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Inventory Utilization
Part 4 of 4
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Postponement is defined as the process of delaying the product until the last possible moment. There are fully two aspects of postponement that we need to look at, as shown in Figure 8. First of all, it is necessary to think in terms of storing our inventory at the point of use.
Companies working on moving their turns from three to nine will concentrate on improving their housekeeping. The skills that we learn in the stockroom about "a place for everything and everything in its place" should be quickly transferred to the workplace areas out on the shop floor. We need to learn how to control inventory at the point of use. The techniques learned during lean manufacturing about workplace neatness and organization will also be applied to the material flow. These materials should be stored closest to the point of use so that they are readily available when needed. That leads us to the idea of trying to define the point in time when the materials are needed. We utilize the concepts of modular bill of material to delay committing the product to the customer until the latest possible moment. Features and options of the end unit product should not be assembled to the product until we have the actual customer order. It does not make sense to rely on the forecast and try to build the product ahead of time. Instead, we should hold the modules at their lowest common denominator and then assemble to order, after the customer has given us their requirements. Companies that are experienced in this process soon learn innovative ways to hold even the raw materials and are able to execute the entire manufacturing cycle in the time that the customer is willing to wait. When a company becomes good at this process, this innovative thinking goes all the way back to the design of the product. These skills at integrating speed in the shop, design of the product, and location of the inventory items will extend out to other elements of the supply chain. This is shown on Figure 9. Companies that achieve 20 to 60 turns will apply their skills all across the supply chain. We may even find some customers who are willing to do the last operations for the sake of speed and convenience. As a matter of fact, the other day I bought a Timex watch in a Wal-Mart store. The clerk at the store did the last assembly operation of putting the watch in the box for me, the customer. SUMMARY We always need the skills that constantly improve our accuracy. At the three-to-nine-turns range we will be working on static information such as counts. As we get better and better and start working towards 20 to 60 turns, we begin to focus on accurate processes. We learn how to improve our skills from looking at static data and information to the much harder "data on the move." We apply the same skill set, but in new ways, to dynamic processes of how we control and move materials. Similarly, as we improve our skills at quick throughput, we will be able to move from three turns to nine. We tend to be drawn to specific processes and operations. As we get better at improving speed, we will focus our attention on the flow of the materials. No longer do we work on how much of what is where; rather, we work on how much is moving and how often does the cycle repeat itself.
Then we turn our attention to the drastic change in the attitude of our people. People who are focused on moving turns from three to nine tend to focus internally on our company. That is not all bad. However, the skills we learn, here must be applied to the bigger picture before we can expect to move from 20 to 60 turns. This application to the bigger picture hinges on moving the focus from us to the customer. Companies with double-digit turns have an unrelenting focus on what the customer wants. And lastly, we need to be able to utilize some of the newest techniques. Whether we are working on lean, Justin-Time, theory of constraints, supply chain management, or postponement—they all have applicability in specific cases. When we move from three turns up to nine, we learn how to apply these methods in the smallest and easy processes. We can see this in postponement by thinking in terms of modular bills of material. The skills that we learn while working with our existing bills can also be applied to the product design process. When we are ready to strive for 20 to 60 turns, successful companies will apply these techniques throughout the supply chain. It is amazing to me that the skills I learned while helping companies move from three turns to nine are in fact the same skills used by companies to move from 20 turns up to 60. However, we do change how we use those skills. All we have to do is learn to make a transition in focus. We need to change our focus from fixed material and data to items that are moving. We will also change the focus from us internally to the more holistic view of the entire supply chain. When we are able to make those changes in focus, we can expect very good results from our efforts. For balance of this article, click on the below link: Lean Manufacturing Articles and click on Series 12 STAY CONNECTED To stay current on Lean Management Basics and Best Practices, subscribe to our weekly MBBP Bulletin... and we'll send you our PowerPoint presentation, "Introduction to Kaizen Based Lean Manufacturing™." All at no cost of course.
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