Do you have surplus capacity in your manufacturing or other production facilities?
It is very common for some machines / resources not to be fully utilised. Your business will, typically, only have one bottleneck that is 100% utilised.
By definition, every other process has surplus capacity. Read more on the very powerful concept of “Theory of of Constraints” on this link.
On the other hand, some of your other production facilities are necessary but are also not fully utilised. That would lead to over-production at their particular stage in the manufacturing cycle.
Learn more on this in the Skills Module: SM5.0 Theory of Constraints
Options:
- Sub-let some of this surplus capacity.
- Allow another party to use the resource.
- Do the work for them under an outsourcing arrangement.
This earns Income from a facility that is otherwise not fully utilised.
Maintenance of the machine, and/or lease payments on it, are Overhead/Fixed Costs to you.
The more output you can get from these resources, by meeting your own and other people’s demands, the further those Overhead Costs are spread.
For more help understanding any issues relating to this Section of the Turnaround90 Campaign, use the 12Faces Diagnostic System to drill down to root causes of problems and find our suggested Treatments.