Essential Lean Manufacturing for Management Consultants

1
Essential Lean Manufacturing
for Management Consultants
Practical guide with cases and exercises

2
Most treat production as a black-box but if you want to
be a great consultant you will have to get into details

3
The knowledge about production you can use in many
other businesses
Factories Hospitals
Call centers
Airlines an MRORestaurantsLogistic companies

4
In this presentation I will talk about all important issues
that you should master
OEE / OLE
Theory of constraints
Continuous flow
Standardization
5S
Kanban
Zero defect rule
SMED
Critical chain
Waste analysis
Capacity management Production Planning

5
Thanks to this presentation you will be
able to optimize production and
estimate the potential impact of
improvements

6
This is part of my on-line course where I show step by step
how find and analyze in Excel potential improvements in
Production
Click to check my course
Production for Management Consultants
and Business Analysts
$45
$ 0

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Basic methods of improving
production

8
Introduction to improving
production

9
Most treat production as a black-box but if you want to be a great
consultant you will have to get into details. In this chapter I will show you
how to improve production results and what it means in practice
▪ Produce as much as possible (maximize
throughput)
▪ High quality products (zero defect rule)
▪ With as little waste and inefficiency as possible
▪ At lowest possible operational cost
▪ As fast as possible

10
I recommend reading the following books – click on the chosen
cover to see details on each and every book
Click for moreClick for moreClick for more Click for more

12
5
60
35
Adds value Does not add value
and not obligatory
Obligator but does
not add value
Due to different of waste we only use 5% to create value
Source: Report Going Lean, P. Hines, D. Taylor; Lean enterprise research centre; Cardiff Business School; 2000
In lean manufacturing We
have different types of
waste:
• Overproduction
• Defects
• Inventory
• Over-Processing
• Transport
• Motion
• Waiting
Share in total
%

13
We will be using the following techniques to optimize the processes
Overproduction ▪ Overproduction is making too much or too early. This is usually because of working with oversize
batches, long lead times, poor supplier relations and a host of other reasons.
Defects ▪ You produce faulty things or not up to agreed standard. This may be due to errors done by production
people, quality issues or faulty materials
Transport ▪ Transport is the movement of materials, people, machines from one location to another. This is a waste
as it adds zero value to the product.
Waiting ▪ Long periods of no action due to lack of materials , resources, people
Motion ▪ Unnecessary motions of workers due to the way working space is organized
Inventory ▪ Too high inventory that cos t you money, space and causes operational problems
Over-Processing ▪ When you use the wrong tools, procedures or methods you are creating waste as well
You have not used the
employee’s creativity
▪ If you waste peoples’ efforts and creativity you will stop developing
Definition

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Below an example of identified in a retail chain waste
Too much movement (people,
resources, materials)
Lower the need to move
Move faster
Change the timing of the movements
Eliminate the movement
Peak of activities
Set priorities
Assign specific people to perform the activity
during peaks
Decrease the difference between high and
low periods
Use different frequency for different activity

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In production you will know far less than the your customer’s team so you
have to use smart ways to get to the bottom of the things. 5 Why is one of
such methods
Why we are not selling more?
We are not able to produce
more
Why we are not able to
produce more?
Because we have reached our
production capacities
Why we have reached our
production capacities?
We do not have enough
designers.
Why we do not have enough
designers?
We have used up the budget
for training?
Why we have used up the
budget for training?
Financial Director cut it last
year in order to save money

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Let’s start by looking at machine for cutting wood.

