As an organization begins its lean journey, improvements are expected to free up capacities such as machines, people, and space. That said, freed up resources are only useful if they can be accounted for, utilized to improve the business, and effectively communicated.

Box Scores
Box scores are a powerful tool for effectively tracking and communicating the positive impacts of continuous improvement efforts, such as freed capacity that can be reallocated to other value-added activities.

Capacity Box Scores Table

Figure 1. Capacity Box Scores Table

Figure 1. illustrates a typical box score table for tracking operational, capacity, and financial measures. Note that there is a column for the current state on the left and the future state on the right. While there are only three columns between the current state and future state columns in this example, there can actually be any number of columns for the various periods between the two states.

Because capacity is the link between operations and finance, capacity measures are located between the operational and financial section rows. Note in Figure 1 that only overall capacity is accounted for. In practice, capacity would be sub-categorized.
In the following example illustrated in Figure 2. we see employee and machine capacity for two periods (September and October). You can also see the target capacity of the future state of December 31st.

Capacity Box Scores

Figure 2. Capacity Box Scores

It’s important to note that capacity management need not only be limited to employee and machine time. Tracking the percentage of facility capacity used by a specific value stream or support function can also help guide an organization’s decision making and reveal huge areas for improvements, such as in the area of inventory management.

Value Stream Capacity

Figure 3. Value Stream Capacity

9 Step Box Score Decision Process
A 9-step process is a powerful tool for determining where to focus improvement efforts.

  • Step 1. Acquire Period Data
    Before we can improve, we must know what we’re improving. As such, our first step is to collect relevant data for each work area. Keep in mind that these metrics will be used in a later step to calculate capacity. On that note, a few metrics worth considering include average cycle time, units produced, and scrap rate.

    Common Capacity Metrics
    • Staff size
    • Shifts
    • Idle time
    • Working hours
    • Working days
    • Total units produced
    • Average employee cycle time
    • Average batch setup time
    • Rework rate
    • Scrap rate
    • Average batch size
    • Average inspection time

    Next, using data collected, we must calculate the total available time, productive capacity time, and finally the productive capacity percent. We’ll tackle each of those measures over the next 3 steps.

  • Step 2. Calculate Productive Capacity
    Once we have data, we must calculate our productive capacity. To calculate productive capacity, first, we must quantify our total available time in terms of minutes, during a distinct period such as a month. Thus, our total available time for the month is equivalent to September’s total man-hours.

    • Total Available Time = Daily Shifts x Workers per Shift x Shift Work Hours x 60
    • Productive Capacity Time = Total Processed Units (including any rework) X Average Employee Cycle Time Seconds X Workers per Shift X [1 – (Scrap Rate + Rework Rate)] / 60
    • Productive Capacity % = Productive Capacity Time / Total Available Time

    In the example, work cell B has 126,000 minutes of available time and 83,300 minutes of productive capacity or about 66.1% productive capacity.

    • Total Available Time = 2 Shifts x 7 Workers x 7.5 Production Hours x 60 = 126,000 minutes
    • Productive Capacity Time = Total Units 85,000 X Avg Worker Cycle Time 12 7 Workers X [1 – (10% Scrap Rate + 20% Rework Rate)] / 60 = 83,300
    • Productive Capacity % = 83,300 / 126,000 = 66.1%
  • Step 3. Calculate Non-Productive Capacity
    Next, we must calculate the non-productive capacity. To start, we must quantify the total amount of non-productive (i.e. set-up time, rework time, scrap time, inspection time, etc.).

    • Total Available Time = Sum of all time not directly related error-free production (i.e. all time related to activities our customers aren’t willing to pay us for, such as maintenance, training, and meetings.)
    • Non-Productive Capacity Percent = Non-Productive Time / Total Available Time
  • Step 4. Calculate Available Capacity
    After calculating productive and non-productive capacity, next, we calculate the available capacity.

    • Available Capacity Time = Total Available Time – (Productive Time + Non-Productive Time)
    • Available Capacity Percent = 1 – (Productive Capacity % + Non-Productive Capacity %)

    Figure 4 illustrates a summary of the capacity measures for three distinct work cells.

