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Maximizing Capital Investment in Manufacturing

Explore how the manufacturing industry can utilize available capital at low interest rates towards automation, advanced machinery, robotics, and productivity optimization.

nevada-johnson
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Maximizing Capital Investment in Manufacturing

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  1. If large amount of capital were available at low interest rates, what would manufacturing industry spend it for? Telesis

  2. Likely candidates • Computer systems for sending shop floor data to planners and cost accountants • Process Automation • CNC machines • Bigger, faster models of current machines • Robots • Automated storage and retrieval systems • Automated inspection equipment Telesis

  3. Assembly Plant Characteristics(Averages for plants in each region) Telesis

  4. Questions Raised • Whether automation is the secret? • Does manufacturability of the product make the difference? • Is product variety and “under the skin” complexity the reason? Are the more productive plants focussed on single / few standardised products? Telesis

  5. Automation v/s Productivity Telesis

  6. Automation v/s Productivity Telesis

  7. Automation v/s Productivity • The hi-tech plants • End up adding many indirect technical and service workers • Have a hard time maintaining high yield because breakdowns in complex machinery reduce the fraction of the total operating time that a plant actually produces vehicles Telesis

  8. Engine Plant Telesis

  9. Comparison of Engine Plants Telesis

  10. Toyota Kamigo # 9 • Equipped with 20 year-old machines • Retrofitted • Preventive Maintenance 8 – 4 – 8 – 4 • Set-ups in two mts. • Work Stations close to each other Telesis

  11. IBM Telesis

  12. IBM / HP Telesis

  13. General Principle • Do not put equipment simply to displace labour • Equipment cannot think or solve problems; humans can • Equipment can be a problem; labour can be an opportunity Telesis

  14. Economies of Scale • The economy-of-scale “law” is: • Bigger store, bigger restaurant, bigger factory, bigger machine yields lower cost per unit • The six-tenths rule, viz. one large capacity line is better than two or more small capacity lines in the ratio six : ten Telesis

  15. Economies of Scale • A firm has a smash product – sales are on a fast incline • The company is hiring; overtime, extra shifts and weekend work are becoming normal; and delivery lead times are stretching out • Looming on the horizon are lost sales Telesis

  16. Economies of Scale Telesis

  17. Economies of Scale • Marketing projects growth in demand Telesis

  18. Economies of Scale Telesis

  19. Economies of Scale • Decision is made to add capacity • Engineering searches OEM’s catalogs; selects latest large machines / lines – enough capacity for five years of projected demand growth • Machines are installed and debugged, which takes several months owing to the large machines’ complexities and needs for special utility hookups Telesis

  20. Economies of Scale Telesis

  21. Economies of Scale • With the installation of new capacity, backlogs and lead times melt • So does the demand Telesis

  22. Economies of Scale Telesis

  23. Economies of Scale • The new capacity utilisation rate takes a nosedive • Everyone is nervous • Marketing is under pressure • Launch advertising campaign • Cut prices • Design and sell something that will keep the capacity busy • The machine has become the master, dictating policy Telesis

  24. Economies of Scale Telesis

  25. General Principle • More than one team, cell, line or machine is better than one • Add fixed capacity in small increments as demand grows Telesis

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