if large amount of capital were available at low interest rates,
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If large amount of capital were available at low interest rates, what would manufacturing industry spend it for?. Likely candidates. Computer systems for sending shop floor data to planners and cost accountants Process Automation CNC machines Bigger, faster models of current machines - PowerPoint PPT PresentationTRANSCRIPT
Telesis
If large amount of capital were available
at low interest rates, what would manufacturing industry spend it
for?
Telesis
Likely candidates
Computer systems for sending shop floor data to planners and cost accountants
Process Automation CNC machines Bigger, faster models of current machines Robots
Automated storage and retrieval systems Automated inspection equipment
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Assembly Plant Characteristics(Averages for plants in each region)
J/J J/NA US/NA
Europe
Productivity (hrs/veh) 16.8 21.2 25.1 36.2Quality (defects / 100 veh)
60.0 65.0 82.3 95.0
Space (sq ft / veh / yr) 5.7 9.1 7.8 7.8Repair Area (% of assly area)
4.1 4.9 12.9 14.4
Inventory (days) 0.2 1.6 2.9 2.0Job Rotation (0=none, 4=frequent)
3.0 2.7 0.9 1.9
Suggestions (# / employee)
61.6 1.4 0.4 0.4
# of Job Classes 11.9 8.7 67.1 14.8Training of new workers (hrs)
380 370 46 173
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Questions Raised
Whether automation is the secret? Does manufacturability of the product
make the difference? Is product variety and “under the skin”
complexity the reason? Are the more productive plants focussed on single / few standardised products?
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Automation v/s Productivity
0
10
20
30
40
50
60
70
80
0 10 20 30 40 50
Automation (% of automated assly steps)
Pro
du
ctiv
ity (h
rs /
veh
)
J / J J / NA US / NA NIC EUROPE
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Automation v/s Productivity
0
10
20
30
40
50
60
70
80
0 10 20 30 40 50
Automation (% of automated assly steps)
Pro
du
ctiv
ity (h
rs /
veh
)
J / J J / NA US / NA NIC EUROPE
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Automation v/s Productivity
The hi-tech plants End up adding many indirect technical and
service workers Have a hard time maintaining high yield
because breakdowns in complex machinery reduce the fraction of the total operating time that a plant actually produces vehicles
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Engine Plant
Chrysler Trenton
Plant Size (sq. ft.) 2,200,000
Employment 2,250
Throughput (per day) 3,200
Inventory (days) Avg. 4
Robots 6
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Comparison of Engine Plants
Chrysler Trenton
Toyota Kamigo # 9
Plant Size (sq. ft.) 2,200,000 310,000
Employment 2,250 180
Throughput (per day) 3,200 1,500
Inventory (days) Avg. 4 Avg. 0.25
Robots 6
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Toyota Kamigo # 9
Equipped with 20 year-old machines Retrofitted Preventive Maintenance 8 – 4 – 8 – 4 Set-ups in two mts. Work Stations close to each other
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IBM
HV LC – IBM
3178 logic unit
Models One
# of suppliers Small
Part count Small
WIP reduction 24 to 5 days
Space reduction Sixfold
Labour reduction Thirteenfold
Robots Several
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IBM / HP
HV LC – IBM LV LC – HP
3178 logic unit PC touch screen
Models One Mixed
# of suppliers Small 2,000 to 200
Part count Small 20,000 to 450
WIP reduction 24 to 5 days 21 to 3 days
Space reduction Sixfold Fourfold
Labour reduction Thirteenfold Fourfold
Robots Several
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General Principle
Do not put equipment simply to displace labour Equipment cannot think
or solve problems; humans can
Equipment can be a problem; labour can be an opportunity
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Economies of Scale
The economy-of-scale “law” is: Bigger store, bigger restaurant, bigger
factory, bigger machine yields lower cost per unit
The six-tenths rule, viz. one large capacity line is better than two or more small capacity lines in the ratio six : ten
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Economies of Scale
A firm has a smash product – sales are on a fast incline
The company is hiring; overtime, extra shifts and weekend work are becoming normal; and delivery lead times are stretching out
Looming on the horizon are lost sales
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Economies of Scale
0
100
200
300
400
500
600
700
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Demand Capacity
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Economies of Scale
Marketing projects growth in demand
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Economies of Scale
0
100
200
300
400
500
600
700
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Demand Proj. Demand Capacity
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Economies of Scale
Decision is made to add capacity Engineering searches OEM’s catalogs;
selects latest large machines / lines – enough capacity for five years of projected demand growth
Machines are installed and debugged, which takes several months owing to the large machines’ complexities and needs for special utility hookups
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Economies of Scale
0
100
200
300
400
500
600
700
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Demand Proj. Demand Capacity New Capacity
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Economies of Scale
With the installation of new capacity, backlogs and lead times melt
So does the demand
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Economies of Scale
0
100
200
300
400
500
600
700
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Demand Proj. Demand Capacity New Capacity Actual Demand
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Economies of Scale
The new capacity utilisation rate takes a nosedive
Everyone is nervous Marketing is under pressure
Launch advertising campaign Cut prices Design and sell something that will keep the
capacity busy The machine has become the master,
dictating policy
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Economies of Scale
0
100
200
300
400
500
600
700
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Demand Proj. Demand Capacity New Capacity Act Demand Decision
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General Principle
More than one team, cell, line or machine is better than one
Add fixed capacity in small increments as demand grows