Re[2]: Machine Hour Capacity Gage

Date: Mon Jun 02 1997 - 17:02:42 EEST

     Hello Preston,
     I wonder how much capital investment you are responsible for and how
     much of it is yours personally. If your a manufacturer or large OEM
     justifiying a half million plus expenditure may be paled by your
     savings if you are quicker and first to the market.
     However, the rest of the world needs ROI and profit to stay in
     business regardless of the type of investment. Hence, efficient
     queuing of machine to optimize capacity equals throughput. Throughput
     equals ROI and sooner profit. All our stakeholders would appreciate
     it if our investments were profitable. This analogy is no different
     then developing product from concept through distribution.

______________________________ Reply Separator _________________________________
Subject: Re: Machine Hour Capacity Gage
Author: Preston Smith <> at INTERNET
Date: 5/30/97 2:54 PM

On Fri, 30 May 1997, Steve Deak wrote:
> Joseph DeGuglielmo wrote:
> >
> > Do any of you fine folks out there have a feel for how many hours a month
> > your machine needs to run to be considered "At Capacity"?
> >
This has been an interesting thread. The emphasis has been on been on
keeping the machine as loaded as possible to maximize return on your
investment in the machine.
This viewpoint totally ignores the value of fast response to the demand
for prototypes -- the very argument for having rapid prototypes in the
first place.
We work with many manufacturers to help them speed up their product
development, and we find that there are two major related mistakes that
most of then make. One is that they have no idea what one day of schedule
slippage on a development project is worth to them financially (dollars of
profit lost due to a day of slippage). Second, because they do not place
a financial value on time, they try to minimize expenses by overloading
their people and equipment, trying to squeeze every second of up-time out
of them. As a result, everything sits in queue awaiting scarce resources.
Managers who know the cost of delay for each of their development projects
include this factor in loading their people and equipment, deliberately
allowing some slack that provides the flexibility needed to respond
These topics are covered in detail in Chapters 2 and 11, respectively, of
our book, Developing Products in Half the Time. A second edition edition
of this book with even more powerful information on these two vital topics
will appear in a few months under the title Developing Products in Half
the Time: New Tools, New Rules.
Preston Smith
New Product Dynamics telephone: +1 (503) 248-0900
Portland, Oregon USA fax: +1 (503) 294-1192

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