By now most, if not all, of us have been exposed or involved in what
appears to be a ceaseless amount of change. The only variables are
the scope and timing of the changes.
We have also had to accept the fact that effectively dealing with
change is a skill we should learn quickly as it becomes more and
more pervasive in our working and personal environments. Let's keep
it simple and define change in two currently popular definitions.
The first is evolutionary change which we can call "continuous
improvement" and the second is revolutionary, typically known as
Continuous improvement reached its pinnacle of popularity during
our focus on quality, which has been intense during the past decade.
However, businesses in this increasingly competitive world have
come to realize that if everybody is working on improving themselves
(typically with the same popular quality thrusts), then this
significant effort is resulting in no strategic benefit for any one
firm. The company that wants to differentiate itself from the "rest
of the pack" needs an approach that will have the potential to reap
far greater and quicker benefits than can be achieved by a
methodical improvement program. This latter goal has led companies
to reengineer their business processes in the belief that this is
the only way to achieve significant benefits (or else do it to
survive, or rejuvenate existing improvement efforts which have
reached a plateau).
Now let's evaluate the impact that these two different approaches to
change can have in our Production and Inventory Management
Production and Inventory Management Organization
Since P&IM organizations can differ significantly from company to
company (even within companies), let's just address a few common
functions that are likely to exist. Our structure will have customer
order entry, master scheduling, material planning, and production
activity control. Of course we will also have the following generic
computer systems to support us; order entry & billings (customer
backlog), production scheduling, bill of material, material
requirements planning, inventory control, shop floor control, etc.
Now let's identify some improvements that have been made over the
years and their impact on our organization.
Evolutionary Changes in P&IM
Similar to other functions undergoing traditional analysis, P&IM was
evaluated to identify improvements that would result in a more
efficient organization. It must be pointed out here that a key word
is "efficient." Only recently have
we begun to look at a business process rather than business
functions, and that is what drives you to focus on effectiveness
rather than efficiency. The shift in focus came about as we realized
that it is of no value to be 100% efficient, doing ineffective work.
The P&IM function has always had to deal with a large amount of data
ranging from product families to raw material items; future,
current, and historical demand/ capacity; selling prices and
material costs, etc. In addition they were dealing in areas with a
major impact on cash flow. The data, level of detail, and importance
made it an attractive area to utilize computer system solutions.
One of the major improvements made over the years has been the
integration of the separate systems that were used to support the
different activities within P&IM or the related functions outside of
P&IM. Although this change was based upon a modest request to
eliminate the separate maintenance of each system (module) needed
for production and inventory management, it paved the way for the
benefits of data base management.
Unfortunately, these enhancements in information systems resulted
in the optimization of functional or task goals, while at the same
time concealing the business process owner. In the absence of an
owner, activities within the process may improve, but no one is
evaluating whether or not the overall process improved. An example
of a popular process is the order fulfillment cycle. It combines key
functions or activities such as order entry, order scheduling,
material planning, material handling (supply), manufacturing, and
material handling (distribution). The process cycle begins when an
order is received from the customer and is completed when a product
is shipped to the customer. In the past we would develop a system to
make each piece more efficient and consider our efforts successful
even if the total process did not improve. In many instances the
changes to one activity adversely affected another! Today we are
beginning to look at the whole cycle and if the entire process shows
no improvement or no benefit to the customer we shift our resources
to another potential opportunity.
To be Continued
For balance of this article, click on the below link:
Lean Manufacturing Articles and go to Series 02
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