In part 1 of this series, I introduced some negative effects of “keeping them busy”. In part 2, I explained a little bit about the mechanics of how this happens, and the different problems caused by overactivation of bottleneck and non-bottleneck resources. This time, I will conclude with the additional ill effects of unneeded overtime, addition of unneeded additional capacity/outsourcing, and expedited freight charges.
Keeping them busy can lead to unneeded overtime. This is really an extended negative effect of misusing a resource to make the wrong part at the wrong time and creating a shortage of the part that should have been produced. We now need that part to complete the order, or the assembly and the ship date is here, or maybe it is already overdue. At this point, the best we can do is to run overtime to produce the missing part. We’ve kept them so busy that we’ve created more work for them!
If the need for overtime becomes a common occurrence, this may give the impression that more capacity is needed, even though we are operating in a “hurry up and wait” mode. The capacity “problem” is usually noticed when you are scrambling to make end of month shipments. Common responses are to hire temps, hire more full-time operators, enforce mandatory overtime, add shifts, add equipment, or even to add a new facility. An even more unfortunate decision is to outsource since internal resources can’t seem to keep up. In many cases, these actions are unnecessary if the hidden capacity can be released by changing the way resources are managed. (Hint: don’t keep them busy).
You probably already see where I’m going with expedited freight charges. This can happen on both ends. On the front end, we expedite materials/parts from suppliers because of shortages created. On the back end, we expedite shipments to our customer because our scheduled lead time was not met. Depending on where material is coming from and where your product is going, these costs can be substantial. It can also create painful logistical issues depending on customer shipping requirements, even more so if you are shipping hazardous materials and/or shipping internationally.
In closing, I will say that the “keep them busy” mindset is one of the most damaging operational management behaviors I have ever witnessed. It creates so many cascading problems, even more than discussed, and can even create a self-sustaining negative feedback loop.
Don’t keep them busy,
Dave