Fastems Web Magazine 01/2010
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Technology Corner

When will the 8760 hours in a year be achieved?

In a German study in the early 1980s, the utilization rate of machine tools was 6 percent, and the figure has probably not risen much above 10 percent yet. Figures such as 20 percent are way over the top! When a workshop manager estimates the actual utilization rate, the typical answer is something like: "Well, I really don't know, but it feels like a lot more than those figures." If you want to know the actual number of productive hours in your workshop, you need a way to get this information.

The cost of a finished part consists of four things: material, human labor, capital costs, and overhead costs. The way to calculate the exact costs varies, and for example overhead costs can be allocated in different ways.

The main capital cost is the capital invested in production machinery, whether the machinery is owned or leased. It is obvious, that if the productivity of the machinery can be doubled, the capital cost can be almost halved. This also halves the payback period or doubles the margin. Cutting the capital costs in half can of course also be used to increase competitiveness. Therefore, it is fair to assume that the number of productive hours in a year is an interesting subject! Furthermore, if increasing the number of productive hours does not require increasing the amount of human labor accordingly, competitiveness is improved even further.

Automation increases the efficiency of production cells as well as stand-alone machine tools
When production is organized into production cells, the productive hours of an individual machine tool are not the most interesting issue. Instead, lead time and production capacity of the production cell are the interesting figures. If the production cell consists of machinery that has already paid for itself, the investment cost is not of utmost importance. However, when making a new investment, the capacity and cost of machinery matter a whole lot more: unutilized capacity costs money! Automation almost always plays a role in a production cell.

When production is based on stand-alone machine tools instead of production cells, the main challenges arise from small batches and large number of different parts. The key issues include flexibility, set-up times, and number of tools. Automation works great for this type of production as well. Both technology in general and the factory-made automation products that utilize this technology have evolved rapidly as of late. The basis for automating mixed production has changed completely. It is possible to increase the number of productive hours of a machine tool!

Start measuring, now
People's work becomes more diverse when automation is taken into use. There is less production line work, and allocating working hours to the manufactured parts is more difficult. Human labor becomes more like an overhead cost. Automation usually also reduces the total number of working hours.

Competitiveness is improved because of improved utilization rates and reduced amount of human labor. A determined development project achieves another important goal besides lower costs: learning! It gives a chance to learn new ways of working and seize new opportunities. In a positive work environment, this new know-how increases positiveness, improves work environment, and helps recognize new challenges and thus further improves competitiveness. A key issue in learning is measuring the actual performance.

This column began with a discussion on measuring the utilization rate of machinery. Recognizing this humble truth has an immediate, drastic effect on work: the issue is noticed! It is a good idea to start measuring your current performance, because the first improvements are also the most significant and give the entire development project a positive tone. The final tweaks will increase the utilization rate by a few percent, and by then the entire team will have plenty of experience on how to develop your production. Start measuring, now!

Fastems Fadector provides you with an easy way to collect and analyze information on utilization rates.

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When will the 8760 hours in a year be achieved?

If you want to know the actual number of productive hours in your workshop, you need a way to get this information.

Fastems was selected for the Minister's visit because of our excellent cooperation with the TE Centre and our operations that are focused on change and on the future.
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