We are often faced with dreaded waits at grocery stores, airports, and sporting events. We also witness waits when upstream products and services are delayed, when product development time persists endlessly, during transactional processes related to sales, human resources, quality control, and information technology departments, and from a multitude of healthcare services. We see these delays, because the grocery stores, manufacturing plants, or healthcare facilities do not have sufficient capacity to deliver products and services in a timely manner.
Capacity is simply the maximum amount that a system can handle. For example, a medical testing lab may only be able process twenty samples in one hour. This becomes problematic when there are forty patients waiting for their test results. In another example, a manufacturing plant can only produce 100 finished products in one day. This low production rate in the manufacturing plant is problematic when there are 400 customers waiting on products that they have already purchased.
The items that reduce capacity are called bottlenecks or constraints. A bottleneck is the one thing that causes your operation to slow down the most. For example, in the healthcare lab, the current bottleneck could be an insufficient number of testing instruments. If the lab purchases additional testing instruments, then the lab could increase its capacity.
Even though a healthcare testing lab has increased its capacity by purchasing additional instruments, there will now be a new bottleneck in the lab testing process. In fact, there will always be a bottleneck in our process, so your goal is to continuously improve and to continuously remove the greatest bottlenecks (constraints) from your processes. The ever-presence of a bottleneck is described by the Theory of Constraints.
When we think about the bottlenecks that we see in grocery stores, wholesale stores, healthcare facilities, transactional services like insurance companies, and manufacturing plants, we first think of dissatisfied customers. Yes, customers will be dissatisfied; they might write negative reviews on social media sites, and they might choose your competitor for their next purchase. Ultimately, your business wastes money, and it loses profits due to its bottlenecks and poor capacity.
Fortunately, there are seven simple ways that you can reduce your bottlenecks and improve your capacity to save money and improve your profits.
1. The first way to improve your capacity is to ensure that you have properly allotted your expenses across your process. Determine if you are overspending or underspending in each phase of your process. If you are overspending in non-critical and non-value-adding phases, then revert that money towards critical, value-adding phases that directly affect your most critical, capacity-limiting bottleneck.
2. The second way to improve capacity is to have enough space. If space is limited then unneeded employee motions can add time to your process, and products and works-in-process can become damaged. Both of these wastes add costs to your process and reduce your profits.
Expansion will solve space constraints when that option is feasible. Alternatively, leaning the workspace can reduce unneeded motions, unneeded transportation, and the amounts of damaged products and works-in-process. Implementing a sustainable and effective 5S system and Kanban signage can dramatically improve your capacity without the added cost of expansion.
3. The third way to improve capacity is to have the correct amount of employees. Having too many employees can cause confusion, result in duplication of work and overproduction, and create idle employees and un-utilized talent. Having too few employees can decrease employee satisfaction, increase errors, and increase processing times. Capacity planning software and spreadsheets, along with forecasting, are useful when calculating the optimal number of employees that help to improve capacity.
4. The fourth way to improve capacity is to measure the speed of your machines for both manufacturing and transactional processes. Machines might operate poorly due to maintenance, software upgrades, complexity and user-unfriendliness, and improperly trained employees. Thus, it is important to make sure that your instruments and machines are maintained on a regular basis, and it is important to make sure that employees are properly trained. Adding maintenance schedules next to instruments and machines, assessing employee training, incorporating Kanbans and error-proofing controls, and utilizing control charts and control plans to monitor speed and time, can improve the capacity of your machines and instruments for both manufacturing and transactional processes.
5. The fifth way to improve capacity is to have a consistently, reliable supply chain. If suppliers deliver damaged and defective parts, materials, and components, then your timeline will be delayed, you could lose customers, and your profits could decrease. The same consequences can occur if your suppliers are also late with their deliveries. To increase your capacity when supply chain issues are present, it is important to qualify your suppliers by ensuring that they can provide high quality parts, materials, and components when you need them. Also, avoid using single-sourced parts, materials, and components, and utilize secondary and tertiary suppliers to increase your capacity.
6. The sixth way to improve your capacity is to manage your inventory effectively. Ideally, we want to avoid unneeded inventory, because inventory:
- Ties up our cash,
- Increases risk of loss due to disasters, technological changes, and short-shelf lives,
- May increase end-of-year costs related to taxes, and
- Can encourage push-based systems that produce for the sake of production instead of producing only when orders are received.
However, inventory shortages can lead to increased timelines, dissatisfied customers, lost sales, and decreased profits. Thus, incorporating inventory management systems as simple a two-bin system, Kanban squares and racks, and combinations thereof can decrease inventory shortages, reduce excess inventory levels, and increase your capacity.
7. The seventh way to increase capacity is to make sure that your employees are satisfied. Highly satisfied employees have good productivity levels, and they are more likely to exhibit high levels of organizational citizenship behavior, meaning that they will go above and beyond their expected job duties. In contrast, employees who are not satisfied with their jobs are prone to underproduction, tardiness, absenteeism, and high turnover potential. To increase capacity when employee dissatisfaction is high:
- Determine what motivates each individual, employee,
- Provide leadership training for managers,
- Provide competitive salaries and benefits,
- Provide development opportunities and training,
- Maintain transparent and honest communications from the highest level leader to each employee,
- Offer unexpected perks to employees like employee picnics, surprise lunches, and special paid time off, and
- Celebrate company successes with all employees instead of select personnel.
To learn more about value-added process steps and value stream maps, lean systems and wastes, forecasting, and control charts, then make sure that you sign up for our Platinum-level, Lean Six Sigma training.