Manufacturers know that to successfully reduce cycle times takes a tremendous amount of time, effort and the follow-through capability to see strategies successfully enacted. However, one tool manufacturers can use to graph lost time, and isolate its causes, are Pareto charts. Using Pareto charts can help the company reduce its cycle times by focusing in on those issues that cause the most downtime in production. In essence, it’s about isolating the worst offenders, determining their impact, and putting a plan together to reduce cycle times and increase throughput.
First, before going into the steps to setting up a Pareto chart, it’s best to first review the principle behind what many refer to as “The Pareto Principle”. Simply put, the principle states that 80% of a given outcome is often attributed to 20% of causes. It is often referred to as the 80-20 rule. It can be applied to the revenue derived by a company’s customer base, the results achieved through multiple marketing initiatives, as well as the products that sell within a company’s inventory.The rule comes from an Italian economist named Vilfredo Pareto and how he accounted for the difference in land ownership within his native Italy.
Companies have since used this rule to show how 80% of their revenue is derived from the top 20% of their customer base and how 80% of their success in marketing is derived from the top 20% of their marketing plans. Consequently, it is also used in assessing a company's inventory as most of a company’s fastest selling finished goods often comes from a small number of highly popular product lines. Leveling out this ratio in every instance helps to reduce cots and mitigate risk. So, how can the rule be applied within charts that depict a manufacturer’s lost time?
To Learn about proper work cell layout and design, please go to: Manufacturing Work Cell Optimization: Design, Layout and Analysis
Using Pareto Charts to Capture Lost Time
The purpose of this exercise is to track the causes of lost time and determining which are the most costly, or better put, which are the worst offenders. This can be done within an individual production work station, across multiple work stations or can be used to track lost time over the entire shop floor. The idea is to capture lost time, graph them on the Pareto chart and then isolate the most common causes.
Let’s assume a production manager tracked the incidences of lost time on the production floor over a period of 1 week. He or she would focus on capturing the causes of lost time, tracking the incidences of lost time, and would summarize these results by showing what the individual and total percentages amounted to from these causes. The steps are fairly straightforward.
- Determine causes of lost time
- Track incidences of lost time
- Account for individual percentages
- Determine total percentages
This is somewhat similar to setting up the perfect manufacturing work station where lost time is identified, eliminated and steps are pursued to increase production throughput by lowering cycle times. The basic premise remains the same. Identify causes of lost time, track their incidences, assess their impact and put a plan in motion to reduce their effects. This is what the Pareto chart would might look like for our production manager and his or her attempt at isolating causes of high cycle times.
The video above explains how to determine mean, median and mode cycle times in a given work station. It is taken from the post: Cycle Time Tracking & Variance Analysis in Excel for Small Manufacturers
When looking to lower manufacturing cycle times, be sure to use Pareto charts to graph lost time over a given period. Doing this will allow you to isolate the causes of lost time and adopt plans to mitigate their effects. In the graph above, the incidences of lost time are captured on the “Y” axis, the causes of lost time on the “X” axis and the total percentages on the “Z” axis. In addition, we’ve isolated the 80 – 20 Pareto principle by tracing a green dotted line. This depicts the fact that 80% of the lost time can be attributed to the first three listed causes. The remaining issues of OOS “out-of-stock”, lack of proper tools and bad assembly outlines, only represent 20% of the lost time on the production floor.
You can access the same chart here: Download Manufacturing-Pareto-Chart-Capturing-Lost-Time
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