World Class Performance

What we know to do in industry today and what we are actually doing are quite different! And the gap gets wider every day. The proven, effective practices that we learn in seminars and talk about are still not being applied. APICS continues to certify thousands of people every day in effective practices that people don't go back to their jobs and use.

Look at some specific examples:

1. While there are several exceptions, most industries today shut down the factory at least once a year to count everything. It's called the Annual Physical Inventory. In many companies, just the thought of not doing it sends shock waves up and down the corridors. Ironically, for at least 20 years we've had well-defined cycle counting practices that can prevent the necessity of "reworking" inventory records. Practice the proven, well-publicized steps to accurate inventory records, and you'll never have to stop production to take the annual physical inventory.

Many companies have proven it can be done! Auditors routinely approve financial statements, even though a physical inventory wasn't taken. Yet physical inventories continue to be a common practice in most industries. We know better, but we still do it!

2. We know an industry runs better if we select suppliers and measure performance on reliable quality, shorter lead times, frequent deliveries, sharing technical knowledge, etc. Yet we continue to select suppliers based on the lowest price. It has been well-documented in thousands of articles that better supplier performance is the result of looking at total costs, not just purchase price. We talk a good game about partnerships, yet continue to use leverage and clout as a prime tool to try to get better supplier performance. Again, we know better, but we continue to use the same old practices.

3. The merits of making only what you need when you need it are proven. In other words, smaller is better. Yet we continue to see running at full speed just to keep the equipment busy. We continue to see long runs justified frequently by economic order quantity calculations. "While you're making a thousand, might as well make another three thousand because the rest of them are practically free," is a common attitude that drives long runs. Keeping all the equipment busy and getting the direct labor up to absorb more overhead and appear to be more profitable continues to be a common practice! Once again, we know better, but the same old practices still dominate many, if not most, companies.

4. Should we only make what we are selling? The answer is obviously YES! This requires close coordination between sales plans and manufacturing plans. Should we put together a plan that meets customer needs and simultaneously is within our current manufacturing capability? Absolutely! This is just common sense. Yet in most industries, sales plans and manufacturing plans reside on separate islands. We have well-published and proven practices of how to follow an effective five-step Sales and Operations Planning process that guarantees that plans are integrated. Phenomenal improvements in operating performance is always a byproduct of carefully following these five steps. But do we religiously follow these steps in most companies? No! We know better, but once again, we don't do it.

Why?

I believe much of the answer lies in the fact that these current practices represent a "comfort zone" that many people in an organization cannot move away from. The alternatives would require many people in the organization to do their jobs differently. It's new. The transition is downright frightening. Many times, most of us will continue old practices even if they aren't the most effective, because they are the most comfortable. Moving from one comfort zone to a new one can be traumatic!

For example, I don't think many of us doubt that eating red meat, not exercising, and frying foods in animal fat are not in our best interests for long-term health. Why do we continue these habits? Among the many reasons, we are comfortable doing things that way. Alternatives are scary.

To be Continued

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