Reducing Work in Progress with HYDRA X

Many manufacturing companies dig deep into their pockets for flexibility and on-time delivery. The price is high levels of work in progress. In economic terms, finished and semi-finished products place an enormous burden on manufacturing costs and therefore, work in progress should be kept at a minimum. Read this blog post to find out how it works and what you need to achieve this goal.

What is work in progress and how is it generated? Let’s have a look at today’s manufacturing processes:

1. Decision: 500 pieces are to be produced of item A
2. A production order is created
3. The order consists of several operations producing item A step by step
4. Each operation either requires the intermediate product from the upstream operation and/or raw material from the warehouse
5. Usually, operation 1 must be completed before operation 2 can be started
6. This might lead to delays. During this time, semi-finished articles are stored in a buffer stock.
7. With poor planning, it may even come to further wait times between operations.

Even if operations overlap, semi-finished products are held in buffers to prevent material shortages at downstream operations. As a rule, the larger the lot sizes that are produced, the higher the work in progress. ERP systems usually do not deal with the material processed on the shop floor. Once booked out, the material disappears in a black box called production and only reappears as a finished item when it is booked in again. The result is work in progress, which is very costly for manufacturing companies.

Pros and cons of work in progress

Work in progress provides both advantages and disadvantages. Let’s start with the pros:

• The more material and semi-finished products exist, the less likely are interruptions due to material shortages.
• Especially in the event of last-minute changes and special customer requests, work in progress provides flexibility — apparently.

However the cons outweigh the pros:

• Work in progress ties up capital as you have already invested time and material, which cannot yet be monetized.
• Work in progress occupies space in the shop floor or intermediate storage facilities.
• Perishable material tied up in work in progress leads to avoidable waste.
• High levels of work in progress also mean that a lot of time is spent searching for proper material.

In short, work in progress levels should be kept at a minimum, but how does it work?

Transparency is key

As in many other fields of application in production, you need a high level of transparency to improve things. Simply put, you need to know your work in progress to take action to reduce it. As mentioned before, the ERP system does not know the work in progress and cannot support you in this endeavor. At this point, you need an IT system that deals with production processes: for example a Manufacturing Execution System (MES) such as HYDRA X by MPDV.

The MES is aware of the material that is consumed and produced. Each operation includes input and output material. The stocks of input and output material can be updated by automatic quantity postings from the machine or manual part quantity postings. The system knows at all times the stock levels of work in progress. The MES is also aware of the wait times between operations as it records each activity with exact times.

Consistently reduce stock levels

There are various methods to avoid or reduce work in progress. One of these approaches is a lean management method and deals with an improved clocking of processes. Individual work steps are already designed in work preparation so that tasks do not run completely sequentially, but operations can overlap. As soon as the first operation outputs the first ten parts, they are forwarded to the second operation. Here, it is essential that workplace capacities are similar. As it is of no use if one workplace can process much more parts per hour than the other workplaces. If this is the case, you can increase the capacities of the other workplaces or use two workplaces of the same type in parallel. If parts can be processed in a steady flow, you can reduce the number of buffers between the stations, which in turn reduces the work in progress. The HYDRA X mApp Work Order Controlling visualizes all relevant data and KPIs revealing room for improvement when executing orders and operations.

Synchronizing material and information flow is another lean management method to reduce buffers and work in progress. The consulting professionals from MPDV can support you with a value stream mapping 4.0.

Plan inventories

Last but not least detailed planning provides further opportunities to avoid high work in progress levels. To do so, the mApp Predictive Material Planning of MPDV’s Advanced Planning and Scheduling System (APS) FEDRA displays required materials in direct relation to orders and operations. According to the orders scheduled, the mApp uses the current stock levels and planned quantities produced and consumed to show material requirements and check material availability. By improving detailed scheduling processes, you can generate more transparency and eventually lower the work in progress.

Conclusion

What are the lessons learned?

• Work in progress is costly.
• The lower the work in progress stock levels, the better for your company.
• Solutions like MES HYDRA and APS FEDRA help you get to grips with your work in progress.
• Lean methods also help you reduce your work in progress.
• The consultants of Perfect Production support you with everything about value stream mapping and lean management.