Measuring Modeling and Managing Supply Chain Capacity

Approach for understanding and Managing Capacity

Plan Do Check Act

• Plan– Establish operating plan

– Assess current capacity

– Define demand

– Identify sufficiency plan to close gap

• Do– Implement actions

• Check– Measure performance

• Trend, Pareto

• Act– Use 8 D to resolve problems

Capacity Planning

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Value Stream Perspective

• Holistic view of

– Capacity and capability

– Internal and external

• Current State and Future State

– Plan, Do, Check and Act

• Identify constraint(s)

• What can you Influence or Control

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Understand the 5 Ms and Effect on Capacity

• Measurement (OEE and OAE)

• Machinery (Capability…Gross, Eng., Actual)

• Methods (Lean Tools…SMED, TPM)

• Manpower (Standard work and Training)

• Material (Right…Place, Time, Amount)

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Customer

• Demand based on contracted agreement

• Operating plan… – APW/LCR 5 Days

– MPW/MCR 6 days

• Shutdown losses for extended holidays.

• Forever requirement

Supplier

• Demand based on market forecasts

• Operating plan… – 6 to 7 days per week

• Shutdown losses limited

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APW=Average Production Week LCR=Lean Capacity Rate

MPW=Maximum Production Week MCR=Maximum Production Rate

Perspective Customer versus Supplier

Measuring Capacity

Align Measures

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PROBLEM DEFINITION TIME PERIOD DATA TYPE ANALYSIS & REPORTING FOCUS

1 EXECUTIVE

Management or

Business Process /

Systems

Year / Month Aggregate $Financial Data Driven Reports /

Directional AnalysisPolicy

2 DIRECTORProduct / Workshop

FunctionMonth / Weekly

Product Line / Asset Allocation

($ / %)

Trend Charts (Material, Resources,

Timing)

Business Processes /

Interdisciplinary Systems

3 MANAGER Process / Work centers Weekly / DailyProcess / Material Allocation

($ / %)

Pareto / Trend Charts (Material Flow

/ Quality)

Workshop Resource

Capability / Capacity /

Flexibility

4 SUPERVISOR Group Workflow Daily / HourlyMaterial / Quality Statistics &

Analysis

Work and Material Flow Charts /

Waste Elimination (Kaizen)Standardize Work

5 OPERATOR Individual Workflow HourlyMaterial / Quality Attributes (5S -

G0/NO GO)Status to Target (RYG) Quality

MANAGEMENT

OPERATIONS PERFORMANCE METRICS

Capacity and Time

• Gross

– 24 hours day x 7 days week

– Cycle time has significant impact on gross pieces

• Operating Plan

– Gross minus time not scheduled

• Run Time

– Operating minus planned downtime

• Availability %=

– (Run time – documented lost time) /Run time

• Efficiency %– Ideal cycle time/(Available time/Total pieces)

• First Time Yield %– Good pieces/Total pieces

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Measurement

• Overall Equipment Effectiveness (OEE)– Availability x Efficiency x First Time Yield

– Measure of Production Team

• Overall Asset Effectiveness (OAE)– ((Op Plan– Planned DT)/Op Plan)) x OEE

– Measure of Operations Team

• Total Equipment Performance (TEP)– ((Gross Hrs.- Not Scheduled)/Gross Hrs)). x OAE x OEE

– Measure of Executive Team performance

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• Visual management of the constraint

• Variance to plan WHY? Why?

Measure to Plan

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• Trend, Pareto, and Sufficiency Plan

Measurement Goal, Actual and Plan

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Modeling Capacity

Strengths

• Simple to use/understand– Production processes

– Static data

• Internal processes

• Based on data from actual production runs– PPAP 300 piece

– Run at Rate

• Identifies constraints

• Mandated by OEMs

Weaknesses

• Minimizes effect of non value added processes– Buffers, Material movement

• Data isn’t dynamic– Time between failures

– Time to Repair

• Focused on individual process not the production system.

• Focus on up level BOM

• Not good at what if?

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Capacity Analysis Workbooks

Strengths

• Plans internal and external processes.

• Considers Machinery, Manpower, Methods, Material

• Demonstrates capacity versus demand overtime

• Analysis of BOM

• Identifies constraints

Weaknesses

• Uses static data sets– Cumbersome to maintain

• Analysis of planned to actual generally performed through spread sheets.

• Reliant on accurate production reporting

MRP System

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Strengths

• Identifies throughput improvement opportunities

• Provides a visual for understanding product and information flow

• Working document

• Captures process data

• Future State Maps

Weaknesses

• Static Data

• Manual process requires team involvement to be effective

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Value Stream Mapping

Strengths

• Considers the interrelationship of all processes.

• Includes machinery, methods, material, manpower.

• Considers variation

• Evaluates capacity overtime

• Validates Production System

Weaknesses

• Must have software license

• People must be trained in usage

• Models are unique to flow

Production Simulation

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Manage Capacity

• Identify product families

• Value Stream Map product families

• Collect process flow and information flow data

• Use value stream and associated data to develop simulation of the process flow

• Validate capacity plan with simulation model

• Use Kaizen to improve constraint throughput

– Question all reasons for losses

• Why?

• Can the lost event time and /or frequency be reduced

• Update VSM and simulation

Capacity Management

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Deploy Theory of Constraints

• Only by increasing flow through the constraint can overall throughput be increased.

• Assuming that demand has been defined the steps are:

– Identify the system's constraint(s)

– Decide how to exploit the system's constraint(s) (how to get the most out of the constraint)

– Subordinate everything else to the above decision (align the whole system or organization to support the decision made above)

– Elevate the system's constraint(s) (make other major changes needed to increase the constraint's capacity)

– Warning! If in the previous steps a constraint has been broken, go back to step 1, but do not allow inertia to cause a system's constraint

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Summary

• Define Product Family Value Steam

• Understand 5 Ms of the Production System

• Assure demand is accurate

• Collect and Analyze operational data

• Base capacity on historical performance

• Deploy Theory of Constraints

• Validate improvements with appropriate models

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