By Paul Hogendoorn
Most of us have heard the term “time is money” used mostly by people that sell their services based on time. In manufacturing, time really is money, so to improve as a company, its very important to measure time.
But exactly what “time” is most important to measure?
The first answers that usually come to mind are “uptime” and “down time”, followed by “Takt time” and “cycle time”. But there are other time measurements that may be far more critical to your business. Read on to see what they may be.
But first, lets look at the four obvious ones quickly.
Uptime is a measurement for what percentage of time your equipment is running and producing products. Its helpful for understanding utilization and capacity and determining things like OEE (machine efficiency).
Downtime is a measurement of the time the equipment is not in a productive state, and that is usually broken down to various causes or reasons for the equipment not running productively. It is a helpful measurement to keep track of equipment condition and planning maintenance or continuous improvement objectives.
Takt time is the average time between the beginnings of two successive product units being manufactured. It is a common measurement in high volume, standard part production, and gives an indication of if the machine or line is running to expected rate. It lets you know if you are on track to achieving the desired production in the expected period of time.
Cycle time is similar to takt time, but it is a measurement of how long a particular production cycle is. It typically refers to the number of hours (or days) a production unit is expected to take. It is helpful for planning machine time or determining if jobs were quoted accurately or not.
Now we’ll look at some of the other time critical measurements that could greatly affect your manufacturing operation, and how they should be applied.
Lead time is the estimated amount of time it will take to complete and deliver the product. It factors in sourcing material, machine, and labour availability, and confirms or sets customer expectation. Conservative, or “safe” lead or delivery times help a company achieve a high internal score, but other than mitigate the potential for failing to meet a promised delivery date, the habit of always being conservative with lead times costs the company capacity, profitability, and cash in hand.
Wait time is the period a partially manufactured unit waits between one process and another. In most factories I am in, this time is not measured in any empirical and visible method, but in many custom or high mix, low volume operations, it is a more important measurement than uptime or downtime. Wait time is wasted time. It could indicate that you have a bottleneck or insufficient machine capacity, or, it could be a matter of starting a job too early, spending money on the material as well as the labour, and then having that investment of time, material and energy, just sit there, having to be warehoused, stored or simply managed around, with an increasing chance of being damaged or lost (or no longer required as orders change) as the wait time increases. Wait times, in effect, are a good measurement of planning – the lower the number the better. The better the planning, the lower the number.
Cash conversion time is the time between when an order was received and when the product was shipped, allowing the invoice to be sent and the company to get paid. This is far more than a finance or front office measurement; it is a reflection of the efficiency and effectiveness of the entire operation. Any improvements to uptime or downtime will have an effect on cash conversion time, though in most companies, only relatively minor. Reductions in wait time can have a bigger effect, and better planning to shorten the lead time can have the biggest impact of all. Every improvement to the other time measurements is an incremental improvement that allows more accuracy and time efficient planning.
As an example, a company that can reduce its cash conversion time from 120 days average to 90 days average increases its capacity by 33%, and likely its bottom line by even more. In a custom shop, where each job may be different, cash conversion time can be greatly impacted by one other time measurement many companies don’t track empirically or visually. And that is, upstream process time.
Upstream process time is the time a project is in administration, or engineering, and has not yet been released to the floor. In companies that engineer a project to order, or even manufacturer to order, lead time can be used up in the upstream processes, negatively affecting the downstream (in this case, production floor) process, causing stress and chaos and jeopardizing more than just the delivery date of this particular order. Having a target for upstream processes to be completed, and then achieving and improving on those targets, is often a best first step for high mix, low volume, and custom manufacturers.
Where to start and how do you implement a system? It starts with understanding your current baseline data of your critical, business impacting measurements. Since all other measurements affect the cash conversion cycle, that would be the place to start. From there, it’s a matter of determining what in the operation is affecting that time the most, then measuring it empirically, in real time and very visibly, with the stated intention and commitment to improving it.
Dashboards that show the targets and the actual measurements are a good way to start. They don’t have to be complicated, integrated, or even automated. A visible and standard daily or weekly update of where projects are, relative to where they were expected to be, or where production or upstream process are compared to where they are expected to be, is a good place to start. Even if its updated manually to start – as long as its visible and accurate – it’s only a few minutes of administrative effort, that when done consistently, will set your company on a course to improve its most business critical performance metrics.
Getting people something to see early in the process is critical – and its not hard, or expensive, but its vital if you want information to change behaviors, and if you want changed behaviors to drive results. If you need help getting started, or some ideas how to get started, send me an email to [email protected] and we will help you start measuring the right things and creating a dashboard to start improving all your critical time targets – because in manufacturing, time really is money.
