Why idle capacities are nothing to freak out about

Having a proper scheduling system in place is essential for any kind of manufacturing process to continuously plan and track the production status. As manufacturing processes are wide ranged as well as company sizes there are various options to choose of: One can opt for complex algorithms that aim to optimize a production line or for a more simple, straight-forward scheduling software that mainly aims at adding transparency. Some small manufacturers might even use paper or a whiteboard as a scheduling tool, others further hire experts or try to implement lean techniques or TOC tools. But, what works for one manufacturer can be counterproductive for another and vice versa. Therefore, the very first step for any manufacturing company is to identify its characteristics, goals and distinct features. Focusing on job shops, this blog post introduces some important insights for HMLV (high-mix low-volume) manufacturers and explains why ignoring them leads to inferior performance.

The scheduling challenges of job shops

For a job shop, unfortunately, most principles and techniques, used in flow shops, are either useless or need to be adjusted. This is due to the fact that job shops face a highly unstable environment with different orders each requiring a unique routing; often resulting in a kind of (perceived) chaos. It is therefore utterly important for them to introduce a structure and a scheduling system. This can be quite a challenge; not only does a job shop lack routine and repetition, the schedule can never be set for a long time as outer influences continuously update the plan. This can be due to employees not being able to properly handle the unique order, customers changing their mind about the product or the lack of availability of specific raw materials.

Usually, within the theory of manufacturing, the aims of scheduling are always separated into two perspectives: the aims that are derived out of the resource perspective and the aims that are derived out of the job perspective. As this theory typically is derived from make-to-stock production and hence follows the perspective of resources, it is typically seen as efficient to increase batch sizes to increase utilization and decrease cost. On the other hand – following the perspective of jobs – it is efficient to decrease batch sizes to decrease job throughput times and ensure on time delivery. This conflict is called dilemma of scheduling. But purely looking on job shop manufacturing it becomes clear that this dilemma is not existing at all. Typically job shops do not produce any stock and just derive production orders from customer/ sales orders. Hence the perspective of resources is quite obsolete while the job view is the one and only perspective to focus on.

How job shops gain a competitive advantage

Having identified the focus of a job shop schedule, it is essential to realize how a job shop can stake out a unique position within the industry in order to gain a sustainable competitive advantage. Mostly, within the scope of a HMLV environment, such a competitive advantage is to a large extent determined by the firm’s throughput and its on-time-delivery (OTD) which means that, as a scheduler in an HMLV environment, one must focus on the time-delivery-performance.

One common mistake in gaining a competitive advantage

Not making use of these important insights often leads to a common mistake many job shop manufacturers make: freaking out about idle capacities. Neglecting the perspective of resources does not only mean that idle capacities are acceptable but also implies that idle capacities are the logical consequence and – looking on non bottle neck resources - nothing to worry about. Here is what happens if a job shop manufacturer DOES worry about idle capacities and therefore, lets its machine work at maximum capacity:

1. WIP increases. As all machines work at their maximum, stock is produced that is not belonging to a certain order. This does not only lead to chaos but also bears the risk of losing control over the different orders (in the future). Besides, WIP ties up cash.
2. Overhead increases. As work piles up in front of a workstation, you have to additionally administer your stock.
3. OTD decreases. As your resources are blocked for make-to-stock production there is a great danger that customer orders need to wait or that requests for new orders are planned with a later delivery date as possible.

As already mentioned above, the time-delivery-performance of a job shop is essential in gaining a competitive advantage; letting all machines work at maximum capacity only threatens this performance. Hence, in order to increase OTD, job shop manufacturers must not focus on their machines to work at 100% efficiency.

Troubleshooting

Not letting all machines work at 100% efficiency means that the production of each station and work center needs to be adjusted individually according to the current orders. Sometimes, machines or specific workers do not work at all, other times their full capacities are required. Sometimes, in case of a (temporary) bottleneck, overtime is necessary to assure OTD – so-called troubleshooting. It is obvious that this always depends on the current orders, their expected delivery dates and the current capacity of workers and machines. In this case, troubleshooting, when properly applied, is not a bad thing but rather a desired approach in the job shop environment.

All in all, it is apparent that transparency, in form of a suitable scheduling tool, is necessary to keep up with the many upcoming changes in a job shop and its many unique orders. The volatile environment most likely leads to continuous scheduling adjustments, idle capacities and sometimes troubleshooting. This is indispensable when working towards the goal of increasing OTD and eventually gaining and sustaining a competitive advantage.

Interested in learning more about an easy and visual job shop scheduling that help you gain transparency and improve your time-delivery-performance?