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Lean manufacturing Solution

Lean Manufacturing Solution

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MANUFACTURING BASICS & BEST PRACTICES BULLETIN

Now serving over 9387 subscribers

Competitive Knowledge for Manufacturing People

Lean Manufacturing Solution
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July 11, 2005

Hi [[firstname]], welcome back.

Companies seeking a cost advantage over competitors
usually zero in early on labor costs. Wage levels in
particular are an obvious target. Cutting people and/or
wages and benefits may gain a temporary reprieve from
Chapter 11, but they are rarely the key to a
sustainable competitive advantage. Because they sour
workforce attitudes, wage cuts often put out of reach
the productivity gains that could be obtained by more
skilled, sensitive management of human resources.

For example, training the work force in added skills,
can permit more flexibility in job assignments, and
that in turn can boost shop-floor results. This more
flexible use of labor has enabled companies to convert
from MRP shop order "launch and expedite" systems to
the processes of flow technology. The success of such
a changeover is dependent on a highly trained,
flexible workforce that can design and dynamically
balance sequential production work cells. The results
can be exciting --- typical reductions beyond MRP
gains are 20% production costs, 40% space requirements,
25% inventory, 40% quality costs, and 40% cycle times.

Effective shop floor control has proven elusive as we
have upgraded our manufacturing control system from MRP
to MRPII and then to ERP. To capture control of shop
floor activities, we need to stop beating a "dead horse"
and start implementing and improving sequential
production processes. The winners turn to Kaizen Based
Lean Manufacturing. . . you can too!

Whether your company is either implementing or
thinking about pursuing lean manufacturing and/or other
change initiatives, you'll want to be sure to read
this week's bulletin, "Profitable Growth."

Have a nice day, keep the faith, and stay connected.

Bill Gaw
Business Basics, LLC
Bg@bbasicsllc.com
760-945-5596

Lean Manufacturing Solution

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MANUFACTURING BASICS & BEST PRACTICES BULLETIN

Now serving over 7132 subscribers

Competitive Knowledge for Manufacturing People
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PROFITABLE GROWTH
Mastering the 8-Basics of Lean Manufacturing

In their efforts to draw closer to customers, many
manufacturers have lost focus on what should be a
company's primary success factor - profitable growth.
In today's competitive manufacturing environment, it
takes more than quick fixes, outsourcing and
downsizing for companies to consistently achieve their
growth and profit objectives. While these options may
yield temporary financial relief, they will not lead
the way to long-term growth and profitability. For
companies to grow and consistently exceed bottom line
expectations, they need to get lean. And, to get lean
they must master the basics of lean manufacturing.

Over the past 30 years, we were led to believe that
computerized systems would provide the solution to all
of our growth and profit challenges. Material
Requirements Planning (MRP) and Enterprise Resource
Planning (ERP) System gurus assured us that if we
implemented their software programs the bottom-line
would take care of itself. Well it hasn't happened!
Like most perceived panaceas, each of these programs
received a lot of hype, produced a few success stories
but in general, contributed little towards helping
companies identify and achieve their full growth and
profit potential.

For a measure of their shortcomings, one needs only to
spend some time in an MRP scheduled manufacturing
facility - especially during the last weeks of the
final financial quarter. In a typical company, you'll
find that converting the quarterly financial forecast
into reality still requires overtime, internal/external
expediting, last minute "on-the-run" product changes and
even a little "smoke and mirrors". Results are scrap,
rework and warrantee costs that negatively impact
profitability. Then there are quality and shipment
problems that deliver less than acceptable customer
satisfaction. Companies have spent many thousands of
dollars in pursuing MRP and ERP only to see their growth
and profits decline due to uncontrolled operating costs
that produced non-competitive pricing.

So, after introducing MRP/ERP computer systems and more,
why is it that most businesses are still struggling to
sustain profitable growth and are no where close to
achieving their full growth and profit potential? The
first reason is simple - the results achieved by any
computer system are only as good as the people at the
controls and the integrity of the data they provide.
The second is complex - most manufacturing managers
facing major day-to-day problems and constraints adopt
a totally reactive management style. Consequently,
their time is consumed with "band-aiding" and/or
finding ways to work around system and process problems
- leaving them little or no time to analyze and
eliminate the root causes of ineffective systems and
processes. How does one turn around such a classic
"cart before the horse" syndrome? What's required is
first a company-wide, in-depth understanding of the
fundamental basics of lean manufacturing and then a
total commitment to the consistent and tenacious
execution of the 8-basics of lean manufacturing.

