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Thread: manufacturing production quota system design

  1. #1
    Associate Engineer
    Join Date
    Dec 2021

    manufacturing production quota system design

    Hi All,
    Are there any case studies / whitepapers / etc available online which cover design of production quota systems for manufacturing? My background's in Mech E but now involved in management. Having a quota system for goods manufacturing has been something I've pondered for sake of increased efficiency & satisfaction with employees, but much uncertainty arises when thinking on:

    1) a 'level playing field' where differences in ease-of-access to raw materials impact the employee's cycle time

    2) how to value different types of activities (cutting parts vs welding)...this is mostly already handled through different wage rates, but could change depending on intermittent demand surges and employee availability (cross-training would be heavily emphasized)

    I think all concerns boil down to simply thinking one's way through them, but reading a case study of how other companies have done it would be helpful to color the design process. The feasibility of such a system is of-course situational w.r.t. the product(s) being manufactured, among other factors.

    I've read that companies in Europe (esp. Germany) have done this for decades, and I'd assume plenty companies elsewhere.

    My primary objective with this is to allow employees who are more productive to work shorter shifts, thereby having more time at home, while also offering incentives during temporary surges in demand.
    Last edited by chad_bays; 12-01-2021 at 01:13 PM.

  2. #2
    Technical Fellow jboggs's Avatar
    Join Date
    Mar 2011
    Myrtle Beach, SC
    Two thoughts:
    First, your question brings back some very painful memories of my early days in mfg engrg. A unionized tire plant I worked in had a rate system on every job. It was part of the union contract. When a worker fulfilled his "quota" for the day he had to stop work. The theory was that this would motivate him to work quickly for time off. It also created an incentive for the company to hire more union workers in order to get more output.

    Theory is one thing, reality is another. Who sets those rates? And how? In practice, every year before contract negotiations the company would hire a rate consultant. The goal was to establish a quantity of good parts that each job was able to produce in an 8 hour shift, assuming each worker was conscientious, competent, experienced, and well trained. The really good workers might be able to "cap out" after only 6.5 hours if they were really good.

    Guess who else also hired a rate consultant? Right, the union. Do you think their evaluations ever agreed? Never. Even close? Never. They were always off by an order of magnitude. The whole thing was simply an exercise to "justify" a strike.

    So then after all the consultants were paid and gone, the contract negotiators would eventually end up with an agreement that was usually very nearly exactly what the union consultant recommended. Then finally we all get back to work!

    If the theory held true and if the rates were right then everybody would work a solid 8 hour shift. Then as certain workers got better and better, they would start "capping out" a little earlier, maybe after 7.5 hours, or even 6.5 hours if they were really good. But this would take time.

    The reality? Within one week after the contract was signed, almost every employee was "capping out" after only 4.5 to 5 hours. They spent half their day in the break rooms. Saw it over and over every year.

    Any questions why that company (like so many others) no longer exists?

    Second - Get a copy of this book "The Goal" by Eliyahu M. Goldratt and read it!

  3. #3
    Associate Engineer
    Join Date
    Dec 2021
    Hi jboggs,
    Thank you for the thoughtful reply. In my case, there's no union involved, so I tend to think that many of the machinations you alluded to won't apply. There won't be any consultants involved in this, either (aside from web forum discussions like this). My initiative is to look at what's in front of me, and keep the system as simple as possible...contradicts me asking for color commentary here though...

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