What is a Disruption?
A disruption can be as minor as a production slow down or as catastrophic as a massive product recall. Disruptions can also be seen as additional steps needed to assure quality or as rework to accommodate lower quality product. All of these disruptions reduce your margins by having to spend extra resources outside of the labor and material used to produce your finished goods.
Take a look at the list below, and see if you have experienced any of these disruptions:
Small Disruptions
(Under $5,000 per disruption, including labor and material)
- Line slowdown because materials were not optimal?
- Material standardization activities because materials have different characteristics from different suppliers?
- Sorting raw and in process materials because of mislabeled packaging?
- Supplier paperwork not present?
Medium Disruptions
(Over $5,000 per disruption, including labor, material and overhead)
- Line stoppage because inconsistent materials affected production?
- Line changeover because materials were not delivered on time?
- Sorting finished goods (for example, products that do not meet final inspection)?
- Increased safety stock to accommodate supply chain availability issues?
Large Disruptions
(Over $100,000 per disruption, including material, labor, overhead and containment)
- Product recall because of lower quality product?
- Lower yield because of additional processes needed to determine if raw materials meet specification?
- Fines because of lack of compliance to government (FDA) or industry (TS/QS/ISO) regulations?
- Increased WIP to accommodate production inefficiencies?
Catastrophic Disruptions
(Over $1,000,000 per disruption, including material, labor, overhead, containment and brand)
- Product recall because of potential safety issues (i.e. Firestone)?