We knew from our previous TOC implementations, that there is 30-100% capacity hidden (wasted) because of the current way of working. In almost all cases, the bottleneck resource is found to be very busy (activated) but utilized very poorly! So, we implemented a proven mechanism to improve the true utilization of the bottleneck operation. In most situations, a significant lead time is lost in carrying large transfer batches. We implemented a second mechanism to reduce transfer batch sizes, which reduced the material waiting time significantly, hence the lead time. And a third mechanism of order/dispatch prioritization reduced the chaos and improved synchronization.

These key changes released 50% additional capacity with the same resources. And dispatches increased by 25% in 3 months. Yes, Sales increased by 25% in a span of 3 months. See the 13 Week moving weekly average graph of dispatches. Each data point in the graph is average of preceding 13 weeks. During this period WIP dropped from 2 months to 3 days. Now any new order can be turned around in less than a week.

And all this was done without adding any new machine or operator!

Any situation can be significantly improved if we identify the limiting assumption!

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