Most companies place a high value on the ability to increase production capacity. And it’s especially valuable to do so if added equipment costs can be avoided. After all, the nature of manufacturing is to produce goods, and modern operations are only getting more efficient at doing so.

In this article, we will be exploring exactly what production capacity is and strategies you can use for finding hidden capacity within your shop.

What is Production Capacity?

Production capacity is the maximum output that can be achieved in the production of manufactured goods. It is generally a part-based metric that identifies the most goods that can be created given a set amount of resources (time, labor, materials).

ie. Within a week, we can produce 500 widgets.

The ideal for any manufacturer is to operate at full capacity. This means that all equipment is utilized at the highest percentage and operates with optimized processes to incur no unnecessary downtime. But capacity in most manufacturing companies is constrained by one of several factors.

Before we can work to increase capacity, it is best to first understand how capacity is hindered via these losses.

The Six Big Losses

Developed in Japan in the early 70s, the Six Big Losses represent the categories that alone or in combination can constrain production. The cumulative impact of these losses defines a machine’s Overall Equipment Effectiveness (OEE) and impacts the amount of available capacity that exists for that piece of equipment or the factory.

The six losses are broken down into three categories with sub-categories:

Availability Losses

• Equipment Failure – Breakdowns and mechanical failures
• Setup and Adjustment – Changeovers and dial in

Performance Losses

• Idling and Minor Stops – Jams and obstructions
• Speed Reduction – Poor maintenance or inexperienced staff

Quality Losses

• Process Defects – Human error and poor workflow
• Yield Reductions – Defective parts and scrap

Calculating Production Capacity

Before a company can begin to address issues caused by the Six Big Losses, they must first understand how capacity is calculated. The vast diversity of industries and processes mean that there will be differences from company to company. However, the basics of calculating capacity are the same.

1. Machine-Hour Capacity: This is a straightforward calculation of the number of machines multiplied by the number of hours available to run. This may range from single day shifts or continuous operations.
2. Production Capacity of One Product: Here, the amount of time required to produce one unit is divided by the machine-hour capacity.
3. Production Capacity of Multiple Products: Most factories produce more than one product. In this case, each product is calculated as it would be for a single product, then added to the output of the other product. If the time to produce each item is different, then the combination of units per hour up to the maximum capacity is determined by order position, or schedule, to work within that capacity.

Once the capacity is known for all equipment, the impact of the Six Big Losses will result in a utilization level for each machine and the factory. Increasing capacity means understanding and managing those variables favorably. This is done by a combination of metrics that help define the utilization rate and the gap required to address it and improve.

Increasing Production Capacity

Companies seek to increase capacity for various reasons. This may be to meet actual increases in demand or planned increases in demand. They may also be used for short-term and long-term spikes in demand as well. Regardless, there are several basic strategies to increase capacity and optimize a manufacturing plant to take on the extra load.

Short Term

• Use Current Equipment: Using current equipment more may result in overtime which includes weekends or nights. It may also mean adding shifts in manufacturing plants that don’t have a continuous operation.
• Outsource: This is essentially using someone else’s equipment to manufacture a part or all a product. However, this may cost manufacturers a premium.

Long Term

• Optimize Equipment Utilization: This means deploying tools and methods to improve the performance of existing equipment to “unlock” hidden capacity.
• Purchase Additional Equipment: Ideally, purchasing new equipment is considered when existing equipment is optimized and at its maximum capacity. If this is the case, it will be far easier to justify such a large capital expense.

Strategies for Increasing Manufacturing Capacity

Short-term increases run the risk of being expensive and even dangerous. If the run lasts longer than planned, overtime becomes a drag. And by outsourcing, there is always a chance of competitors attempting to copy your product. But long-term increases can be achieved that lowers cost and protects companies from the risk of duplication.

The key to unlocking hidden capacity is in using best-in-class software and devices designed to capture, analyze, and contextualize data so that leaders can better understand, and improve, the performance of their operations. By benchmarking progress, manufacturers can begin to fully optimize their equipment utilization and uncover paths for improvement.

Let's discuss a few of the key metrics management should pay close attention to when attempting to increase the production capacity of a plant.

OEE

The gold standard of measuring manufacturing effectiveness, Overall Equipment Effectiveness takes into consideration availability, performance, and quality.

• Availability: Amount of time a machine is in cycle producing parts compared to the amount of time a machine is scheduled to be in cycle.
• Performance: The speed that parts are produces while the machine is in cycle.
• Quality: The percentage of good parts out of the total parts produced. 

Ultimately, OEE is a measure of how well you use your manufacturing equipment and identifies areas that can be improved, whether that be the amount of idle or downtime a machine experiences, the time it takes to create a part, or the extent of quality issues experiences.

MachineMetrics comes with an out-of-the-box OEE report and provides the option to create a customized report as well. You can easily segment the data to spot inefficiencies and trends.

The OEE Report comes out of the box with MachineMetrics, giving you access to OEE across each machine, groups of machines, or the entire shop floor.

Further reading:

• 7 Strategies to Measure and Improve OEE
• A Comprehensive Guide to Overall Equipment Effectiveness
• OEE Software: Understand How to Track and Improve Productivity
• Learn More About the MachineMetrics OEE Report

TEEP

Taking OEE one step further, TEEP considers maximum availability to be all available time, as in 24 hours a day, 365 days a year. In contrast, OEE uses total operations time as the maximum amount of availability, taking into consideration unscheduled time.

As you can see in the above report, you can also track TEEP within MachineMetrics.

Further reading:

• OEE, OOE, and TEEP - What's the Difference?

Utilization

Broadly defined, utilization is the percentage of available production time during a selected time period that a machine was operating to process materials.

Machine utilization data may be presented in the MachineMetrics Utilization Report for the following utilization-related components:

• In-Cycle: Percentage of the selected production time period that the machine reported to MachineMetrics as being in-cycle.
• Spindle-Rotating: Percentage of the selected production time period the machine reported to MachineMetrics that its spindle was rotating.
• In-Cut: Percentage of the selected production time period the machine reported to MachineMetrics that it was cutting material.

Furthermore, you can view utilization across all machines, for a group of machines, and even for individual machines, allowing you to break down the data to find overarching trends or issues with individual machines.

Below is a quick introduction video to the MachineMetrics Utilization report:

Further reading:

• Learn more about the MachineMetrics Utilization Report

Case Study: Unlocking Millions in Production Capacity

By using real-time production captured by MachineMetrics, manufacturers can use accurate data-driven insights to address problems, improve on processes and unlock hidden capacity without expensive overtime or outsourcing. MachineMetrics’ system has been successfully used to increase capacity while lowering maintenance costs, improving quality, and ensuring that Capex costs are used only when current capacity is fully optimized.

Interested in how MachineMetrics is unlocking hidden capacity for our customers? In this video case study, OEE Director Matt Townsend of Avalign Technologies (a medical device manufacturer), shares how instant visibility into shop floor performance resulted in a 25-30% increase in OEE, a more effectively leveraged workforce, millions of dollars in increased capacity (without additional equipment), and increased throughput via the reduction of bottlenecks. Watch the case study now.