Requirements for Success
What manufacturing companies need to have
1. Valid and realistic plans. Valid means
that they support the strategic, business, and production goals of
the business. They will be realistic if adequate resources will be
2. A complete, integrated formal system,
A. A Core System incorporating master
production scheduling, rough-cut capacity requirements planning to
test for realism, material requirements planning, detailed capacity
requirements planning, capacity control and priority control
elements. One principle states, "There is one core system
framework common to all types of manufacturing."
B. Supporting systems for activities
involved in design, procurement, processing, quality, cost, customer
relations, and many other areas.
3. Integrity of all file data. The goal must
be 100 percent of data having no significant errors.
4. Fully qualified people who are:
A. Educated to understand the body of
knowledge, know basic principles, and be familiar with applicable
B. Skilled in applying techniques to their
business. C. Self-motivated to initiate actions to improve.
They will know the fallacies in the
conventional wisdom statements cited earlier:
1. Even complex, sophisticated systems using
powerful computers cannot cope with myriad crises. When the causes
of the crises are eliminated, as they can be, much simpler systems
2. Inventory is a liability, not an asset.
The right amount in any company is less. If inputs to it cannot be
balanced with outputs from it, inventory cannot be controlled; if
they can, inventory is not needed.
3. Increasing work input to a plant builds
work-in-process, lengthens lead times, makes priorities less valid,
and decreases ability to deliver products on time. Increasing output
first does the opposite, achieving desirable goals.
4. Flexible operations, including concurrent
engineering design, short setups and small lots, low
work-in-process, and responsive suppliers can reduce costs of
5. Idle time is often less wasteful than
committing scarce resources making things not needed now.
6. Manufacturing problems are being solved
and a cushion of inventory (planning the unplannable?) is a waste.
Actions to Succeed
What manufacturing companies need to do to
become world-class competitors is clear. The principal actions are:
1. Organize for continuous improvement. This
A. Top management recognition that there are
no quick-fixes, they cannot buy their way out of trouble, their
people can solve their problems, and there is no valid alternative
except company failure sooner or later.
B. Operations can be improved by
cross-functional teams working in many areas simultaneously.
C. A high-level champion will insure
concentration on important improvements. Patience and perseverance
are essential. Nothing has higher priority.
Determine customers' true needs. IBM failed to do this. The goal is
no surprises from customers.
3. Make suppliers partners. Certify the best
for each commodity, establish long-term contracts for capacity,
order specifics in small quantities on short lead times, cooperate
on mutual improvements, and share all gains.
Cut cycle times. Don't plan weeks and months to do a few hours of
real work. Reduce setup times, cut lot sizes, arrange machines in
cells, balance operations, smooth out and speed up the flow of work.
Change batch operations to process plants. The First Law says
everything will improve.
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