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3 Signs it’s Time for a Manufacturing Process Assessment

September 21, 2022

 by David Collins III

manufacturing assessment

Most factories could use a manufacturing process assessment. Regardless of a factory’s performance, a set of outside eyes can always add a perspective and see something that the people working in the factory may have missed. It is good due diligence.

However, while every factory could USE a manufacturing process assessment, there are factories that NEED one. The following are 3 signs that it is time for a manufacturing process assessment. If you are struggling with these, now is the time to act.

 

1. Scrap and Rework are a Constant and You Can’t Figure Out Why

Some scrap during a manufacturing process is standard. Very few products can be produced without at least a little scrap. However, that should be part of the process and clearly measurable. The difference is between “engineered scrap” and “waste”. For example, if you are making a pipe, the piece of metal might be 5mm longer than the final product so that it can be worked into the correct shape and cut to the right length. Waste would be anything over that engineered level. If whole pieces must be scrapped and it occurs regularly, you have a problem.

Rework is when the final product needs to be touched up before packaging and shipping out. Rework is a sign of a flaw in the manufacturing process especially if it happens over 5% of the time. The cause might be surprising and simple but without an assessment, it is difficult to find the root cause.

 

2. Your Factory is Full of “Stuff”

The “stuff” in this case is work-in-progress (WIP) and raw material inventory. Excessive WIP and raw materials are hazardous, inefficient, and drag on cash flow. If you are seeing this, it is time to have an assessment of your manufacturing processes.

Piled-up materials on create hazards that can block exits, obstruct walkways, and make injury more likely to occur. Everything in a factory needs to be in its place to reduce accidents. WIP is essentially cash sitting around doing nothing. Manufacturers maximize profit and cash by quickly turning raw materials into finished products. Products in progress are doing nothing for your company except existing on your balance sheet.

Similar to WIP, excessive raw materials are a drain on cash flow since they are not doing anything and may become worthless if they are allowed to sit on the shelf too long. Some safety stock (excess inventory in case there is a delay in raw materials) is important, but many factories overdo it and have raw materials sitting in the warehouse for months or even years. Or, you have a large supplier issue. Waiting on late deliveries and/or constant quality issues will build raw materials inventory in a major way.

This is a sign that it’s time for assessment because WIP is a symptom of poor process control and bottlenecks in production. The processes are not well aligned so one area moves more quickly and unfinished products pile up. All too often, factories believe this is normal and thus not a cause for concern. It is. Better purchasing systems to reduce the amount of material on hand and an improved workflow can improve your cash flow and make your factory safer and more productive.

 

3. Can’t Seem to Produce the Volumes Required

Many factories struggle to produce the volume that they want. Lead times may be too long and capacity cannot meet demand. We often see Chinese factories tell their buyers that any demand can be met by just ordering more. Similarly, they (though this is changing) believe that just adding more bodies will solve the problem. It won’t.

Here a manufacturing assessment is to determine the nature of the shortfall rather than just solve a problem itself. It may be that the factory is truly at full capacity and the assessment will show that new production lines are needed. However, it is more likely that bottlenecks and inefficiencies are preventing the factory from achieving a higher level of production. More people will not remove the bottleneck and may even make the situation worse.

In these scenarios, a manufacturing process assessment with a value stream map (VSM) will identify weak points and provide a path to raise production and increase capacity.

 

The Bottom Line: Early Prevention is Key

Do not ignore the warning signs that you have read here. Each day these issues continue is a day that production, money, and time are lost. Early prevention is key. It is much simpler to solve a problem when it is only a few weeks old than when it has been lingering for more than a year.

Trust your gut: if you think things could be better, then they probably can be. Ask for an assessment and find solutions.

 

Are you unsure what problems your factory might have? Here's how CMC's manufacturing assessment services can help. 

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Topics: Manufacturing Consulting, Manufacturing In China, Process Improvement

David Collins III

David Collins III

David was a Senior Strategy Consultant for Deloitte, served in Iraq as a Special Operations Civil Affairs soldier, and as a Governance Advisor to the Afghan Government with the Department of State. At CMC, David advises clients on strategy and investments.

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