Production Control in Capacity Selling type Machine Shop - Challenge of Project Order Flexibility

This paper describes a case study performed in a capacity selling type (CS) machine shop manufacturing wiring control systems of paper machines by partnership subcontracting. The research task was to improve a flexible way for handling large project orders. Traditionally, production control techniques are based on methods developed for companies manufacturing similar products in line. In case of CS, the material requirements planning is often less important than proper scheduled timings capacity usage. The case company is a small outsourcing firm with permanent staff of 20 and has its core competence in highly automated machining. In addition to traditional capacity selling production control the firm wanted more efficient and flexible ways to carry out large project type orders with extreme variation of design, materials and parts. Benchmarking was used as a primary method in search of suitable project control system for a CS shop. With help of international benchmarking clearinghouses, the guidelines of the system to be developed was adopted from a large plant fabricating electric protective relays (make-to-order) and a middle-size factory manufacturing special tractors for forest works and diggings (assembly-to-order). The case presents an example how a CS company can handle large projects by combining project management and capacity control. Furthermore, this study demonstrates the usefulness of systematic benchmarking method whilst searching practical applications in industry the best practises.