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Lean Manufacturing Articles

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


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