Companies are often faced with periods of fluctuating product demand that can make it difficult to maximize the usage of their capacity and resources. This makes it challenging to realize potential profit and can even have detrimental effects on the bottom line. Developing flexibility strategies to react to fluctuations in demand allows a manufacturer to dynamically adjust capacity and resources to keep costs under control.
This project was pursued at a diesel engine manufacturer for two older product lines experiencing consistently declining volumes. The volumes were declining due to this company releasing newer products in the market, and the current economic downturn. There was also an expectation to eventually phase out these two engines after approximately five years.
A project team was formed to address these challenges starting with defining the project scope, setting up the team and a cross-functional project structure, and developing work packages with a master timeline. Working together, the team generated different scenarios to introduce flexibility. These scenarios were systematically analyzed comparing hard factors, by calculating the business case for each, and soft factors, with a risk analysis and pairwise comparison.
The initial project goal was to consolidate two product assembly lines into one. The two lines considered produced diesel engines from the same base configuration and could be consolidated onto one assembly line with the proper investment and planning. As the project progressed, it was necessary to devise and implement additional flexibility enablers such as workforce restructuring and lead time reduction as the volume fluctuated more than was originally forecasted.
At the conclusion of the project, only the latter methods of workforce restructuring and lead time reduction were implemented. Consolidating the two assembly lines into one was indefinitely suspended because of worsening economic conditions and restrictions on project investment. Having more than one flexibility strategy was the key to enable reactions to fluctuating demand and ensure success in this project.