When a business projects growth for a profitable product line, engineering reviews options for additional capacity, selects “the best” and commits to a timeline. This then goes through a defined capital planning & execution process. This capital process has high visibility to the business owners. The project is subjected to an established financial analysis that the business has some measure of faith in. The capital process has a proven track record. Although the results are not always good, there are systems to manage both successes and shortcomings.
In other words, there is a process that has visibility up to business executives which provides the means to ensure progress and set course corrections.
But most capacity strategies do not sufficiently consider ‘hidden plant’ opportunities. Why is this? The ‘hidden plant’ is additional capacity can be made available by solving process reliability problems (operational and equipment). These can often deliver 15 – 30% additional capacity from the existing process. And production provided through the ‘hidden plant’ is substantially more profitable than from expansion capital!
The reason process reliability is not embedded in capacity strategy is because most businesses don’t have the measures, organization and practices in place that can give business executives confidence. They need confidence that the opportunity is real, that the organization can deliver the results, and that progress will be visible and that they can exercise course corrections to ensure timely success.
The problems start with inconsistencies in measures across the organization and a lack of robustness in the numbers when viewed across time (as maximum demonstrated rate changes are made). Then, measured potential improvements are often at the equipment level, and don’t accurately reflect business (production line capacity) impact. Resources for driving improvement are often pulled into responding to crises, distracting from proactive improvement, and many organizations lack well-established work processes to ensure opportunities are identified and harvested.
Manufacturing executives often cannot see that proposed process reliability improvements are backed by data showing they will in aggregate deliver what is needed. This leads to a “work harder / do better” mentality and an unsustainable over-reliance on champion driven results.
In this presentation we will explore how an organization may elevate process reliability up to the manufacturing and business executive level, into the forefront of capacity strategy, where it rightfully belongs!
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