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First check if you can increase production capacity from your 'hidden factory' before spending unnecessarily on new capital plant and equipment.
Many companies find that they can double their current throughput once they find and fix all their present losses.
You may find all the 'free' profit you want for a very small cost of a Value Stream Mapping investigation.
The term 'hidden factory' comes from the discovery that many companies under utilize their assets. For various reasons their production equipment stands about not working, or working at less than rated capacity, yet their employees work overtime to make product to meet deadlines. This means they are actually suffering lost production and lost productivity.
Many of these companies expand their operation by buying new capital equipment to increase production when they should first recover the lost production capacity and lost productivity from the 'hidden factory'.
A production capacity analysis will identify where there is potential to get increased capacity from underutilized plant. The aim is not to run the plant at speeds higher than it was designed for. Making production plant and equipment run harder than it was built to handle will only destroy it sooner. Increased production capacity comes from finding the causes of lost production time and gaining back that lost productivity.
It is common to recover up to 40% production capacity with minor additional expenditure while retaining the same size workforce. With some re-engineering and design-out of maintenance problems an increased production capacity of 50% can be expected. The white paper - How to find Your 'Hidden' Production Plant Capacity - tells of a mining company that spent $250,000,000 to expand production capacity 30%, which they already had as lost productivity in their 'hidden factory'. They could have recovered their 'lost productivity' for a quarter of what they paid.
Before spending money on new capital plant and equipment first do a production capacity analysis and find-out if you have a 'hidden factory'. There are serious amounts of money to be saved and large amounts of lost productivity to be regained for small cost. The production capacity analysis finds the lost capacity and lists how to recover the lost production productivity. You get back a fully utilized production plant that makes up to 50% more product for much less capital expenditure than buying new.
Learn how to discover your true downtime costs and your real total production loss
Every production stoppage causes lost production and huge downtime costs. Each lost production incident is far, far more expensive, terribly more expensive, than you realise. Your accounting system does not even come close to pricing the total, true value of a lost production incident to your business. It does not matter why production stopped, every minute of lost production is costing your business hugely. You can now identify the total true downtime cost to your operation and justify spending the money to fix the problems that cause production loss once and for all. Read the Downtime Cost Analysis ebook and find-out the terrible truth of the real cost of production loss incidents.
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Document Number: LRS.WP.0002, Rev: 0, Revision Date: 14 February 2007
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