E-commerce bringing in more business is a good thing—until it isn’t. To prevent your production lines from going down from too little maintenance or your employees burning out from too much overtime, you need a plan to bring more capacity online without breaking the budget.
Recently, a client approached us with a request to review their manufacturing operations and find the bottlenecks holding back their production capacity. The client, a domestic manufacturer in the home décor sector, struggled to keep up with growing retail demand. Stockouts were high, and labor was approaching burnout due to six straight months of mandatory overtime. Chainalytics was engaged to perform an on-site assessment of production operations to increase plant throughput. First, an immediate increase in production volume was required to keep up with the current demand. Further increases would be needed to ramp up for future growth and eliminate overtime.
When seeing it your mind’s eye isn’t enough
Along the way, the client brought up a question about “envisioning” the future state of operations. We had assessed their operations, defined the gaps, identified the solutions, and developed a roadmap to the future. But, while it is typical to build custom models to quantify changes, validate results and develop a business case, they wanted something a bit more concrete and visual. We reached into our tool bag and pulled out something we’ve employed before – simulation.
Our team walked through the plant, performed interviews with key individuals, and observed each line individually. This discovery phase yielded important information on operations, which we then documented, diagrammed, and resourced. Understanding the flow of materials, the technology driving the lines, and the mechanical and manual resources of production allowed us to begin preliminary construction of a line- and work-center-level simulation model. We reviewed all steps in the manufacturing and materials processes from suppliers’ goods hitting the back of the plant through finished goods out the front door. Some of the critical operational factors we were analyzing were: line speed variations, SKU and packaging variations, manual vs. automated processes/steps, labor requirements, timing of all steps in the process, and batching logic.
How to build a simulation in three steps
- Start with building a baseline simulation model. We examined nine of the plant’s manufacturing lines and, incorporating our Microsoft Visio diagrams and time studies, used Simio Modeling software to build baseline simulation models. We verified the models by running current state production scenarios and attaining similar throughputs and costs, as shown in plant operation financials.
- Change model parameters to represent possible business conditions. Should you speed up production lines? Perhaps add labor per line or entire additional shifts? Maybe add a different flow path? Expand sections of the line to increase throughput in the same footprint? Change line layouts? How about flowing materials to the lines differently? Employ accumulation areas? Alter schedule sequences and changeover routines? All these ideas become possible after building and validating the baseline. Challenge the team to come up with as many variations as your timeline permits.
- Rate and compare different scenarios and define the desired outcome. Assess your business needs and develop a roadmap to take your organization to that sought-after future state.
Is it even possible to increase a plant capacity by 30-40%?
After reviewing the results, the answer to that question was staring right at us. Instead of a substantial investment in another plant to achieve their growth objectives, the client was able to develop a multi-year phased plan for improvement that met their goals. The first phase captured benefits requiring little capital but provided a 20% improvement in capacity. Eventually, with an additional couple of years and a reasonable amount of capital investment, the client had a clear path to a 100% capacity increase within the confines of its existing facility.
A production simulation project can help you find increased efficiencies, procedures, and layouts to create new capacity with a few additional resources. Reach out to us and see how Chainalytics can help provide you with an alternative, cost-effective path to adding manufacturing capacity. Using one-of-a-kind tools and approaches like digital assets and managed analytics services, we consistently deliver actionable insights and measurable outcomes to our clients.
Patrick Boyle is a principal in Chainalytics’ Supply Chain Operations practice. He has over 25 years of experience working with manufacturing companies in multiple industries across all of the disciplines of supply chain management, business process redesign, and project management. He specializes in ensuring business transformation and organizational innovation and alignment.
Chellappan Palaniappan is a consultant in Chainalytics’ Supply Chain Operations consulting practice. Chellappan’s previous experience in warehouse design, simulation, and continuous improvement within 3PL environments has proven invaluable to our customers during diagnostic and operational improvement engagements.
