Increase The Productivity At The Bottleneck

As understood by the book, a bottleneck is any resource which is equal to or less than the market demand placed on it. To find out the bottleneck the case has derived multiple ways.

Look at all the resources and compare them with market demand. According to the case the one in which demand is greater than capacity is the bottleneck.

Discuss with expediters to find out the parts most frequently in short supply, which probably the ones were passing through a bottleneck.

Next, the bottleneck would have the biggest pile of WIP inventory sitting in front of it.

Finally the 2 bottlenecks were:

  1. NCX-10
  2. Heat treat department

The case has executed a series of actions to increase the productivity at the bottleneck to improve the system performance:

  • Moving quality control inspection first. Checking parts before they go to bottlenecks and dedicating an inspector checking pre-bottleneck parts
  • Implementing new rules for lunch break
  • Reusing 3 old machines to complement what the old NCX-10 was working
  • Organizes the bottlenecks to work on only overdue orders (from the most overdue to the least overdue orders).
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 There are some limits to the strategy as described in the case:

First, their suppliers need to increase the frequency of deliveries and reduce the quantity of each delivery, which will increase delivery cost, also they may lose certain bargain power to suppliers.

Secondly, the conflict with current cost calculations model. Reducing batch sign means more setups on equipment. Under the current way the cost is calculated, the cost looks as though it's gone up because of the additional setups, however the cost is actually gone down.

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The following are the useful measures at the operational level to express the goal:

Throughput: It is the total production which can be produced in a given assigned time. It is the rate at which entities are produced.

Inventory: Where the inflow rate exceeds the outflow rate, the number of flow units inside the process increases. It is the total of all the money the system spends in order to take inventory into throughput.

Financial Measure: Increase net profit while simultaneously increasing both Return on Investment (ROI) and Cash flow.

Equations:

Net Profit = Throughput - Operating Expense

ROI = (Throughput - Operating Expense) / Inventory

Cash Flow = Throughput - Operating Expense +/- Change in Inventory

Productivity = Throughput / Operating Expense

The three common financial measures that express the goal to "make money " are by increasing the following-

Cash flow- It is the net amount of cash a company received and disbursed during a time period.

Return on investment -It is a measure to evaluate the returns on an investment.The higher the ratio the greater is the benefit.

ROI = Net income /cost of investment

Net profit- Net profit is the money that is left after one subtracts their total business expenses from their total revenue.

Net Profit = Total Revenue - Total Business expenses

When designing an operational process from scratch, we should align the whole process in accordance with the bottleneck by making it as the leader of the process as it will decide the flow time of the system.

As stated earlier the bottleneck will decide the total throughput and the capacity of the plant, so the inter-dependency should also be taken into consideration.

By making bottleneck as the leader it will reduce time as well as inventory thus making systems more efficient. Also if available as in the case of the book, there is an alternative to NCX-10, thus working them in parallel can decrease the flow time, while increasing the output.

The book analyses what the goal of a business should be and what is important to measure and control to achieve that goal. To influence industry to move towards continuous improvement. When operations is effective, you work better not harder. Productivity is an act of bringing an organization closer to its goal.

Alex thinks the robots are so successful because:

Because their localized cost per part had gone down.

Sales had not increased; labour had not decreased, while the inventory had gone up.

Once the plant's operations stabilize, Alex finds himself spending more time with his family. He wins back his wife's affection and his plant suddenly becomes the most productive one in the company. Alex is promoted to President at UniCo and entrusted with the task of implementing Jonah's advice throughout the entire division. he begins to realize that 'bottlenecks' or constraints can change over time, and hence he must adapt his way of managing the business

The counter statements would be as follows:

If a product requires 2 hours to manufacture, how the order can take three weeks to make it, certainly there are bottlenecks the manufacturing process.

The departments are slow to carry out the process which takes three weeks to complete the order.

There may be a bottleneck in the way the products move across departments, that are taking time to complete the order.

Updated: May 19, 2021
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Increase The Productivity At The Bottleneck. (2019, Nov 23). Retrieved from https://studymoose.com/increase-the-productivity-at-the-bottleneck-essay

Increase The Productivity At The Bottleneck essay
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