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Total time
Preparation and
Maintenance =0 Total available time
Operating time
Idle time due to
organizational issues
100%
54%
OEE =
100 %
54 %
x
x
98%
Cutting
98%
37%
Set-
ups
Idle
time
70%
Percentage of good
products
70 %
Below the OEE (Overall Equipment Efficiency) for the Cutting
Machine. Only 37% of the time it is doing valuable works

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Removing bottlenecks - content
marketing example

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Bottlenecks are dangerous as their hurt the efficiency
of the whole system

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What is the throughput of every system and where
is the bottleneck?
Example 1
7 5 7
Example 2
5 10 20
Example 3
5 5 3
x Stage capacity

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The are 4 rules that you should follow when it comes to
bottlenecks
▪ Identify what is the bottleneck
▪ Increase its throughput by lowering the time needed for
everything that goes through the bottleneck
▪ Add new resources to bottleneck
▪ Adjust everything to the bottleneck – so it works at the
same pace

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Continuous flow
introduction

25
Ideally you would like to have a continuous flow of goods
▪ Each process “speaks” to each other and it is enough to
say to the last one what you want. The rest will follow
▪ Pull process not a push process
▪ We produce only what the customer needs and exactly
as much as he wants
▪ Hardly any inventory
▪ We use efficiently resources especially people

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In order to implement it in real life we have to define
some terms
Hourly capacity
▪ Number of semi-products / parts that can be
produced by a specific worker
Cycle Time (CT)
▪ Time in minutes needed to produce 1 semi
product /part by a specific worker
=
=
Hourly Capacity =
60
Cycle Time (CT)
Takt time
▪ Frequency with which the product is demanded
by the customer=
Cycle Time (CT) ≈ Takt time

27
Continuous flow gives you a lot of advantages
Short cycle time
Less inventory
Higher quality
Fewer inefficiency
Better usage of people
Less space
Faster servicing of the
customer
Lower need for
transportation
Lower costs

28
How not to make continuous
flow – sandwich factory

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Imagine that you have a small factory producing
sandwiches

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You have 4 people. Each of them does the sandwich
from beginning till the end
Cut the bread
Cut vegetables
Fry vegetables
Cut the cheese
Assemble the sandwich
Pack the sandwich
4
5
3
6
7
11
36
x
CT in
minutes

31
This means that the customer has to wait 36 minutes for
the sandwich to be prepared
Cut the bread
Cut vegetables
Fry vegetables
Cut the cheese
Pack the sandwich
4
5
3
6
7
11
36
36
x
CT in
minutes

32
If you divide the activities and give 1 activity per person you
can lower the waiting time of the customer to 10 minutes
Cut the bread
Cut vegetables
Fry vegetables
Cut the cheese
Pack the sandwich
4
5
3
6
7
11
36
Cut the bread
Cut vegetables
Fry vegetables
Cut the cheese
Pack the sandwich
3
4
2
4
6
10
29
All operations done by 1 person Division of work and specialization
10
x
CT in
minutes

33
Yet since each person is not talking to each other you are
creating a lot of work in progress (WIP) that you have to
throw away
Cut the bread
Cut vegetables Fry vegetables
Cut the cheese
Assemble the
sandwich
Pack the
sandwich
15
30
20
15 10
6
10
3
2
4
4 6
10
10
80
X
Hourly Capacity in pieces
CT in minutes
Inventory in pieces
120
40
32
40

34
When we compare the 2 options we can see that there are
some strong advantages of the division of work yet is causing
lot of waste
All operations done by 1 person Division of work and specialization
▪ 4# of people ▪ 6
▪ 36 minutesTotal cycle time
needed to produce
the sandwich
▪ 29 minutes
▪ We are not using the people – no
customer cannot do anything
Type of waste ▪ We are wasting food that we have to
throw out at the end of the shift
▪ 36 minutesTime the customer
awaits for the
product
▪ 10 minutes
▪ None; just raw materialsInventory of Work
in Progress
▪ A lot . The biggest in vegetables – for 120
sandwiches

35
How to make continuous
flow – sandwich factory

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If we want to limit the waste we will have to look at the cycle time of
each and every operation. As you can see this is due to the fact that
some process are much faster than the things that follow after them.
You have to get even cycles
3
2
4 4
6
10
Cutting Bread Cut Vegetables Cut Cheese Fry vegetables Assemble sandwiches Pack the sandwich
Takt time

37
The are number of ways in which you can try and get the
even cycle times
▪ Combine two operations
▪ Divide 1 operation into many
▪ Speed up the operation
▪ Put Kanban between the 2 process or FIFO lane and limit
the time of specific worker spend on the working station

