# LEAN Production #3: learning how to manage your resources

In previous articles, we already introduced the LEAN system and some of the concepts on which it is based. The TIM WOOD list and the Three M’s definition are basic pillars for understanding what is wrong in our production process, and how we can get to improve our business.

If you want to learn more about this, just check the previous articles:

This article will explain the basics of the production process analysis. We will **start with some definitions**, and then one can see some examples to understand the matter and the reach of the contents. The definitions and explanations of this article are mainly based on [1].

## DEFINITIONS FOR THE PROCESS CAPACITY ANALYSIS

The following list includes the most basic definitions for the capacity analysis of a production process:

**Processing Time (PT).**For each activity, resource or step of the process, it is the time required to process one unit.**Flow Time (FT).**It is the minimum time to produce one unit, adding the PT for all the sequential activities.**Resource Capacity (RC).**It is the maximum quantity of units that one activity of step can process per unit of time.**RC = m/PT,**being m the number of resources that can be working in parallel to process different units at the same time. The study of the capacity [2] will be the key part of this article since all the other parameters will be indicators based on this.**Bottleneck.**It is the resource of the process with the minimum RC. It is,**RC(Bottleneck) = min(RC)**.**Process Capacity (PC).**It is the maximum quantity of units that the whole process can generate per unit of time.**PC = min(RC)**. The Bottleneck limits the PC.**Flow Rate (FR).**It is the real capacity of the process. If we have not limitations of input materials and output demand,**FR = PC**. However, this can be different in a real case in which the output demand of the process is lower than the PC.**Resource Utilization (RU).**Percentage of utilization for a single resource during the continuous processing of materials.**RU = FR/RC**. For an FR = PC case, the Bottleneck RU = 100%, that is the maximum utilization.

## ANALYSIS OF A BASIC PROCESS

We will use the definitions above to analyze a basic production process. We will assume deterministic processing times, and consider unlimited input materials and output demand from our customers.

In this example, our production process should be working continuously and in the best case possible the process will not include any idle time.

Let us imagine the production process for a table board game. The process will be divided into four steps, that we can associate to four activities:

**Printing**. We print the board, box and cards of the game.**Cutting**. We cut the board, the box and the cards in their final shape and size.**Assembling**. We assemble the box.**Packing**. We pack everything and close seal the box of the product.

In this oversimplified example, we will assume that every activity needs to be finished before the materials pass to the next step. It is, we must cut everything before assembling the things.

So, now that we knot the 4 steps, we must know the **Processing Time (PT) for every one of them. **We can know this by directly measuring it during the production process and doing some statistics. We assume the PT as follows:

- Printing. PT = 15 minutes.
- Cutting. PT = 10 minutes.
- Assembling. PT = 8 minutes.
- Packing. PT = 5 minutes.

At this point, we can draw our process as a Gantt diagram, as we can do for projects management. For this example, we will use a free software called GanttProject, that can be found here.

As we can see, the duration of every step is different according to the PT defined above. Every activity is preceded by the previous step, starting from the printing and ending with the packing.

From here, we can calculate the **Flow Time (FT) of our process. **It is as simple as adding every PT:

FT = 15 + 10 + 8 + 5 = 38 minutes.

That is all the time we need to produce a new board game. If one of our customers required one, we cannot provide it in less than 38 minutes assuming that we can start the production immediately and we have not any output stock.

We can calculate the **Resource Capacity (RC) in games per hour from the PT of every activity. **Since we have only one printer, one cutting machine, one assembling technician and one packing technician, we assume that the number of parallel resources for every activity is 1. Then:

- Printing. RC= 1/15 games per minute = 4 games per hour.
- Cutting. RC= 1/10 games per minute = 6 games per hour.
- Assembling. RC= 1/8 games per minute = 7.5 games per hour.
- Packing. RC= 1/5 games per minute = 12 games per hour.

It is clear now that **the bottleneck is the printing step, that has the lower RC**. And since we were analyzing a simple case with infinite input materials and output demand, our **Flow Rate (FR) **= **Process Capacity (PC) = 4 games per hour. **It is the maximum number of units that we can produce in one hour, in the best case possible.

The last parameter is the Resource Utilization (RU):

- Printing. RU = 4/4 = 100 %.
- Cutting. RU = 4/6 = 66.67 %.
- Assembling. RU = 4/7.5 = 53.33 %.
- Packing. RU = 4/12 = 33.33 %.

This give us a very bad scenario, in which we are using resources down to one third of the time. There are so much idle time for some of the activities, and we can actually check it if we update our Gantt diagram with the production processing of various items:

The diagram shows the dependencies of every process from each other. If we consider that every activity is associated to a certain key resource, we can identify the idle times in the production process for every resource:

The printer is our Bottleneck, and we can see that it is constantly working during the production of these 3 units. It makes sense, since the RU of the Bottleneck is always 100%. **The most important: we can appreciate the under-utilization** of all the other resources.

## THE LEAN ANALYSIS: HOW TO UNDERSTAND THE PROBLEMS

From the previous analysis, we have found some important facts about our production process:

**The activities are not correctly equalized.**We have**long idle times**and under-utilized resources, due to the different Processing Times. We could be doing a more efficient use of these resources!**Our Bottleneck is the printing process.**It is the activity limiting our production process, and the resource associated to the activity -the printer- is**working all the time**. That is a**hot point**.- In the best case possible,
**we can produce 4 games in our hour**. If our game goes viral and we have 4000 sales in one day, we will take 1000 hours (more than 41 days) to produce the demanded products. The customers will probably not like this!

So, what can we do to improve our production process? First, we need to understand **the source of the unproductiveness**. We can declare this process as “**MURA**”, according to what we saw in the LEAN Production #2 article. There is an irregular work-load for the different resources, driven by the “**MUDA**” or waste during the idle times.

There are many different types of wastes, and tools that we can use to work on their reduction. An overview of these matter was already discussed in the LEAN Production #1 article.

For this simple production process, we could work on dividing the tasks in different sub-tasks for the pipeline, or to investing in reducing the processing time of the Bottleneck and other slow activities.

If we buy a faster printer, our production process changes drastically: lowering the PT of the printing step down to 10 minutes, our Bottlenecks are both the printing and the cutting processes, increasing the FR to 6 games/hour.

Other action could be buying a second printer, so that they can work in parallel. For the printing process, the RC= 2/15 games per minute = 8 games per hour. In this case, the Bottleneck is not the printing process anymore, and the RU of the printers is lower than 100%. The hot spot will be the cutting step from now.

## CONCLUSIONS

A basic understanding of our process capacity is the first step to analyze its productivity and the source of any possible problem. We can detect the weak points of our production, and take specific actions to improve the process by using the core concepts of LEAN.

This article used a very simple production process example, but real life productions have many other variables to take into account. Probabilistic production times, stock limitations, time-variant demands, reparation and maintenance tasks, and many other points that require the use of the LEAN thinking in order to simplify the process and grow for an efficient production.

Innovation is always spinning forward. Just like a Drill.

# REFERENCES

[1] Grunow, M. and Ott, H. (2018). *Lean Production*. [online] edX. Available at: https://www.edx.org/course/lean-production-tumx-qpls3x-0 [Accessed 22 Sep. 2018].

[2] Isixsigma.com. (n.d.). *Capacity | iSixSigma*. [online] Available at: https://www.isixsigma.com/dictionary/capacity/ [Accessed 22 Sep. 2018].