Lean Manufacturing 306

To understand continuous flow manufacturers' MRP II systems requirements and to distinguish them from batch process or repetitive requirements, operations must be examined from five perspectives:

• Processes: Continuous flow manufacturing sites are generally large facilities spread out over many acres containing a multitude of plants, production trains, tanks, silos, tankcar storage tracks, waste treatment ponds, and administration buildings. The proverbial "plant tour" may last several hours and involve walking or driving many miles. Process flow follows a fixed path through large scale special purpose equipment. Production activity is capital intensive, with labor content reduced to peripheral functions like control room monitoring, quality control, and maintenance. Operationally, the strategy is to leverage manufacturing to the hilt and mass produce a standard product with the lowest cost per unit possible.

It should be noted that, with few exceptions, a continuous flow manufacturing site is never 100% pure continuous flow from purchase receipt thorough shipment of finished goods. There usually exists a hybrid mix of continuous flow, batch process­ing, and repetitive filling and packaging. There may be an initial batch operation which mixes ingredients and feeds them to a continuous flow line. Or a continuous flow plant may send output to a batch operation, which then passes it on to another continuous flow area. In most cases, continuous flow process­ing ultimately feeds bulk product to a packaging line which is batch or repetitive in nature. The continuous portion of the total process may account for 90% of manufacturing value added, or it may account for only 10%.

• Capacity: The challenge of scheduling to optimize capacity utilization in a continuous flow plant is not a difficult one. Standard doctrine says to run the plant twenty-four hours a day, seven days a week, year round. Production lines and equipment are well-balanced, so it is unusual to have buffer stocks within the physical confines of a continuous flow line. Capacity availability is at all times clear and visible. The line either runs or it doesn't.

The capacity planning and scheduling challenge comes in the form of allowing downtime at appropriate intervals for pre­ventive maintenance or changeovers. Longer-term, the challenge is to acquire additional plant capacity or to make major sourcing decisions. Matching aggregate production capacity to market demand is a management decision, and the wrong choice can have dire consequences.

• Products: Continuous flow manufacturers produce enormous quantities of bulk commodities like paper, cloth, oil, herbicide, flour, steel, and resin. In chemical processing, product differ­entiation usually occurs near the end of the process by varying blends, or through packaging in different types and sizes of containers. In paper processing, paper grade is usually deter­mined at the front end during pulpmaking, with further differentiation occurring in the final slitting and packaging stages. In textiles, yarn production determines the ultimate weights, colors, and blends, while weaving and cutting can add an unlimited number of patterns and sizes to the final product. In all cases, continuous flow processes output a relatively small number of bulk items, and then batch or repetitive finishing and packaging processes provide an unlim­ited variety of finished products.

• Inventories: Most continuous flow operations managers will tell you they have some raw materials inventory, virtually no in-process inventory, and a little finished goods inventory. In reality, there often exists several months worth of these inventories, often lined up in tankcars outside the plant. This may be required due to seasonal availability of raw materials or seasonal demand from customers. In most cases, the materials management function is not controlling stock levels tightly. This problem is further compounded when there are shelf life limitations for these materials.

In their defense, it should be noted that the ramification of a stockout of raw material feeding a flow line can be cata­strophic. If a dedicated line goes down, it can be time consuming and costly, not to mention dangerous, to restore operations. However, most continuous flow manufacturers can benefit greatly from formal inventory control capabilities provided by MRP II.

• Markets: To be competitive, continuous flow manufacturers are under tremendous pressure to keep prices down, and to spread production costs across as many units of product as possible. However, in some cases quality can be a big com­petitive differentiator. Specialty paper producers can get a better margin for premium writing papers and facial tissues. Another differentiation strategy is to provide hard-to-get prod­ucts.

It is interesting to note that during the past decade, a number of batch process manufacturers (particularly in foods) have con­verted their resources to continuous flow processing to get better control of quality and costs. At the same time, certain continuous flow manufacturers (chemicals) have retooled their flow pro­cesses into batch production to allow them to compete more from standpoint of product variety and the ability to deliver specialty items. In any case, all manufacturers are constantly reevaluating their operations strategies to determine how best to survive through the year 2000.

To be Continued

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