  • Available capacity percent

    Figure 4. Available capacity percent

  • Step 5. Identify Bottlenecks
    Once we have quantified the available capacity percent of each work cell, value stream, or area, we must identify bottlenecks. Fortunately, this is as simple as identifying the area(s) with the least capacity. The analysis in Figure 5. reveals that Workcell B’s available capacity is not only the least of the three work cells but is also negative. Negative capacity tells us that this work cell must work overtime in order to meet customer demand. Therefore, Workcell B is the bottleneck work cell in this scenario.
  • Step 6. Add Bottleneck Measures to the Box Score
    Figure 5 Here you can see an example of the capacity metrics for two monthly periods. This can quickly and easily be compared to the target capacity this organization would like to reach by December 31st. In this case, the organization has an available capacity target of 10%.

    Two months of capacity measures

    Figure 5. Two months of capacity measures

    It’s important to recognize that numbers rarely paint a complete picture. For example, any time a product mix changes or resources are reorganized and reallocated, metrics can change as a result. So, while you want to track trends as a way of measuring improvements, you also should remain cognizant of other factors that can contribute to changes in metrics.

  • Step 7. Identify Improvement Possibilities.
    Reviewing data can help guide decisions by highlighting areas where improvement is needed. For example, analyzing the data in Figure 6, may reveal the opportunity to reduce the large amount of rework and scrap for work cell B. Furthermore, notice the difference in available capacity between the different work cells. By better balancing work across work cells, we could effectively reduce the bottleneck time.Once an improvement opportunity has been identified, we must also identify possible solutions. For example, in this case, better balance across the different work cells might be accomplished through cross-training employees in each of the three work cells.Whatever improvements you identify, once agreed upon, they should be implemented.

    Non-productive capacity percent

    Figure 6. Non-productive capacity percent

  • Step 8. Link Lean Improvement to Capacity Changes and Operational Goals.
    Always remember that the results of continuous improvement efforts should also be quantified in order to know for sure how successful we were and to further encourage future improvement cycles.Figure 7 illustrates the numbers for each work cell after implementing kaizen improvements. As you can see, in this example, work cell B went from having an available capacity of -1.9% to 14.1%.

    Post-Kaizen Measures

    Figure 7. Post-Kaizen Measures

  • Before we wrap up, it’s important recognize that there are many times when non-value-added tasks are unavoidable such as maintenance. While time must be allocated to maintaining equipment and work areas, customers don’t value this. For this reason, it can be helpful to break non-value-added time into two categories:
    1. Non-value-added
    2. Necessary non-value-added

    With this distinction in mind, organizations can better prioritize improvement activities with the goal of eliminating all unnecessary non-value-added time while reducing all necessary non-value-added time to a minimum.

    Hours % Payroll
    Cell Workers (all cells)
    Value-added time 222,000 55.0 $4,400,000
    Non-value-added (NVA) 80,000 20.0 $1,600,000
    Non-value-added, necessary 40,000 10.0 $800,000
    Available time, NVA necessary 60,000 15.0 $1,200,000
    Total cell workers 400,000 100.0 $8,000,000
    Maintenance Workers, VS Managers and Staff
    Value-added time 0 0 0
    Non-value-added (NVA) 47,500 27.5 $275,000
    Non-value-added, necessary 115,000 72.5 $725,000
    Total cell workers 162,000 100.0 $1,000,000
    Value Stream Total
    Value-added time n/a 48.9 $4,400,000
    Non-value-added (NVA) n/a 40.3 $3,625,000
    Non-value-added, necessary n/a 10.8 $975,000
    Total maintenance workers 100.0 $9,000,000

    Figure 8. Necessary vs unnecessary non-value-added time

  • Step 9. Utilize Freed Capacity to Drive Financial Improvements.
    Of course, our goal isn’t better-managed capacity alone. Once an organization has freed up or otherwise created excess capacity, that capacity should be utilized to drive financial performance. While the specific decision-making processes related to how to utilize capacity to improve an organization’s financial position are outside of the scope of the topic of capacity management box scores, financial improvement should always be kept top of mind.