Utilization vs. Flow paradox

 

2. Why "High Utilization" is an Operations Trap

It Creates the Ultimate Waste: Overproduction

Overproduction is the "mother of all wastes" because it breeds and hides every other operational failure. When you run machines just to keep utilization metrics high, you create excess inventory.

  • The Cost: That inventory requires warehouse space, material handlers, forklifts, and tracking software.

  • The Risk: It risks obsolescence, damage, and engineering change reworks.

It Blinds You to Real Capacity

When a plant is choked with Work-in-Progress (WIP) inventory caused by over-utilization, lead times skyrocket. Workers spend half their day moving parts out of the way just to find the parts they actually need. High utilization creates an illusion of a busy, high-capacity plant, when in reality, the plant is drowning in its own excess.

It Destroys Flexibility and Responsiveness

If a machine is booked $100\%$ of the time with long production runs to achieve "economies of scale," the plant loses the agility to respond to a sudden, high-margin customer request. Changeover times are avoided because they drop utilization numbers, forcing the company into massive batch sizes that detach production from real-time market demand.

#ChrisReep #ChristopherReep #LeanCultureAdvisory

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