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Proper Equipment Utilization Reduces Costs and Improves Margins


This is an area where I have found management involvement and simple visual methods to be more effective than expensive hardware and software collection and reporting systems. The goal for operators as well as management and supporting departments, such as engineering and quality, should be to make it easy to see if you are on track or falling behind.

  • Drum – Buffer – Rope (DBR). This is an operations scheduling methodology based on Dr. Eli Goldratt’s Theory of Constraints. Implementation does not require a large capital investment. It is not the intention of this article to get into the details of DBR, but in its simplest form, it can be white board fodder for monitoring constraint operations using visual green/yellow/red pins, flags or cards to clearly identify the status of each order as it moves through the manufacturing process.
  • Gemba walk. Sometimes referred to as “management by walking around,” this practice takes management to the production floor to look for opportunities for improvement. As with all lean practices, it is based upon the principle that it is better to observe what is happening than respond to post-activity reports. A best practice would be to combine this with DBR and conduct walks daily or during each shift to see where you are vs. where you need to be.
  • Issue notification system. This can simply be a light or flag that the operator can activate to indicate that an issue that has stopped or slowed production. This is most effective when the supporting departments, such as quality and engineering, are located in the manufacturing area. Once activated, it should be all hands on deck to resolve the issue.


Analysis and reporting are most effective when used in combination with participative monitoring. They should be used to measure the results of changes that have been implemented and identify new opportunities for improvement. As with monitoring systems, analysis can be done without significant capital investment and is most effective when the entire operations team is involved in capturing and using the information.

  • Machine tool life management impacts both cost and quality. Changing out tooling prematurely increases cost in dollars and time. Using suboptimal tools, or running for too long, can impact cost and quality. Thus, choosing the right machine tools and determining the optimal numbers of parts to produce before changing can have a significant impact on OEE. The upfront work requires involvement and cooperation among the operators, engineering and quality, but once determined, the monitoring can be as simple as a manual log kept by the operator. Incidents of premature failure need to be addressed as they happen and should encourage communication between the operators and engineering through shared goals and metrics.
  • Cycle times are another area where manual systems can be effective without significant capital investment. Requiring operators to measure and record activities also has the advantage of personal engagement and identification of issues as they occur, vs. review of post-activity reports. Engineering and quality should review and discuss results with the operators on a continuous basis.
  • Analysis and reporting is most effective when it is openly communicated and frequently updated. Responsibilities and rewards should be shared to encourage cooperation and engagement between departments. Graphs posted centrally in the manufacturing area and updated by operators with pens and markers can actually have a greater impact than reports generated from expensive Manufacturing Execution Systems.


In conclusion, to realize the maximum margin improvement and cost reduction, companies need to expand their focus to look at their suppliers and their own internal operations. A useful way for both benchmarking and establishing a baseline measure is to calculate OEE. Improving OEE can be accomplished without significant capital investment and is most effective when management and all departments are engaged in a continuous and purposeful manner to identify, monitor and review progress of improvement opportunities.

David Finch is the President and founder of Insight Collaboration Partners, consultants that assist companies in improving inter-departmental communication, supplier collaboration, strategic sourcing and overall operations efficiency and cost reduction. Mr. Finch has over 25 years of hands-on responsibility in global supply chain and manufacturing operations in the medical device and the orthopaedic industry with Becton Dickinson, Johnson & Johnson, Wright Medical Technology and MicroPort Orthopedics. He can be contacted by This email address is being protected from spambots. You need JavaScript enabled to view it.