The next step in this process is looking at capacity. In the area of capacity management, a LST should focus on reallocating existing capacity and exploring alternatives for divesting of excess capacity.
- Cross train employees to create a more flexible workforce. A cross training program should be part of continuous improvement and progress measured by performance measurements
- Assign available employees to continuous improvement activities when productive activities are not available. A formal company-wide continuous improvement program should be created that identifies employees with available capacity and matches them to continuous improvement activities.
- Bring outsourced activities in-house. All outsourced production activities should be analyzed to determine if the company possesses the resources to perform these activities in-house. If the resources exist, bringing outsourced activities in house will reduce costs
- Become a contract manufacturer. If your company possesses a particular core manufacturing process competency, explore the possibility of using that competency to produce products outside of your normal product families.
Divesting excess capacity
- Develop an employee attrition program, where full-time employees who leave the company are not replaced. A sound cross-training program makes an attrition program possible
- Reduce or eliminate overtime
- Freeze full-time hiring and begin a temporary workforce program. This program requires the company to create a pool of temporary workers that can be called on to meet spikes in customer demand, and don’t work if not needed. Additionally, a temporary worker program identifies potential full-time employees with the specific skills & experience that could be needed if a full-time employee must be replaced, or if demand has sufficiently increased to warrant hiring full-time employees
- Sell excess machinery & equipment
- Reduce your facility size or rent excess space
Each of these alternatives will require some time to analyze and/or implement. The LST must use good project management practices to ensure that responsibility, accountability and deadlines are met.