Economic Assessment of Production Downtime

1. Economic Assessment of Production Downtime Investigators: Scott J. Mason, Ph.D. Heather L. Nachtmann, Ph.D. Graduate Scholar: James Hazman

2. Background • Further-processing plants produce fully-cooked chicken products • A few raw materials can turn into many different end products • Use WIP as raw material for the products • WIP is supplied in-house and/or outsourced

3. Project Motivation • Supplied WIP problems: • Mis-execution • Late shipment • Incorrect shipment quantity • Costs incurred due to supplied WIP problems: • Rework costs • Lost production costs due to schedule changes • Opportunity costs

4. Project Objectives • Develop a methodology for determining the “true” cost of production downtime caused by WIP quality, quantity, and timing issues.

5. Project Approach • Observe and document relevant processes for pilot plant • WIP preparation • Rework process • Scheduling/rescheduling of the products • Setup/changeover process • Identify and analyze all significant cost factors

6. Project Approach • Develop scalable production downtime cost model for all Tyson’s further processing plants • Test the cost model, evaluate the results, and refine if needed • Formulate and recommend solutions to the production downtime problem

7. Project Benefits • Exposure to all hidden costs associated with production downtime • Ability to determine accurate costs associated with production downtime • Motivation for Tyson suppliers to improve the quality and delivery of WIP