AGGREGATES OR ITEMS
Companies pour money into
consultants, implement
SOP, understand their
customers, their
competition,
their products, and have
poured their hearts and
souls
into achieving aggregate
accuracy in the high
nineties
month after month, and are
dismayed to find that things
are still a mess. The hot
sheet is longer than ever,
backorders are just as high
as they were before, service
levels have not improved,
and frustration is the order
of
the day. How can this be?
Never forget what your
customers actually buy—
ITEMS! And I'm sure that
your customers are just as
picky as mine have been.
They want motors that fit on
their equipment, shoes in
the right size, an oil
filter that
will fit on their car, or
medicine that will treat
their particular
ailment. Of all the nerve!
The same companies that put
all this effort into
aggregate product line forecasts
will frequently lament that
they just don't have
the time to review all those
item forecasts.
If that's the case where you
work, I suggest you start
paying attention to the
individual item forecasts as
your
first order of business.
Make the time. Aggregates
are
fine for shop capacities,
sales planning and such, but
your customers buy, your
shop builds, and your purchasing
staff buys individual items!
It is also crucial to have
your item forecasts in great
shape if you intend to use a
popular and helpful system
feature called forcing.
Forcing takes those great
group
line forecasts or
adjustments and makes
prorated adjustments
to items so that they equal
the desired group
forecast. What do you think
happens when you force
outstanding group forecasts
onto lousy item forecasts?
You get even worse item
forecasts! Forecasts already
too
low will get cut even more,
and vice versa. The adage,
"garbage in, garbage out,"
applies to your company,
too.
Work all exception reports
faithfully before you make
any group adjustments or
pass the forecasts to the
MPS.
I also recommend that you
review all item forecasts
twice
a year, once at the start of
the annual budget or
business
planning cycle and again six
months later. This sounds
like a lot of work, but it
really isn't when you
consider all
the error prevention you'll
gain by adding human
intelligence
on catalog changes,
promotions, or just making a
quick adjustment that
prevents the item from
becoming
an exception later. And the
more errors you prevent going
to the MPS, the more you'll
prevent from reaching
your shop floor and the
purchasing department.
Please remember that a
system just does math; I've
yet to see
one that had any common
sense or knew your business
better than you do.
To Be Continued
For balance of this article, click on the below link:
Lean Manufacturing Articles and click on Series 15