Demand is growing, but the operation can’t keep up.
When demand rises, the operation often starts to perform worse. Delivery reliability usually goes first, then quality, and gradually efficiency too. It looks like a capacity ceiling, but usually the operation can do considerably more. The causes were always there; they were absorbed by spare capacity that growth has now used up. We help you bring the operation back under control, and grow.
Margin should grow faster than volume
More volume of the same product, with the operation unchanged, should grow the margin disproportionately: the fixed costs were already covered, and the extra volume only brings variable costs with it. In practice it often doesn’t work out that way. Equipment reliability falls, quality problems appear, and rework and overtime increase. The margin stays flat or even falls, and so does customer satisfaction.
Many companies conclude that they have hit their capacity ceiling and need to invest. Others are baffled: the plant used to do this with ease, and now can’t even get back to its old level.
It may eventually be a capacity problem. But that is rarely what a company runs into first.
What is really happening
An operation running below its maximum has room to absorb problems. More volume takes that room away, and the problems that were always there come to the surface. At first the customer barely noticed; now they do.
Those problems were always costing money. Under pressure, those costs rise. The good news is that structural problems that were always left alone now get tackled. And that delivers more than the extra volume alone.
Unlock what you already have before you invest
The first reaction from the operation is often: more people and more equipment. Usually that isn’t the right first move. First, quickly establish the real capacity you already have, and unlock it.
If that still proves insufficient, you can launch a well-founded investment in parallel, based on facts rather than assumptions.
