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Topic Leveling Production to Demand

Leveling Production to Demand

Home Forums General Forums New to Lean Six Sigma Leveling Production to Demand

This topic contains 4 replies, has 3 voices, and was last updated by  Charles Schaefer 3 days ago.

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  • #704873 Reply

    This is my first real question/post so I’m sorry if I don’t provide the right information or ask a stupid question.

    I’m working on a certification project to deal with leveling production vs demand.

    There are 3 machines producing 6 different part numbers. We suspect that to level production with demand we only need 2 machines and occasionally part of the 3rd when demand increases but we need to prove it so that we don’t fail our customer. With the extra capacity, we could bring in some fabrication that we have been outsourcing (costing about $250k in the last year).

    Part of the objectives would be to:
    -Control the finished goods inventory (it has been piling up very high recently, and sitting for months on our shelves; space is an issue in our shop)
    -Stop Over-Producing
    -Utilize excess capacity to increase profitability

    So here are my questions:
    -Does this seem like a possible six sigma project as opposed to just lean implementation? This is hard for me because we don’t really have a good system for accurately determining when and how much to produce for these parts.

    -What measures might be used to help control the output (production) to the input (demand)?
    My thoughts were to use:
    Sales Qty
    Production Qty
    Inventory Qty

    Thanks for helping, I just want to know if I’m on the right track.

    #704888 Reply

    It’s more of a lean project than SS since it doesn’t involve finding and reducing the causes of defects, defined as variation outside of customer specifications. I’d recommend that you use Theory of Constraints to reduce bottlenecks and “pull” to optimize production within constraints in order to match demand. Sure, there’s lean six sigma which strives to blend SS and lean, and 6-ToC which blends SS and ToC. And failure to meet demand is a sort of defect from the customer perspective. But I wouldn’t go there to make it an SS project.

    #704889 Reply

    @Straydog Thanks for your response.

    If the ability to meet demand whenever they needed it were one of the top factors in keeping their business, would that change your thoughts?

    Our motto that we have printed on our trucks and our boxes is essentially ‘If you order today, you’ll get it tomorrow.’ That’s what we sold them on, so an inability to meet that is very rough on our business relationship. It doesn’t help that they account for an obscenely large chunk of our business and therefore are always a focus of management.

    #704916 Reply

    @aaronolson No, I wouldn’t change my thoughts. In project management we teach that there is a difference between functional and non-functional requirements. Functional requirements concern what the product, service, or whatever the project is developing actually does. Non-functional requirements are things such as costs, deadlines… Six sigma deals with identifying the causes and reducing the rate of defects — variations outside of functional specifications. Admittedly the distinction gets conflated if your business is, for example, delivery. Then failure to deliver on time is a functional defect. But from what you say, your business is production. Matching production to demand is much more about lean than six sigma.

    #704949 Reply

    Charles Schaefer

    What you want to do is optimize production and costs given several constraints (i.e., demand, machine capacities, labor availability, etc.) which is a classic linear programming problem that can be solved using Excel’s Solver function. You can first try to meet demand using only 2 machines and then try three. You’ll need to forecast demand using past sales and also any information your Sales Department can provide.

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