Like Vince Lombardi, who achieved success by having
his team focus on the mastery of football basics - we
need to have our manufacturing teams focus on the
mastery of lean manufacturing basics. These basics
require proactive planning and tenacious execution that
demands leadership above and beyond just satisfying
"day-to-day" accountabilities. Some managers can't
envision the benefits of mastering business basics,
other simply can't find the time. Like practicing
blocking and tackling in football, it's not exciting,
and like most football heroes, managers prefer to run
with the ball. But without the tenacious and flawless
execution of lean manufacturing basics, companies will
seldom achieve their full growth and profit potentials.
Delineated below are the 8-basics of lean manufacturing:

INFORMATION INTEGRITY: It is not uncommon for front
office management to become disenchanted with
computerized systems results when time schedules and
promised paybacks are not achieved. Truism: acceptable
systems results cannot be achieved when systems are
driven by inaccurate data and untimely, uncontrolled
documentation.

PERFORMANCE MANAGEMENT: Measurement systems
can be motivational or de-motivational. The individual
goal setting of the 80's is a good example of de-
motivational measurement - it tested one individual or
group against the other and while satisfying some
individual egos, it provided little contribution to
overall company growth and profit. Today, the balanced
scorecard is the choice of manufacturing winners.

SEQUENTIAL PRODUCTION: It takes more than systems
sophistication for manufacturing companies to gain
control of factory operations. To achieve on-time
shipments at healthy profit margins, companies need
to replace obsolete MRPII/ERP shop scheduling
methodology with the simplicity of sequential
production. Manufacturing leaders have replaced their
MRP shop order "launch and expedite" methodology with
continuous production lines that are supported by real-
time, visual material supply chains ... sequential
production. The assertion that sequential production
only works in high production, widget-manufacturing
environments is a myth.

POINT-OF-USE-LOGISTICS: Material handling and storage
are two of manufacturing's high cost, non-value added
activities. The elimination of the stock room, as it
is known today, should be a strategic objective of all
manufacturers. Moving production parts and components
from the stockroom to their production point of use is
truly a return to basics and a significant cost reducer.

CYCLE TIME MANAGEMENT: Long cycle times are
symptoms of poor manufacturing performance and high
non-value added costs. Manufacturers need to focus on
the continuous reduction of all cycle times. Achieving
success requires a specific management style that
focuses on "root cause" proactive problem solving,
rather than "fire-fighting."

PRODUCTION LINEARITY: How linear do your production
departments produce to the company's master schedule?
As companies struggle to remain competitive, one of
the strategies by which gains in speed, quality and
costs can be achieved is to form teams of employees to
pursue and achieve linear production. Companies will
never achieve their full profit potential if they
produce more than 25% of their monthly shipment plan
in the last week of the month or more than 33% of
their quarterly shipment plan in the last month of
the quarter.

RESOURCE PLANNING: One of the major challenges in
industry today is the timely right sizing of
operations. Profit margins can be eroded by not
taking timely downsizing actions and market windows
can be missed and customers lost by not upsizing
the direct labor force in a timely manner. These
actions demand timely, tough decisions that require
accurate, well-timed and reliable resource information.

CUSTOMER SATISFACTION: Customer satisfaction is in
the eyes of the beholder - the customer. Perceptions
are what we need to address when it comes to improving
customer satisfaction. It does us no good to have the
best products and services if the customer's perception
of our "as received" quality and service is
unsatisfactory. We need to plan and implement proactive
projects that breakdown the communication barriers that
create invalid customer perceptions.

While many business gurus have identified one or more
of these manufacturing basics as important to the
successful pursuit of business excellence, the
fundamental importance of these lean manufacturing
basics has been lost in the proliferation of buzz words
and the mania of systems sophistication.

We say it is time for companies to put a hold on
sophisticated systems development that cause self-
inflicted, day-to-day chaos. In its place, they should
immediately initiate an action learning program for
gaining a company-wide understanding and acceptance of
the importance of the basics of lean manufacturing.
Once buy-in and commitment have been achieved,
aggressive planning and tenacious implementation must
follow. In short, let's put the "horse before the cart"
- such a program will build a solid foundation for
redefining and revitalizing a company's pursuit of
profitable growth.

If you and/or your company want to discover why and how
the manufacturing winners are identifying and mastering
the 8-basics of lean manufacturing, you need to
reconsider adding our e-Tutorial, "Kaizen Based Lean
Manufacturing™" to your training tool kit. To help
you make it happen, we have prepared a very special
offer for MB&BP Subscribers:

Lean Manufacturing Solution
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A SPECIAL OFFER FOR MB&BP BULLETIN SUBSCRIBERS

If your company is interested in mastering the
basics of lean manufacturing, a good approach would
be to consider our e-Tutorial, "Kaizen Based Lean
Manufacturing™."

During this week only, MB&BP Subscribers can purchase
their tutorial at a 25% discount from the Web site
visitor's special price of $395.00; or for $297.00.
Now that's a savings of $200 from retail and many more
hundreds of dollars less than attending a relevant
seminar. Now that's an offer you shouldn't pass up.

You can check it out at:

http://bbasicsllc.com/kblm-ar.htm

Do it today because the offer ends: Friday 07-15-2005
and after this week you won't see this special again
for another year.

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Lean Manufacturing Solution

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Business Basics, LLC
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West Coast: 760-945-5596

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Lean Manufacturing Solution

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

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