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We know that customers want to eat 6 sandwiches during
the hour. It means that we need cycle time of 10 for every
process
106

39
Let’s see what we can do with our cycle times
3
2
4 4
6
10
Cutting Bread Cut Vegetables Cut Cheese Fry vegetables Assemble sandwiches Pack the sandwich
Takt time

40
We can combine some of the processes to get to the
pace required by the customer for every processes
7
6 6
10 10
Cutting Bread & Cut
Cheese
Cut Vegetables & Fry
vegetables
Assemble sandwiches Pack the sandwich Required by customer
demand

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In this we lower down the inventory drastically and have
fewer people
Cutting bread &
Cut Cheese
Cut & fry
vegetables
Assemble the
sandwich
Pack the
sandwich
10
8,6
10
6
10
7
6 6
10
10
0
X
CT in minutes
Inventory in pieces
11
21

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Let’s see how the 3 options compare with each other
All operations done by
1 person
Division of work and
specialization
needed to produce
the sandwich
▪ 29 minutes
▪ We are not using the
people – no customer
cannot do anything
Type of waste ▪ We are wasting food that we have to throw out at the end of the shift
awaits for the
product
▪ 6 minutes
in Progress
▪ A lot . The biggest in
vegetables – for 120
sandwiches
Continuous Flow CT
10; no limiting lanes or
kanban
▪ 4
▪ 29 minutes
▪ 6 minutes
▪ 21 sandwiches are
thrown and 11 sets of
vegetables for
sandwiches

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Now let’s try to lower down the inventory drastically
Cutting bread &
Cut Cheese
Cut & fry
vegetables
Assemble the
sandwich
Pack the
sandwich
10
8,6
10
6
10
7
6 6
10
10
0
X
CT in minutes
Inventory in pieces
11
21

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If we put FIFO lanes and kanbans we can further improve the
customer experience and lower inventory
Cutting bread &
Cut Cheese
Cut & fry
vegetables
Assemble the
sandwich
Pack the
sandwich
10
8,6
10
6
10
7
6 6
10
10
CT in minutes
Lane limiting the inventory
FIFO Lane
Max 1
FIFOLane
Max2
FIFO Lane
Max 2
FIFO Lane
2
Kanban

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Let’s see how the options compare with each other
All operations done by
1 person
Division of work and
specialization
needed to produce
the sandwich
▪ 29 minutes
▪ We are not using the
people – no customer
cannot do anything
Type of waste ▪ We are wasting food that we have to throw out at the end of the shift
awaits for the
product
▪ 6 minutes
in Progress
▪ A lot . The biggest in
vegetables – for 120
sandwiches
Continuous Flow CT
10; no limiting lanes or
kanban
▪ 4
▪ 29 minutes
▪ 6 minutes
▪ 21 sandwiches are
thrown and 11 sets of
vegetables for
sandwiches
Continuous Flow CT
10; lanes and Kanban
▪ 4
▪ 29 minutes
▪ 0 minutes
▪ 2 packed sandwiches
▪ 2 almost ready
sandwiches
▪ 2 sets for sandwiches

46
For more examples and templates in Excel go to my on-line
course where I show you step by step how to find and estimate
improvements in production
$45
$ 0

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You quite often have situation when people perform at
different pace and with different results. You have to
standardize them
1 2 3 4 5 6 7 8 9 10 11 12

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Standardization gives you a lot of advantages
Faster time of execution
Lower waste
Bigger predictability
Easier management of the
production floor
Easy to replace workers
Gathering of knowledge

50
If you want to standardize the work I recommend the
following approach
Pick a process
you want to
standardize
Divide it into
small activities
Measure them
among many
executions
Find best
practices and
describe them
Implement
standard
(trainings,
procedures,
tools)

52
5S in short is about cleaning your working
station, putting everything in order and
keeping it this way

53
5S consists of 5 stages
Sort
Set in order
ShineStandardize
Sustain
▪ Remove things that you do not
need
▪ Arrange essential items in such a
way that it is easy to access them
▪ Create set places for them
▪ Keep your working station, tool,
machines clean and keep the
order set
▪ No trash and dirt
▪ Establish rules, checklists
standards and procedures to
keep everything clean and in
order
▪ Turn 5S into habit
▪ Use visual language and
prompts to sustain the
habits

