Relative to earlier reports, the growth in mining capacity was significantly smaller in and significantly higher in For , capacity at mines is now reported to have expanded modestly; previously, it was reported to have contracted.
The capacity measures for both electric and gas utilities are now reported to have increased more slowly between and than stated earlier. Capacity utilization for total industry rose in and but decreased in and Utilization at manufacturers rose in and and then moved down in and The current readings for manufacturing utilization are noticeably higher for through , as capacity revised down by more than output.
Within manufacturing, upward revisions to utilization rates are fairly widespread in both nondurables and durables, though the operating rate in the motor vehicle industry revised down noticeably. Of the 10 major categories of durables, only 3 recorded operating rates in the fourth quarter of that were above their long-run averages. The utilization rate for nondurable manufacturing was As of the fourth quarter of , the operating rate for each major nondurable manufacturing industry group was below its industry-specific long-run average.
The capacity utilization rate for mining declined sharply in and as operating rates moved down throughout the sector. Relative to its previously published rate, utilization at mines for the fourth quarter of is about 9 percentage points lower, reflecting both lower production growth and higher capacity growth. At the end of , the utilization rate for mining was Apart from , the sector has been operating below its long-run average utilization since The operating rate for utilities has been well below its long-run average of The IP indexes represent the level of real output relative to a base year.
At the monthly frequency, movements of the indexes are based on indicators that are derived using industry-specific data from a variety of government and private sources.
The monthly production indexes are anchored to annual benchmarks that are less timely but typically based on more comprehensive data. In most cases, the annual benchmark is nominal gross output reported by the Census Bureau deflated by a suitable price index. Annual revisions to the IP and capacity measures generally involve 1 incorporating new and revised annual benchmark data on output, prices, and value-added proportions; 2 incorporating new monthly or quarterly data that were revised or that arrived too late to be included in the regular six-month reporting window for monthly IP; 3 updating seasonal adjustment factors; 4 updating the methods used to construct the indexes; and 5 introducing changes to the industry- or market-group structure of the indexes based on changes to underlying data sources.
The current annual revision includes more innovations and updates than are typical. The Census Bureau provides annual figures for value added and the cost of materials for manufacturing industries, which can be summed to obtain nominal gross output.
The benchmark indexes for this revision incorporated information for from the Economic Census and new information for and from the Annual Survey of Manufactures ASM.
New annual data were also incorporated into many other indexes not in the scope of the ASM. The benchmark indexes for metallic and nonmetallic mineral mining were updated with any newly available data from through from the USGS, and the benchmark indexes for logging and for publishing were advanced through based on data from the U. Forest Service and from the U. Census Bureau, respectively. To obtain individual benchmarks of real gross output, the measures of nominal gross output are deflated by annual price deflators.
In general, the benchmark industry price deflators consist of price indexes from the BEA through that are extended through with the related producer price indexes PPIs from the BLS. The IP system is organized as a hierarchical structure where the individual production indexes are combined using a version of the Fisher-ideal index formula to construct broader measures of production. The weights that are used to combine individual IP measures into more aggregate measures are based on the value added from the industry, calculated as gross output less cost of materials.
For IP indexes that cover only part of a six-digit NAICS industry, the aggregation weights were constructed by allocating value added as defined by the Census Bureau for a six-digit industry across the various components of IP that compose that industry. The allocation of value added across each component was determined by that component's share of the industry's overall product shipments. The new classification system is coded independently of NAICS, and a concordance was required to align the recent data with the historical data used to allocate weights across IP indexes for the period before There are three key areas of focus to consider when working to increase capacity — software and technology, planning and people, and processes and workflow.
To start increasing capacity, you need to ensure that you have the right tools in place. While these may already be in place at your company, they must also be properly integrated. These software systems are often most effective when aligned across the organization. If all departments are accessing the same data, it creates more efficiencies, minimizes errors, and helps plan for growth. A completely integrated software solution will be able to keep all data aligned, which helps increase efficiencies and reduce errors.
In turn, this will streamline production while boosting customer service. Another critical function of technology is making sure that machinery is kept up-to-date. Technology and software are creating innovations in this process as well.
Through installing IoT sensors into equipment and syncing it to software solutions such as an ERP system , manufacturers can track notifications for repairs and find ways to create efficiencies for capacity planning. You can start small with this by putting a sensor in one piece of equipment and scaling as needed. This is a prime example of software and technology working together and is often the start of a digital transformation journey. If your orders increase, are your people prepared?
Part of capacity planning is ensuring that you have the resources needed to fulfil a growth in sales. Moreover, through the manufacturing system, you can immediately observe what consumes time and resources excessively. Then, consider the probability to cut it out. There are a lot of companies who still manage their business manually.
If you are one of them, you must have found it difficult to find the causes of the machine downtime. With an ERP system that is integrated with the machines, you can monitor its operation in real-time. Fast data access allows you to troubleshoot quickly and opt for the proper next action effectively. The most obvious and common strategy to meet rocketing demand is to ask your staff to work overtime. However, you need to note that this is not a suitable strategy for long-term optimization.
It will also significantly reduce their productivity and consequently will slow your production. Oftentimes, the problem that prohibits you from increasing production capacity lies in purchasing management. The first problem might come directly from your vendors. If you experience late shipment or they send you wrong items, even the damaged ones, you should consider stopping purchasing from them. Find the right suppliers that can accommodate you in any situation.
The second problem might come from your own management. Conventional ways of managing business might impede the purchasing process. So before thinking about adding shifts or overtime, outsourcing, or purchasing new equipment, make sure you truly understand and consider the untapped potential that exists in your current factory.
Untapped potential in your current factory can be broken into two categories, each of which represents a constraint on capacity:. OEE is a well-established performance metric that takes into account Equipment Losses usually broken into the categories of Availability Loss, Performance Loss, and Quality Loss; and further broken into the Six Big Losses as shown in the diagram below.
A comprehensive and very practical way to address Equipment Losses is through the underlying Six Big Losses. The Six Big Losses are very well-aligned to discrete manufacturing and map to specific improvement tools and countermeasures. The Six Big Losses are:. More efficient equipment can be scheduled more accurately and for smaller lot sizes.
This lowers cost and reduces lead times, which leads to more customer orders — which utilize the increased capacity.
OEE is ideally suited for supervisors that want to benchmark and measure progress in reducing Equipment Losses. It provides one simple metric, the OEE score, with which to gauge progress. Even better, it aligns perfectly with the Six Big Losses to provide valuable insights on where to focus improvement efforts and what type of improvement actions will be most effective.
We don't recommend OEE as the primary metric for operators — it is a bit too abstract.
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