do you know how much money is stuck in your factory?

How much money

factory?is stuck in your

Let’s start with the basic measures to judge a factory’s performance:

How much money is going in the factory?

How much money is stuck in the factory?

How much money is flowing out of the factory?

Operational expense

Work in Process (WIP)

Sales

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Somehow everyone keeps a track of inflow and the outflow of money

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but rarely is the money stuck in the factory accounted!

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What is WIP and why is it important?

WIP is basically any inventory which has begun the manufacturing process but is not a completed product.

Actual WIP = Input - Output

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Advantage of a higher WIP:

Disadvantages of a higher WIP:

Not realising the pain areas of the production line,

Having a higher reaction time to quality problems and

Having a higher throughput time for orders.

A higher WIP helps everyone to keep busy without actually

increasing the production.

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On the other side, there are various

disadvantages of a lower WIP

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A lower than required WIP will result in:

Drying upyour line

Lowering your e�ciencies

Reducing your production

output

Increasing your operational

expenses.

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This makes it quite unprofitable for anymanufacturing setup.

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One of the major reasons of higher WIP in the manufacturing process are

the variations in theoutput of different processes

or simply put...

an unbalanced manufacturing process.

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This results in a disrupted flow of the materialthrough the setup...

resulting in money being stuckin the factory.

So, how much money is actually stuck in your

factory?

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Let us consider a factory producing

25,000 denims every day,

working for 8 hours with 1,000 machines.

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If we were to put a number to money stuck in this factory based on standard WIP assumptions,

then the total money amounts to

$ 2.33 Mn.

From a process centre perspective, this is the money stuck:

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Store

15 daysof storage

$ 1.13 M

Cutting

3 daysof inventory

$ 0.23 M

Sewing

30 mins of eachworkstation and

0.5 day at loadingand exit station

$ 0.36 M

Washing

3 days equallydivided betweenloading, process

and exit.

$ 0.23 M

Finishing

5 days withmajor inventoryloading station

$ 0.38 M

Is it possible to reduce the money stuck

in a factory?

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Reducing the WIP levels in your factory

In order to reduce the WIP levels in your factory you need to

reduce either Failure Factor or Transit Time.

Optimum WIP = (Failure factor + Transit Time) x Capacity of succeeding process in unit time

Where,

Failure factor = unit time by which the process has been delayed historically

Transit Time = the time required for transferring the material from the preceding process to the current process.

Let us review possibilities in each of

the process centres

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FABRIC STORE

Ideally sourcing locally or from nearby places would help you in

reducing fabric storage and throughput time.

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Failure Factor

Number of days delayin receiving a specific

lot of fabric

Qualityrejections

Possibilities of reducing money in the process centres

FABRIC STORE

A track of delays in receipt of fabric and transit time would help in

calculating the optimum WIP and also understand if any reduction is possible.

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Transit Time

Time taken between

fabric ordering and delivery

Possibilities of reducing money in the process centres

CUTTING PROCESSES

Any delay will directly result in loss of production capacity, thus a

proper priority for execution of order needs to be ensured.

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Defective lay Delay in receivingfabric from store

Possibilities of reducing money in the process centres

Failure Factor

CUTTING PROCESSES

Transit Time can be neglected

as this would be miniscule

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Possibilities of reducing money in the process centres

Transit Time.

SEWING PROCESSES

A proper tracking of time yielded unproductive due to machine breakdown,

operator absence, trim/material unavailability will give you data point required to

calculate optimum WIP for each workstation.

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Failure Factor

Delay in receiving the cutpanels from cutting department

O� standard time for thepreceding machine / workstation

LOADING STATION WORK STATION

Possibilities of reducing money in the process centres

FINISHING DEPARTMENT

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Failure Factor

Not being able to find the rightsizes and colours to pack a carton

Possibilities of reducing money in the process centres

So what are the measures you can take

to counter these factors?

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Understanding and tracking each of these factors in your factory

Taking concentrated e�orts to reduce them will enable in optimising your WIP.

Also, this exercise needs to be repeated after a stipulated time period to ensure the WIP levels are catering to the current manufacturing environment in your factory.

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There are solutions like

by which provide tracking benefits to help you in optimising your

throughput time by tracking all these factors with least human intervention

www.threadsol.com

For an elaborate insight on the topic, visit

www.stitchdiary.com

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