54
Examples of visual language used to maintain the order

55
Some signs that will show you that 5S is not implemented in
the factory
Machines are dirty
People leave their working
station without cleaning
A lot of unnecessary things just
lying around
Dust on tools
A lot of movement by workers
caused by number of things
surrounding him
No set places for tools and
materials
Everybody dress differently
No procedures / checklist / visual
controls

56
Examples of what we mean by lack of 5S

58
Why it makes sense to get rid of unused things?
Slows down
Takes the place that can be
used by good things
Mental pressure
Distracts you
You lose track
Costs money

59
Since you operate on many platforms and levels you can
create multiple messes. On all of them you should introduce
order and simplicity
Desktop Browser Folder structure
To-do list Kanban shelf House
Desk
Computer

61
Since each person is not talking to each other you are
creating a lot of work in progress (WIP) that you have to
throw away
Cut the bread
Cut cheese
Cut the meat
Assemble the
sandwich
20
15
10
6
10
X
Inventory in pieces
14
9
4

62
By introducing Kanban you limit the work in progress /
inventory
Cut the bread
Cut cheese
Cut the meat
Assemble the
sandwich
20
15
10
6
10
X
Inventory in pieces
Kanban

63
Below some examples of kanban

65
Consulting is a place where the work is very volatile – one day
you work 15 hours and next day you have nothing to do. What
you want to do is use the time of low activity to somehow
prepare yourself and absorb periods of high activity
1 2 3 4 5 6 7 8 9 10 11 12

66
Therefore you should create a shelf of tasks to be done once
you are free. This to-dos should be properly selected and
structured and can have the form of a Kanban

67
Below you have an example of defining of to-dos for the
Kanban shelf
Product
development
Read articles
Read 5 articles
Read 5 articles
Read 5 articles
Read book
Read 50 pages
of 1 book
Read 50 pages
of 1 book
Read 50 pages
of 1 book
Product
proposal
Draft in pencil
Draft in PP
Fill in 5 slides
Fill in 5 slides

68
Tasks from the Product development exercise you put into
the Kanban
Education Product
development
Sales

69
There are number of things that you can put on the shelf
Learning new tools
Learning new skills
Improving skills
Project preparation
Knowledge base
preparation
Training preparation
Conduct training (esp.
lesson learnt)
Business development
Template preparation
Product Development

71
Zero defect rule
Find the error as soon as possible
and eliminate it from the flow

72
Below example form management consulting. In order to
make sure that the value is delivered we put in
some places checkpoints
Write in pencil
presentation
Template in
Power Point
Conduct analysis
for the slides
Fill in slides
Person performing
the task
Overview and
modifications
Additional
analyses
Visual
modification
Final overview
PM / Associate
1 day
sb
x day
Duration of task
performance
Business Analyst
2 days
Business Analyst
14 days
Business Analyst
4 days
PM / Associate
1 day
Business Analyst
2 days
Visual Assistant
2 days
PM / Associate
1 day
Additional
checkpoints

73
Poka Yoke is the name given to all clever ways in which you
can protect people from making mistakes

74
Below some examples of Poka Yoke used in office and
home

75
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77
If you have specialized workers you end-up not using most of
available resources
Research topics for a
post
Write a post Create illustration
Edit and modify
post, add illustration
and schedule
20 5 7 10
# of post that can be
done in a week by 1
person
xx
▪ 75% ▪ 0% ▪ 29% ▪ 50%▪ % of time when
they have nothing
to do

78
If you have specialized workers you end-up not using most of
available resources
Research topics for a
post
Write a post Create illustration
Edit and modify
post, add illustration
and schedule
10 8 8 8
# of post that can be
done in a week by 1
person
xx
▪ 20% ▪ 0% ▪ 0% ▪ 0%▪ % of time when
they have nothing
to do
▪ Comments ▪ We need our researcher to be able to write also posts ▪ The person edits the posts will have to be taught also to create
illustration

