Analysis

Our analysis identifies the means by which enterprise capacity is acquired, sustained and discarded. The obvious means of discarding capacity are reflected in idle and underperforming operating assets, including labor. However, these measures typically capture less than half the productive capacity discarded in many profit focused enterprises.

Beyond obvious losses, we understand that operating standards tend to erode under the weight of chronic excess capacity. We test fundamental operational standards, including efficiency, availablility, quality, cycle times, service and yield. We reevaluate the location and capacity of process constraints. We assess labor productivity.

Beyond production functions entirely, less obvious means of discarding capacity are obscured within functions where performance losses tend to be disassociated from enterprise capacity utilization. In these functions capacity is discarded after output has been produced. 

Sales, Marketing, Customer Service and Engineering may discard costly capacity by lowering prices and sacrificing margin to the point of loss making or over servicing and over engineering output to the point of loss making. Finance may contribute by ‘writing down’ or ‘writing off’ the value of inventory as stored capacity. This applies to service industries as much as to manufacturing, if not more.

If capacity is chronically over acquired, what choice do the functions have but to collectively discard it?  This leads us to question the approval processes for capital expenditures, as well as decisions surrounding acquisitions and mergers.

  • Face to Face Interviews (Across Function) 15%
  • Observation Of Work In Progress (Across Function) 35%
  • Management Systems Critique (Across Function) 20%
  • Historical Data Analysis (Across Function) 10%
  • Presentations And Sharing (Across Function) 20%
Analysis

Our experience indicates that in total, the economic capacity lost within functions outside of production may represent as much as 50% of the total amount of capacity discarded.

Numerous fictions in both financial and operational measurement and reporting obscure such capacity losses and misrepresent the total opportunity. Ultimately, these losses are excluded from traditional measures of capacity utilization. The first task of the analysis is to reveal a holistic view of enterprise capacity utilization.

In addition, the analysis presents the timeline, scope (physical and functional), financial benefits and costs relating to our proposed implementation program. We typically complete the analysis within four to six (4-6) calendar weeks.

Our activities include data gathering, historical analysis, direct observation of work in progress, manager interviews, process definition, systems critique, preparing presentation materials and conducting key presentations. Our teams work on site in a representative scope agreed with our client. 

At the conclusion of our analysis process, the real surprise for many of our clients is that production and operations functions are often not the major players when it comes to maintaining idle and under performing capacity. 

Analysis

Our analysis identifies the means by which enterprise capacity is acquired, sustained and discarded. The obvious means of discarding capacity are reflected in idle and underperforming operating assets, including labor. However, these measures typically capture less than half the productive capacity discarded in many profit focused enterprises.

Beyond obvious losses, we understand that operating standards tend to erode under the weight of chronic excess capacity. We test fundamental operational standards, including efficiency, availablility, quality, cycle times, service and yield. We reevaluate the location and capacity of process constraints. We assess labor productivity.

Beyond production functions entirely, less obvious means of discarding capacity are obscured within functions where performance losses tend to be disassociated from enterprise capacity utilization. In these functions capacity is discarded after output has been produced. 

Sales, Marketing, Customer Service and Engineering may discard costly capacity by lowering prices and sacrificing margin to the point of loss making or over servicing and over engineering output to the point of loss making. Finance may contribute by ‘writing down’ or ‘writing off’ the value of inventory as stored capacity. This applies to service industries as much as to manufacturing, if not more.

If capacity is chronically over acquired, what choice do the functions have but to collectively discard it?  This leads us to question the approval processes for capital expenditures, as well as decisions surrounding acquisitions and mergers.

  • Face to Face Interviews (Across Function) 15%
  • Observation Of Work In Progress (Across Function) 35%
  • Management Systems Critique (Across Function) 20%
  • Historical Data Analysis (Across Function) 10%
  • Presentations And Sharing (Across Function) 20%

Our experience indicates that in total, the economic capacity lost within functions outside of production may represent as much as 50% of the total amount of capacity discarded.

Numerous fictions in both financial and operational measurement and reporting obscure such capacity losses and misrepresent the total opportunity. Ultimately, these losses are excluded from traditional measures of capacity utilization. The first task of the analysis is to reveal a holistic view of enterprise capacity utilization.

In addition, the analysis presents the timeline, scope (physical and functional), financial benefits and costs relating to our proposed implementation program. We typically complete the analysis within four to six (4-6) calendar weeks.

Our activities include data gathering, historical analysis, direct observation of work in progress, manager interviews, process definition, systems critique, preparing presentation materials and conducting key presentations. Our teams work on site in a representative scope agreed with our client. 

At the conclusion of our analysis process, the real surprise for many of our clients is that production and operations functions are often not the major players when it comes to maintaining idle and under performing capacity. 

Pin It on Pinterest

Share This