Operating with Reduced Capacity: Maintaining Output

Following Government measures implementing social distancing in the UK, businesses have had to adapt to change at an unprecedented rate. One of the biggest challenges has been that workforces have been forced to spread out. These measures have been adhered to either by ensuring fewer people are physically at work (remote working), or by adding more shifts with fewer people on each shift. The third possibility arises as a result of changes being made to the Coronavirus Jobs Retention Scheme beginning on the 1st August: businesses will have to pay employees National Insurance and pension contributions. Then, from September employers will need to pay 10% of furloughed employees’ salaries – rising to 20% in October. This unfortunately means that across the country employers will be making the sad and difficult decision to let go of some members of their workforce as sales levels might not be able to support operating costs. Whatever your business’ reality, you are no doubt suffering with the same problem: reduced available capacity. To make sure your business doesn’t suffer, you need to increase the available capacity – without increasing the business’ costs!

It may be that you are now struggling to meet demand with limited capacity. This is a difficult situation and is challenging to manage. Where there used to be a team, there might now be an individual; where there used to be specialists or dedicated resources, there might now be one person on multiple projects. This appears complex – but the solution is relatively simple. You must focus on your bottlenecks.

The first step in sourcing additional capacity is to identify the bottlenecks in your system. Bottlenecks determine the output of your business, so it is crucial to ensure they are being efficiently managed. If you can’t measure the output of your bottlenecks, you can’t control them – and in order to measure the output, you need to know where they are! You might already be aware of your systems bottlenecks, if so, brilliant! You’re one step closer to increasing capacity. If you are not sure where to start, you can of course get in contact.

Once you know where your bottlenecks reside, you can begin to manage them as efficiently as possible. Create a finite schedule. Put together the best sequence of jobs for the machine/department that will maximise output and minimise downtime. If you’re doing this with significantly less capacity, you will have to carefully select the orders you take or prioritise – make a choice on what not to do. Which presents you with another dilemma: how do you choose which orders you take? You should consider how much money it will make you in order to keep the business open, and, how easy it will be to make – how much capacity it will require. You can produce a simple list of parts/products to prioritise by examining the margin the order will generate and dividing it by the number on minutes it’ll spend on the bottleneck. This knowledge will also help you to make other strategic decisions regarding customer and orders which are good for your business. But right now, this will give you the orders you need to schedule on the bottleneck.

A finite schedule will effectively plan your bottleneck and help increase output, but your work isn’t done. The next step would be to subordinate everything else to it. You need to make staffing decisions according to how you can keep the schedule running. Man your bottleneck so that it is running as close to 100% as possible. Stagger breaks and shifts so that your people can have breaks, but the machine/department cannot! Adhere to the schedule by prioritising orders through non-bottleneck departments so that they don’t miss their slot. Lastly, introduce quality checks. With limited capacity, you cannot afford to waste a single minute on defective parts/operations! Introduce quality check before the bottleneck operation so that only quality parts are being worked on. This might appear to increase the workload for people, but it will increase the company output and the benefit will far outweigh this “extra” effort.

If we were implementing these practices under normal circumstances, we’d expect to gain 10-30% additional capacity taking these steps, depending on your environment. In these trying times you need to achieve as much as you possibly can. We’d love to hear how much additional capacity you manage to source. If you are then in a position to move the business forward, past survival to growth, look to the orders you have not prioritised. The volume of those orders will tell you how much extra capacity you need. You are now ready to elevate the bottleneck, and for that you may need to invest.

For now, make sure your business can survive the next few months working with reduced capacity. Identify, exploit and subordinate to your bottlenecks and if you do have any questions, don’t hesitate to get in touch.

We understand that many businesses are struggling to operate at significantly reduced capacity and need answers quickly. If you have any further questions or would like to know how to implement these ideas rapidly, we are offering a free, no-obligation phone call with our Managing Director Andy Watt. Andy is an industry expert and is offering his time to ensure UK business can cope over the next few months. Book in some time now by phoning 01234 834510, or direct message him on LinkedIn.

By Phil Snelgrove, Lauren Wiles