80
Quite often you have one operator per one machine. This is
often not efficient as machines just need
feeding in the goods
1 2 3 4 5
2 3 10 5 10 15
Working station
Worker
15
15
Cycle time for the
whole process
How often in minutes
the customer needs a
product

81
There are plenty of problems with such a layout
It’s not flexible – difficult to
slow down or speed up
Requires a lot of space
You have to invest more in
transportation
Big percentage of time the
workers do nothing
Invites more inventory
Bigger waste

82
You can move from the presented 1 machine 1 operator
set-up to more flexible one…..
1 2 3 4 5
2 3 10 5 10 15
Working station
Worker
15
15
Cycle time for the
whole process
product

83
…if you stick to the cycle time of 15 minutes you can go
down 2 workers. Below show how to organize it
3
4
5
Working station
Worker
15
15
15
15
Cycle time for the
whole process
product
15

84
If the demand is bigger and you have to produce a product
every 10 minutes then you have to reorganize
the production line and add 1 worker more
3
4
5
10 10 10 10
Working station
Worker
15
15
Cycle time for the
whole process
product

85
Alternatively you can use a bit different set-up of
machines that enables you delivering product
every 15 minutes….
15
15
15
Working station
Worker
15
15
Cycle time for the
whole process
product

86
…or every 10 minutes, depending on the demand
10
10
10
Working station
Worker
15
15
Cycle time for the
whole process
product10

87
Let’s see how the options compare with each other
1 worker – 1 machine
Manufacturing cells
for takt time 15
Manufacturing cells
for takt time 10
▪ 3

88
Advanced methods of improving
production

90
Open hours
Maintenance Machine uptime
Uptime utilizationIdle time
60%
60%
OEE =
60 %
60 %
x
x
98%
Proportion of good quality
products
98%
35%
It means that we used only 35% of machine
paid time
In the case of machines you can measure Overall Equipment Efficiency.
Similar concept can be used to measure efficiency of people

91
Similar to OEE that is designed for machines you can
define the Overall Labour Efficiency (OLE) for people
▪ Estimated for machines
▪ Shows you what percentage of
the machine is used to create
value for which you are paid by
the customer
▪ It makes sense to analyze it
especially for expensive
machines and bottlenecks
OEE
▪ Estimated for people
▪ Shows you what percentage of
the people is used to create
value for which you are paid by
the customer
▪ It makes sense to analyze it
especially for people that are
representative of a big group of
your employees
OLE

93
Before you start analyzing the waste you have to somehow group it by
stages of occurrence and type of waste
Type 1
Type 2
Type Z
Stage 1 Stage 2 Stage X….
….

94
For finding the potential improvements in waste I propose the following
approach
Measure and
allocate waste by
stages and type of
waste
Pick specific type of
waste and the stage
you want to tackle
Find the root cause
Find the
improvement
Calculate whether it
makes economic
sense or not

95
There are some standard reasons for high waste
Reasons for high waste
Faulty machines
Lack of procedures and
processes
Poor training
Lack of measurement
Change of technology
Lack of preventive
maintenance
Badly applied technology /
procedures

97
Let’s start with the definition of a setup
▪ Setup is all activities required to switch
production from part/operation A to B
▪ Setup time is time between the last produced
part A to the first good part B

98
When we look at any machine you will see that a lot of it’s
time is taken required set-ups
Production time Set up time Other downtimes Break- downs Preventative maintenance Machine open hours

99
If you reduce set-ups you have 2 types of benefits
1
2 Increase production capabilities
Increase production flexibility
Now
After SMED*
Efficiency: 100 parts/hour
Margin on 1 part – 0,80 PLN
2 h
0,5h
Product A
Product B
Setup
Extra capabilities
Additional margin:
Extra production time (hour)
Productivity (part/hour)
Extra production (part)
Unit margin (USD/part)
1,5
100
150
0.80
Additional margin (USD) 120
X
X
Now
After SMED*
▪ Lower inventories (lower cost of
capital)
▪ Decrease production lead time
Advantage
Production: 2* 1000 parts = 2000 parts
Production: 4* 500 parts = 2000 parts
*Single Minute Exchange Die

