Understanding the Costs of High Cycle Times
When it comes to production work cell optimization, companies must be able to lower cycle times and increase production throughput. However, some companies understand the process better than others. Why is it that some companies lack the ability to perform the proper cycle time analysis? It’s because they lack the ability to apply a dollar value to lost and idle time. Without properly identifying the true costs of high cycle times, a company will never be able to put plans in motion to eliminate lost time and reduce costs.
High Cycle Times Must Have a Cost Associated to Them
There can’t be any ambiguity as to the costs of lost time. Companies must be able to immediately identify the dollar value impact of delays throughout the production floor. Otherwise, it becomes a point of contention and one that’s open to discussion as to the net effect of delays and down time.
When it comes to production work cell optimization, manufacturers must provide the tools to allow management to quantify the costs of down time in a dollar value that everyone understands. Whether it’s based on the hourly wage someone makes or the gross profit of the product made in a given work station, it must be out in the open for everyone to review. By applying a dollar value to these costs, it brings an immediate sense of urgency to addressing downtime. So, what does this involve?
1. Determine Existing Cycle Times
Every good cycle time analysis needs a starting point. In this case, it involves taking the initial cycle times before any changes are made and properly documenting lost and idle time as it occurs. The success or failure of this exercise depends upon the transparency of this initial trial. In this case, capturing lost and idle time is a good thing. Don’t try and make changes to these initial cycle times as they occur. It will help put a dollar value figure on future delays and will point the way to savings.
- Take the current cycle times: Every operation in production has a cycle time. There is a cycle time for the finished product, and one for each operation. Track the cycle time in this workstation with all the downtime. Capture the time from beginning to end – with or without any delays.
- Track the cycle times on a grid: As this exercise unfolds, there will be high and low cycle times. In fact, it should be all over the map. There’ll be times when the cycle times are extremely low and other periods where it’s extremely high. Again, don’t try and change these times. This is an essential aspect of success.
- Be mindful of the delays: In general, it will become abundantly clear what is causing the delays. It could be an incomplete bill of materials, part and material shortages, poor assembly drawings, unclear work instructions or even machine downtime. Gradually it will be obvious where the issues are. While it’s not important to capture the lost time, (as it’s already captured inside the cycle times), it is important to capture the inherent causes of the downtime.
Applying a Dollar Value to Downtime in Manufacturing
2. Determine New Cycle Times
While the first exercise showed the inherent flaws in the work station, this part of the analysis involves eliminating those flaws. Consider workers in production as performing the same function as a doctor. They must have all their tools and necessary instruments within reach. In addition, the operator must never be left idle waiting for instructions. Every second counts when it comes to increasing production throughput. This stage involves eliminating those obvious flaws and starting off with a new production work cell optimization focus.
- Eliminate causes of the obvious delays: This time, the worker will have clear work instructions, easy to read outlines and clearly defined bill of materials. There won’t be any material or part shortages and the machine will be in good working order.
- Use a cycle time analysis to take a new set of cycle times: Once the entire perfect work station has been set up, take an entire new set of cycle times. Over time, it should become abundantly clear how much setting up the perfect work station helps to decrease cycle times. In this case, the cycle times should be more compact and closer to one another.
- Establish a median cycle time: Gradually, a median cycle time will be established and most of the lost or idle time will be minimal in terms of impact. While it will still occur, it won’t be as severe. This exercise is as much about identifying severe downtime as it is determining the proper cycle time.
3. Establish Dollar value Cost of Lost & Idle Time in Manufacturing:
While this exercise does take some practice, it doesn’t require a genius to begin to notice the inherent flaws in a given production work cell. Individual lost time is minimal, but taken as a whole it adds up to a lot of wasted time. Being successful with production work cell optimization requires eliminating that lost time and quantifying delays. What’s now needed is to apply a dollar value to these delays.
- What is the cost of delays? Once the median cycle time has been established, a given range is easy to work with. However, when cycle times begin to increase, the costs must be clearly defined. It’s important to apply a dollar value to these delays.
- Determine method of measurement: Whether it’s measured by hourly wage or by the gross profit of the product manufactured, there must be an agreed upon tool of measurement. When 1 hour of downtime occurs, everybody must immediately be cognizant of the dollar value cost to the company.
- Review and re-visit: This is not a one-time exercise. Its success lies in the constant application and review of these steps. When severe downtime is encountered, review these steps at length to make sure nothing was missed. The most successful companies match their daily cycle times with their production throughput and look for any obvious flaws.
Cycle time analysis is never as simple as just knowing what they are. Manufacturers should always look for ways to improve those times and reduce costs. When companies have the demand for their product, but lack the ability to meet that demand, then this is the perfect exercise to match a company’s throughput to its sales forecast. Before a company looks to increase its labor and equipment, it must first make sure it has maximized its current production capacity. This is the tool to use.