Dasarathi G V
Director in Leanworx
Dasarathi has extensive experience in CNC programming, tooling, and managing shop floors. His expertise extends to the architecture, testing, and support of CAD/CAM, DNC, and Industry 4.0 systems.
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Key Takeaways :
High CapEx due to inaccurate demand forecast: Instead of buying new machines based on uncertain demand forecasts, CEOs should focus on improving machine capacity utilization.
Low machine utilization due to poor data: Inaccurate and delayed data leads to poor decisions on production capacity.
Improve capacity utilization with Industry 4.0: Real-time data from machine monitoring systems can significantly improve capacity utilization.
There are two phases to improve capacity utilization: Reducing downtime and rejections.
How to reduce CapEx costs on new machines ?
A big pain point for CEOs is the high and constant CapEx (capital expenditure) on new machines without any assured return.
What are the challenges of high mix low volume manufacturing?
- From quarter to quarter, you cannot predict whether your orders are going to go up or down.
- Profit margins are very thin, but customers are also forcing you to reduce costs every year.
- However, your key customers are forcing you to increase capacity constantly, and if you do not do this, they threaten to take the orders to some other firm.
- There is constant CapEx on new machines.
What do CEOs of manufacturing companies worry about most ?
Things are looking fine, your orders are increasing, customers assure you of more orders.
So you buy more machines to increase manufacturing capacity. More machines means more CapEx on the machines, more space to house the machines so you have to buy land and spend on the plant construction.
Your direct and indirect wage bills go up because you need more operators, more people in inspection, stores, etc. Your power bill goes up, and so does the cost of consumables.
6 months after you buy more machines, orders suddenly reduce. Machines, operators and indirect personnel are sitting idle. You are saddled with the loan repayment for the machines and the plant construction, higher salary bill, higher power bill, and other indirect costs.
Obviously, you cannot buy more machines based on the customer’s assurances of long term orders.
In most firms involved in High Mix Low Volume (HMLV) manufacturing, capacity utilization of machines is 40 to 50%.
If your utilization is 50%, it means you have 10 machines doing the work of 5 machines.
What are the causes of low capacity utilization?
Reason for causing low capacity utilization is because your decision makers (everyone from the supervisor to the CEO) are getting inaccurate data, and getting it too late to act upon.
This is the situation on the shop floor:
– Data to decision makers goes via multiple people
– Is inaccurate, depends on people’s memory, honesty
– Reaches decision makers after 24 to 48 hours
Inaccurate, late data = Wrong decisions or No decisions
How to increase production capacity ?
When you need to increase production capacity, you have two options:
- Depend on the same old paper-based data chain, buy more machines, increase CapEx and running costs.
- Switch to an Industry 4.0 based data chain. Improve the capacity utilization of the existing machines, by empowering your shop floor team with accurate data that reaches them instantly.
This is how the data chain works in the second option, with an Industry 4.0 based Machine Monitoring System.
- Decision makers get instant and accurate data.
- Better diagnosis, fast response to problems.
- Higher asset utilization and profits.
Capacity utilization can be improved by 20 to 30% in just a few weeks or months. In the time that it takes for you to order and get a new machine, you can increase the capacity utilization so much that you don’t need the new machine.
How is this possible ?
Example:
You have 20 machines, and want to increase capacity by 25%.
Option 1: Buy 5 more machines.
Option 2: Produce 25% more from the same machines.
If you opt for option 2, a machine monitoring system will cost you about 2 % of the cost of the machine.
Here is a plan of action:
Phase 1: Reduce the downtime.
Phase 2: Reduce the rejections.
Phase 1:
Split the total downtime into low and high hanging fruit. The total downtime typically is 30% low hanging fruit and 70% high hanging fruit.
Low hanging fruit is downtime due to work ethics issues: production starting late and stopping early in shifts, meal breaks beyond standard hours, high downtime in night shifts.
High hanging fruit is downtime due to management issues: no raw material, high setup times, machine breakdown, high first-part inspection time.
Machine downtime - Low hanging fruit
Causes of machine downtime:
Production starts late (typical 30 minutes) and stops early (typical 30 minutes). The operator takes unscheduled breaks during the shift, and extends meal and tea times beyond their normal times (typical 15 minutes). Downtime is 15%, 1.25 hrs. in an 8-hour shift
How to reduce machine downtime using Leanworx ?
Leanworx has a report showing late start and early stoppage in shifts, and hourly production report that shows low productivity hours.
Print these and put them up on the shop notice board every morning. Everyone gets to know everyone else’s behavior, and the problem goes away in just 2 weeks. This means a capacity increase of 15 %.
Machine downtime - High hanging fruit
Machine downtime reasons:
- High part unload-load time
- Machine breakdown
- No raw material
- High setup times
- High inspection time
High part unload and load time
This downtime occurs when the time to unload and load the part is more than the standard time. E.g., actual time is 1 minute on average, but time spent is 30 seconds.
The possible causes are operator fatigue as the shift progresses because the part is heavy, poor skill level of operator, etc.
The possible solutions could be: providing mechanical aids to reduce operator fatigue, improving operator skill level by training, etc.
Leanworx has a report that shows you the cycle time and downtime between cycles, for every cycle. You can use these reports to analyze unload-load times and pinpoint causes of high times.
Downtime due to high setup times
- This happens when the actual setup time is more than the standard time allotted, during setup changes.
- The possible causes are poor fixture design, fixture maintenance issues, low operator skill levels, etc.
- Possible solutions are improved fixture design, auto work offset probe on CNCs, modular tooling, quick-change tooling, operator training.
- Leanworx shows setup times for each part change as a report. You can use this to determine long or erratic setup times, then analyze and fix the issue.
High downtime due to machine breakdown
This can be caused by long time to attend to a breakdown, long time to fix a breakdown, and frequent breakdowns.
Solution: Leanworx has breakdown and preventive maintenance features. Time to attend to a breakdown is often half an hour or more.
It includes the time to inform the maintenance department about a breakdown, and then the time for maintenance personnel to arrive at the machine.
This is reduced by Leanworx’s automatic ticket creation and breakdown alerts on mobile phones.
Breakdown frequency is reduced by Leanworx’s preventive maintenance features (time-based and usage-based), and autonomous maintenance features.
Maintenance KPI trend reports (MTTR, MTTA, MTBF) help in improving maintenance systems in the long term. Maintenance incidence reports help in analyzing each incidence.
How long will this take ?
Low hanging fruit: 2 weeks to 1 month, to improve capacity utilization by 15%.
High hanging fruit: 2 to 3 months to improve capacity utilization by 10%.
Sounds unbelievable ?
See these case studies of firms that have actually achieved this.
If you want to know what the downtime numbers are on your shop floor, get in touch with us for a free 5-day trial.
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