Relationship Between Utilization and Cycle Time for Multiple Product Processes

Small businesses thrive by moving faster than much bigger companies. They may not have scale in working on one product, so they probably work on more than one product, especially so in a transshipment hub like Singapore. The traditional approach is always to maximize utilization, but we all know increasing utilization to its limit always increases cycle time, or lead time dramatically. So how do we know where we stand for multiple products?

Below is an example of calculations to find utilization for 2 machines with multiple products.

Clearly from the plot below, we do not want full utilization.

How do we improve performance of a line/plant/process?

1. Relate operational performance like WIP, Cycle Time, throughput and customer service to business level metrics like profits, cost, ROA, inventory turns etc… ask questions like whether inventory reduction will result in significant cost savings? Would cycle time reduction result in significant competitive advantage? Would throughput increase help generate significantly more revenue? Would improve customer service generate business over the long run?
2. From a process point of view, always improve utilization first, then reduce variability, consider batching. The VUT spreadsheet mentioned earlier will help you understand its relationships and interdependencies.
3. Consider structural changes like layout, pull mechanisms, including shifting the push/pull boundary. Pull mechanisms can dampen fluctuations in WIP/cycle time and feed bottlenecks more smoothly.