Executing the Plan
Part 1 of 3

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Manufacturing Simulation Game
MRP vs. Lean Manufacturing
Manufacturing Simulation Game 

In the beginning of a business, one person did (and had to do) everything. As the business expanded, certain tasks were subcontracted (outsourced in today's terms) or more people were hired. Specialization occurred—purchasing, accounting, etc. Policies and procedures developed and grew (both written and unwritten). Business and condi­tions and competition changed. In those companies where the policies and procedures were dynamic, they changed and the companies grew. If these policies and procedures were not dynamic, they would begin to constrain or strangle the company. Guess what?—Customer Service declined, competitors grew and finally some companies woke up: some in time to change and survive, others not in time.

As businesses grew, top management got further and further from the people doing the work on the product or delivering the service. Fiefdoms grew, and slowly bureau­cracies entangled many companies. Product quality often decreased, lead times grew, and costs increased—this is progress? Direct Labor (as a percentage of Total Cost) decreased, but not the interest in it. Overhead increased (in total and as a percentage of cost of goods sold) and in most companies no one was looking-except on periodic short lived binges. There is no equivalent for OVERHEAD items to the usual platoon of lE's that look at direct labor. There was no ongoing consistent effort to contain total costs or decrease them.

Harvard and a multitude of other business schools train many managers. They are needed to support the manage­ment of companies as they grow. Also for the managers, various management programs (MBO, Quality Circles, etc., etc.) have sprouted over the years like mushrooms after a rain. Often they were rolled out with much fanfare. Most were well intentioned. Many soon became cliches, fads, passe, and then history—usually quietly compared to their introduction. Each new program became the "hottest" new panacea for the ills of business.

Much has been written about why these management programs failed or were not as successful as originally claimed. The authors' views on the reasons of failure are that the implementors were impatient; they went to some other program because results weren't large enough or soon enough; the program did not follow the "recipe" that the proponents had found successful; the programs were applied to only a small portion of the business; they weren't designed to be encompassing enough of the underlying problems—they often just addressed the symptoms. What all failures had in common, was that they did not CHANGE the CULTURE !

Just as the dinosaurs died off, so did many of the manage­ment programs. So did many of the companies that Fortune 500 listed in the mid '70s. In Nov. '93, Fortune described the differences between HP and IBM / DEC. Strong decisive policies and procedures from top management are very instrumental in steering HP and dealing with or avoiding many of the problems plaguing the other two.

What kind of company is yours? You are very lucky and fortunate if your upper management is taking firm decisive action to become a World Class company and stay that way. If however your company is not headed to World Class, your options include:

• Get them to head for the World Class goal ASAP,
• Stay put—wait it out,
• Job hunt,
• Take bets on what the next "management program" will be at your company.

("You" and "your" is used in the rest of this paper to include you and all the people in your group or organization).

CHANGE can start with YOU! What can you do for the good of your company and you? How can you break out of the vicious cycle? The vicious cycle starts when a "great new management program" is launched, then slowly withers, makes most people more cynical, and doesn't get the company on the road to World Class. World Class is not only a goal; if you are to stay World Class, it is a constant journey. Everybody has competition and they won't let you rest on your laurels or accomplishments. One time im­provements in customer service, responsiveness, lead times, quality, features/functions, flexibility, and or prices/costs will not hold off the competitors long.

What often happens as bureaucracies grow in size and solidify is that the plan(s) doesn't get reviewed often enough and revised completely enough to be effective. Many of the givens/assumptions that the original plan was based on have changed: technology, customers/markets, competitors, costs/prices, alternatives/substitutes, regula­tions, etc.

Why aren't the plans properly/promptly reviewed/revised/ updated? What is the incentive for most employees? It is little to none. In many, many cases the performance measures only reinforce the continuation of past behaviors. The employees are waiting for (new/revised) directions from middle management. Middle management is waiting for upper management to act. The survival mode is opera­tive—"don't rock the boat."
 

To be Continued