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
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
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.
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
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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