Here is another test or quiz question that showed up in my search logs:
a machine tool is producing 90 pcs per day .using improved cutting tools,the output is raised to 120 pcs per day. what is the increase in productivity of the machine?
I guess the answer seems pretty obvious…
90 x 1.33, rounded a bit, is 120, which gives us a 33% productivity improvement, right?
Not so fast…
How fast does the machine need to run?
Is there demand for the additional 30 pieces per day, or are they just being put into inventory with the hope they will sell at some point in the future?
This is actually pretty common where cost accounting systems allocate overhead against production output rather than actual sales.
But what if you are only selling 90 pieces per day?
After three days you will have a day’s worth in inventory. You are running the machine more than you have to, adding wear and tear. You are consuming material to make parts you aren’t selling. At some point you are going to have to shut down the machine – idle it. What is your productivity then?
What Problem Are You Trying to Solve?
It always comes down to this question. Is there a real-world, customer-impacting reason you need the additional output? If so, then yes, this is a valid countermeasure, similar to one I have overseen myself. If the machine is too slow, what do we have to do to run it faster (while maintaining quality and not breaking anything)?
But if the machine is fast enough, then why are you trying to make it run faster?
And what will happen if we do? Use real numbers. You don’t have revenue until a customer with real money (not transfer pricing) actually pays for your product. Pretending otherwise looks great on the balance sheet for a while, but the paper profits aren’t tangible, you can’t use that “money” to buy anything else, or distribute to share holders. In fact, it is just money you have spent not money you have earned.
Machine Utilization at Home
At least here in the USA, a typical home washing machine will run a cycle in about 25 minutes. The dryer takes about 40 minutes to complete a cycle. If you wanted “maximum efficiency” from the washing machine, all you will get is a big pile of wet laundry. There is no point in running the washer any more often than once every 40 minutes. The dryer is pacing the system.
If I could modify the washing machine to run in 15 minutes instead of 25, how much more productivity do I have? The question is nonsense.
This example makes perfect sense to people. Then I often get arguments about how the factory floor is somehow different?
It’s The System, not the Machine
Key Point: You can’t look at one machine in isolation and calculate how “efficient” or “productive” it is unless it is pacing your system. In this case, we don’t have enough information.
Now, I know this example was just a made up case. But I have seen well-meaning production people fall into this trap all of the time. You have to look at the system, not individual machines.