100
Setup consist of 2 types of operations
▪ Transportation of dies, blades and other parts
▪ Check and repair of dies, blades and other parts
▪ Tools collection
▪ Pre-heating of die
▪ Securing of raw materials
▪ Setting some operation conditions
▪ Attachment and removal of dies, blades, etc
▪ Centering, dimensioning, setting operation
conditions
▪ Trial processing attachments
Operations
during setup
Internal operations
External operations
▪ All operations that can be
performed while a
machine is in operation
▪ All operations that can be
conducted only when
machine is stopped*
Examples

101
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103
Stages of SMED process
Internal
External
Internal
Internal
External
Internal
External
Internal
External
Internal
External
External
Internal
External
Stage 1 Stage 2 Stage 3 Stage 4
▪ Gathering information ▪ Separating internal and external
setup operations
▪ Converting internal to external
operations
▪ Streamline all aspects of the setup
operation

104
SMED – Single Minute Exchange of Dies
Typical “changeover”:
5 – 10 minutes
Typical “changeover”:
5 – 10 seconds

105
Stages of SMED process
Stage 1 Stage 2 Stage 3 Stage 4
▪ Gathering information ▪ Separating
internal and
external setup
operations
▪ Converting internal
to external
operations
▪ Streamline all aspects
of the setup operation
▪ Production and
analysis performed
with stopwatch
▪ Workers interview
▪ Videotape the entire
setup operation
▪ Performing
function checks
▪ Improving
transportation of
dies and other
parts
▪ Improving tools
availability
▪ Re-examine
operations and
convert internal to
external operation
▪ Preparing operating
condition in
advanced
▪ Function
standardization
▪ Radical improvements
in external setup
operations
▪ Radical improvements
in internal setup
operations
Methods
and
Tools:

106
The optimization can be divide into 2 streams
▪ Separate external and in internal operations
▪ Add operator
▪ Move parts / dies’ warehouse
▪ Prepare tools in advance
▪ Clean machine regularly
▪ Standardize screw
▪ Simplify method of fixing die
▪ Preheating of die
Improvements
Technical
improvements
Organizational
improvements

108
Apart from production people you will have a lot of so called maintenance
guys that are fixing the machines
3
4
5
Working station
Worker
15
15
15
15
Cycle time for the
whole process
product
15
Maintenance

109
TPM consists of 8 big streams. The most important is planned maintenance
and autonomous maintenance
TPM
Planned Maintenance
Focused Improvement
Quality maintenance
Autonomous maintenance
Cost Deployment
Training and Education
Early Equipment Management
▪ Operators
▪ Maintenance
Safety Health Environment

110
Autonomous maintenance means that some of the things are executed
by Production
Maintenance
activities
Routine
Maintenance
Reaction to
breakdowns
Preventive
maintenance
Predictive
maintenance
Cleaning / Set-ups
Lubrication & tightening
Daily inspection
Daily equipment care
Creation of maintenance programs
Time based changes
Following trends and measuring
Condition based servicing
Fast & effective repairs
Improvements
Operators Maintenance
Source: Operational Excellence Consulting
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓

111
There are some signs that the company has more or less
functioning TPM
They have predictive and
preventive maintenance
A lot of maintenance is done by
production
Machines are clean and taken
care of
Availability is high
There is low percentage of
quality problems due to
machines

113
In more and more cases you have to find way to replace or support
people with machines to lower down production costs
Machines automating almost fully
specific actions
I.e. CNC
Transportation
I.e. Kiva – self driving robots that bring
the stock to you
Semi automatic solutions
Fully automated lines

114
For automation analyses I propose the following
approach
Measure
current costs
Find automation
solution that
has similar
capabilities
Analyze the
payback time of
such a machine
Check how it
influence the
operations
If it makes sense
propose the
change
▪ Minimal batch
size
▪ Setup time
▪ Variability of
products that
can be
produced on
the machine /
line
▪ Maintenance
needed
▪ You may need
to switch the
whole line for
some time
▪ You may need
to build
additional
space
▪ Most new
machines /
lines are
underperformi
ng in the first
period

