Lean Manufacturing: Productivity




The fifth resource to consider is money. Everyone knows that a business must have money to operate, but we can improve the issue by focusing on cash flow. Cash flow is the net rate at which you take in money and it is not dependant on operating profitably. Many unsuccessful businesses have operated for a long time because they have been able to manage and control their cash flow, while other more profitable businesses have failed because they ran out of cash. Each of you in your respective businesses can contribute to a positive cash flow by balancing expenditures against planned collections. The other function that you can help support is the collection effort. Most often, disputed invoices and the un-willingness of a customer to pay focuses on information issues as opposed to product issues. You can significantly support the finance people by quickly supplying all information requested to support the collection efforts. It is not an unusual request to supply duplicate bills of lading, duplicate shippers, or even proof of delivery. If you are involved in these efforts, do them as quickly as possible.

I mentioned earlier about the profitability of business is a second requirement. Once you have cash flow, then you most focus on operating profitably. We are led to believe that some products, if we produce them, will instantly be profitable. We have heard the arguments from marketing of the better mouse trap and how the world will beat a path to our door. All too often, this will go up in smoke and we are left with high overheads to support low production rates. The major issue to operating profitably is to put together a good forecast and master production plan and then utilize strategic planning through the year to operate so that the cost structures of the business are consistent with the levels of production.

The other issue that affects money is when manufacturing people begin to get the parts and the dollars confused. It is a very common occurance when we get close to month end. More focus is placed on the dollar value of the parts still in process, as opposed to the shipping schedule. This focus causes us to begin emphasizing only the parts with high values, even though they may be ahead of schedule, and sacrificing the parts with low dollar values, even though they are due. The message here is that if we support our master schedule and shipping schedule, the dollars will take care of themselves. We must trust the master schedule and those who are guiding the business to make sure that the dollar value will be there to support the budget. Doing otherwise usually drives up cost through expediting, missed-schedules, and having to ship late goods to customers at premium freight rates.

The final issue concerning money is what we miss when we do not have adequate financial resources. Continually we are evalu­ating opportunities that could positively affect our business. If we do not have the financial resources to seize those opportunities, we will be unable to increase our productivity. Many times machines, new types of products or processes are offered to us, and without funds we cannot have a chance of acquiring those issues. Lack of money also prevents adequate training that will also affect our productivity. But the real bottom line is that when we have a lack of funds, all our energy and focus tends to be on how to get sufficient funds together that will allow us to make ends meet—a very inefficient and unproductive effort.

To be Continued


To stay current on bullet-proofed manufacturing solutions, subscribe to our free ezine, "The Business Basics and Best Practices Bulletin." Simply fill in the below form and click on the subscribe button. 

We'll also send you our free Special Report, "Five Change Initiatives for Personal and Company Success."

  Your Name:

  Your E-Mail:



Your personal information will never 
be disclosed to any third party.

Manufacturing leaders have a responsibility to educate and train their team members. Help for developing a self-directed, World Class Manufacturing training program for your people is just a click away:


You are welcomed to print and share this bulletin with your manufacturing teams, peers, suppliers and upper management ... better yet, have them signup for their own copy at:


With the escalating spam-wars, it's also a good idea to WHITELIST our bulletin mailing domain via your filtering software or control panel: 


This will help guarantee that your bulletin is never deleted unexpectedly.

Manufacturing Knowledge you’ll not find at offsite 
seminars nor in the books at Amazon.com

Lean Manufacturing - Balanced Scorecard 
ISO 9000:2000 - Strategic Planning - Supply Chain 
Management - MRP Vs Lean Exercises - Kaizen Blitz 
Lean Six Sigma - Value Stream Mapping

All at one Website: Good Manufacturing Practices


World Class Manufacturing Menu

 Assembly Line Simulations

Lean Manufacturing Training Articles

Best Manufacturing Practices Archives

Manufacturing Best Practice Bulletin Archives

Linear Operations Survey

Lean Manufacturing Consulting

Lean Manufacturing Consultant

Kaizen Management

World Class Manufacturing Certificate Program 

Resources Links

Lean Manufacturing Training for anyone ... anywhere ... anytime
Business Basics, LLC
6003 Dassia Way, Oceanside, CA 92056
West Coast: 760-945-5596

Lean Six Sigma Training   Thinking Out of the Box   
Balanced Scorecards  Strategic Tactical Planning  
Supply Chain Inventory Management
  Total Quality Management Principles
Lean Manufacturing Implementation  Lean Manufacturing Principles

Email: Click here  Privacy Policy