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Manufacturers live and die by whether machines are running or not. List all of the machines your firm has, calculate available hours for each and publish the list of unused, idle, available machine capacity. Ensure this is reviewed by all sales personnel and applicable trade reps who can secure product orders. Put a bounty, if necessary, on filling up these machines with work at least so a customer is covering overhead costs on them.
Have the sales and marketing staff review your customer listing to identify which clients may have needs that can be met by these idle machines. Send out your representatives, hungry for incentives, and have them offer lucrative deals to a selected few to temporarily fill up your machines. The key to this entire program is having data. That data comes from a person who is directed to report idle machine hours daily. Think about all of your company assets and then target a list of the ten least used pieces of equipment. Question their legitimacy in your firm.
When analyzing idle equipment, ask these questions:
- Which machines are idle? What (department, equipment, work center, assembly area, absorption unit) is not working three shifts every day?
- Ask employees to pinpoint the machines that rarely run. Which of your machines is the least used because of a lack of work? Ask your employees; they know which machines have been sitting idle a long time. When overwhelmed, start with one. Start with the worst problem and begin paying attention to that one first. Once the machine’s efficiency is improved, go the next on the list if you are one that gets overcome by multiple problems. Solve one at a time.
- What types of products are run on these machines? Pinpoint the types of products and then define the market. Go through your customer lists and select those that line up with these unused work centers. Go after these customers and bring the work back that will fill up the machines. Offer a rate they cannot afford to ignore.
- Where is the market for these machines? Where can the company sell more of those types of products not currently being sold? Target those companies defined in number 3.
- Offer hefty incentives for your sales people to find work for these machines. Would it be beneficial to run some special incentive programs to reward the sales representatives that sell products to use up this space or idle time? Run some specials to get interest. There is nothing wrong with this approach and it proves or disapproves the existence of a market out there for these machines, otherwise, if throwing special incentives does not work, sell or scrap the machines and swap for better production equipment.
- What about paying agents in your industry? Are there agents in your industry you can approach to sell off this idle time on a confidential and temporary basis (reduced hourly rates possibly)?
- Sell this idle machine time to help pay off the equipment loans. Your company has bought this equipment. Some of it may still be on capitalized leases or the loans have not been paid off. You need the absorption, so get the machine busy using one method or another. If you have to privately discount the rate per hour to get it busy, do it. It does you no good at all not working. Put it to work plus an operator. It will at least cover some of the fixed portion of manufacturing expenses.
- What are the book and market values of this equipment? You need to think of ways to use these machines, otherwise, they need to be sold off and replaced with equipment that can more easily be sold in the marketplace. What is the current market value of the equipment that is not working versus the payoff of the existing loan on the equipment (if any)?