115
There are some clues that something is a good candidate
for automation
When you have
chances to make
big impact with
automation?
Demand for the product is erratic and
seasonal
A lot of people are involved
Long setups are needed to move from
product to product

117
One of the biggest problem for efficiency is the so called Parkinson’s Law –
Work expand so as to fill the time available for its completion

118
People when asked to evaluate the time certain things will take build in
buffers
A B C
A + B + C
A + B + C
A B C Central buffer
Declared time
Buffer time
Real execution

119
I recommend reading the following books – click on the chosen
cover to see details on each and every book
Click for more

120
Why you need to do
capacity management

121
Why do you need to manage capacity?
Factories take time to build
Market leaders want to build ahead of
time capacity no to loose market share
Cash flow management
You may want to increase your
responsiveness
New capacity = New technology
New capacity may help you lower your
cost
Managing capacity means also closing
down some facilities

123
When managing the capacity you will have to answer some questions
Managing capacity
What will be the operational impact of the
change in capacity?
When to create new capacity?
Where and what?
What capacities to close down?

124
Why do you need to manage capacity?
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1 500
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2 500
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500
1 000
1 500
2 000
2 500
3 000
3 500
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4 500
1 6 11 16 21
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500
1 000
1 500
2 000
2 500
3 000
3 500
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4 500
1 6 11 16 21
In the market Ahead of market (lead market( Follow the market (lag market)

125
The right approach to capacity will differ depending on the
market characteristics
In the market Ahead of market (lead market) Follow the market (lag market)
▪You want to preserve your share
▪Building too early the capacity is too
costly and you do not see extra value
in it
▪Growth of the demand is pretty
predictable
▪There is some value in
responsiveness (you may get higher
prices for shorter lead time)
▪Demand is pretty difficult to properly
predict
▪You can use this tactic to increase
your share in the market
▪Keeping extra fee capacity is
expensive
▪Margins in the business are low
▪The market is experiencing slow grow
▪Demand is pretty difficult to properly
predict

126
There are a few ways in which you can expand your capacities
What options you
have for capacity
increase
Subcontract some of the processes or
production
Squeeze more from current assets
Expand current facilities
Build new facilities
Buy existing facilities

127
$45
$ 0

128
Check my presentation that will help you get into consulting
How to get into consulting
Practical guide how to pass the case part
presentation

129
Check also my other presentations
Production for Management
Consultants
Practical guide
presentation

130
Check also my other presentaions
Management Consulting
Presentations
Practical guide how to prepare a great presentation
presentation

131
You can also find useful some tips on Excel
Essential Excel for Business
Analysts and Consultants
A practical guide
presentation

132
Check also business modeling in Excel
Business models
Practical guide for startups and entrepreneurs
presentation

133
I recommend also looking at some techniques to improve
your business. Click on the cover below to go to the
presentation
How to become world class
analyst
A practical guide
presentation

134
….and how to perform market research
Market research
Practical guide for startups and entrepreneurs
presentation

135
Check my presentation on starting and running consulting
company
How to create management
consulting presentations?
A practical guide
presentation

136
Subscribe to our channels:
www

137
Check my extensive presentation on productivity hacks to see
how you can me 10x more productive
Management consultant
productivity hacks
How to be lazy and still get things done
presentation

138
If you need more detailed version on productivity hacks you
can check our course on productivity hacks
Management Consulting
Productivity Hacks
$45
$15

139
Check my presentation on restaurant business model to
understand it properly
How to open a successful
restaurant
A practical guide
presentation

140
Check my presentation on on-line models to understand
them properly
On-line Business Modesl
A practical guide
presentation

141
For more check also my on-line course

142
Check my presentation on starting and running consulting
company
Start and run consulting
company
A practical guide
presentation

143
There is an interesting summary of ways to test cheaply
businesses
MVP – how to test your business
idea without building the
product
A practical guide
presentation

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