Mistake in an investment
Here is a concrete case of investment error. The manager has made a mistake on the performance of the line. He could not keep the commitments and has set up an additional team.
Investment in a sawing – machining – edgebanding panels in a furniture manufacturer.
The manager was left with the following database :
Weekly schedule: 40 hours in 5 days
- Objective 1000 furniture per week
- 5 pieces on average per cabinet – 14 pieces on average per panel
- All parts are squaring / edgebanding on all 4 sides
The supplier has offered a fully integrated equipment and streaming with the following characteristics :
- Sawing: capacity of 10 panels per hour
- Loading panels by forklift
- Machining / Edgebanding : Capacity of 10 pieces per minute or 600 pieces per hour : 600/4 = 150 finished pieces on 4 sides per hour.
- The supplier also indicated that compared to machined products, the efficiency of the machining / edgebanding would be 85%. The performance of the sawing, with a very good reliability could lead us to expect an efficiency of 95%.
The manager has made the following calculation :
- Objective : 5000 pieces per week
- Sawing capacity : 10 x 40 x 14 x 0.95 = 5320 pieces per week : OK
- Machining capacity : 150 x 40 x 0.85 = 5100 pieces per week : OK
It has therefore approved the investment with a planned capacity of 5100 pieces per week.
But the reality was different. The investment could not meet its commitments, even after the ramp-up phase.
1st mistake: Planned production time
- The manager had not incorporated the 20 minutes break on the day! The equipment works only 7h40mn day thus 38.3 hours per week.
- The loss of effectiveness for the 2 devices is (40 – 38.3) / 40 = 4.25%
2nd mistake : Loading saw part
- The study did not consider stopping the flow during the change of raw material. The evolution of the range is that changes are made every 25 panels. This change request 10 minutes. So for the week (400 x 25 ) x 10 = 160 minutes.
- The effectiveness loss for the sawing part, but also for the machining (the line is in one pice flow) : (40 – 37.3) / 40 = 6.75%
3rd mistake : Defects
- He had not been included the fact that 1.5% of the products were defective and had to be machining a second time.
- For the all line it is a loss of effectiveness of 1.5%
The loss of overall capacity of the line :
- 4.25% + 6.75% + 1.5% = 12.5%
Compared to supplier data, the effectieness of each machine becomes :
- Sawing : 95% – 12.5% = 82.5%
- Machining / Edgebanding : 85% – 12.5% = 72.5%
These two machines are online, the overall effectiveness is a cumulative return on the 2 machines:
82.5% x 72.5% = 59.8%
The weekly capacity is only : 150 x 40 x .598 = 3588 pieces equal to 717 cabinets.
An additional shift had to be set up!