COMPETITIVE KNOWLEDGE
NEWSLETTER
Let's get to it,
As we approach the end of the first quarter of 2001, the question is:
"How linear is your production profile?"
In our last two Competitive Knowledge Newsletter we presented a case for
focusing your improvement efforts on sequential production and production
linearity. Our position was that these processes are crucial to improving
a
company's speed, quality and profits. Have you implemented any of the
ideas and practices presented? How are you doing? We'd like to hear from
you and share your experiences with the rest of our readership. Email
your
comments and questions to CKN Subscriber@aol.com. If you want to review
the relevant articles, simply click on or copy the below URLs to your
browser and click on go:
http://www.bbasicsllc.com/ckn0101.htm
http://www.bbasicsllc.com/ckn0201.htm
Much has been written about supply chain management and e-commerce during
the past year. Today, however, many practitioners are asking the question
"Where's the meat?" While both processes offer opportunities
for
reducing the cost of sales, many companies have yet to reap any gains. In
our lead article, you'll be presented with what should be the ultimate
objective of these processes. If you pursue this objective, you'll
discover, where the meat really is!
Many of you were unable to attend our last seminar on Kaizen Based Lean
Manufacturing. If getting away for a two-day seminar is a problem, don't
overlook our effective alternative, the e-tutorial, "Kaizen Based
Lean
Manufacturing." For information copy this URL to your browser and
click on go:
http://www.bbasicsllc.com/kblm.htm
Enjoy,
Bill Gaw, President
Business Basics, LLC
http://www.BBasicsLLC.com
760.930.1973
Featured in This Month's Edition of the CKN
1. Point-of-Use Logistics Operations
2. Price Tracking
3. Turn Diversity to the Team's Advantage
4. How to Get the Department Budget You Need
5. What They Are Saying
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Logistics Operations for Winners
1. Point-of-Use Logistics Operations
By Bill Gaw
Companies will never achieve their full growth and profit potential, let
alone gain the benefits of a point-of-use logistics manufacturing
environment, as long as business leaders continue to talk about
value-added supplier
partnerships while continuing to treat their suppliers as adversaries.
Material handling and inventory 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 materials to their point-of-use is not a new concept, the auto
industry has done it from its beginning and all industries have had
success with point-of-use, low cost hardware. Supply chain development is
the key, and it's time to realize that there is much more to increasing
supplier contribution to gross profits than simply placing purchase orders
with the lowest price bidder. "Strategic Outsourcing" that
focuses on getting the right materials to the right place at the right
time must replace "beating-up" on suppliers for price reduction
alone.
A manufacturer of electronic component test equipment, in response to its
need to increase factory floor space to build a new multifunction tester,
decided to convert stockroom space into a production area. It was
agreed
that none of the new tester parts would enter the remaining stockroom and
that all common parts would be relocated to their relevant production
areas as "point-of-use" inventory. The key to making this
project a success was the development of a powerful supplier support
network that provided timely and innovative "point-of-use"
logistical support.
High communications integrity, scheduling flexibility/responsiveness,
superior quality, special materials transportation/storage racks and a
positive "continuous improvement" mind set were some of the
characteristics
of the developed relationship. Today, three years after the start of the
project, this manufacturer is a market leader and most of the credit goes
to their supplier development team and the powerful supplier support
network that it
helped develop.
In today's competitive business environment, many manufacturing companies
are turning to value-added supplier partnerships to achieve the material
availability performance that is a requisite to successful point-of-use
logistics. When a company forms a partnership that performs one of the
links in the supply chain, both stand to benefit from the other's success.
The power of supplier partnerships is undeniable. To a great extent, they
have
the best of both worlds: the coordination and scale associated with large
companies and the flexibility, creativity and low overhead usually found
in small companies.
Suppliers have knowledge and insight but aren't burdened with guidelines
from a distant headquarters. They don't have long forms to fill out and
weekly reports to render and can act promptly, without having to consult a
thick manual of standard operating procedures. In an increasing number of
industries, value-added suppliers are proving to be fiercely competitive
-- delivering high quality, competitively priced materials to precise
buyer schedule requirements.
An excellent way of establishing the partnership relationship is to treat
each other as an extension of one's business. The value-added supplier
should look to his partner for services such as special procurement help
on capital
equipment and training needs and maybe some process engineering or quality
engineering assistance. The buying partner, on the other hand, should look
to the supplier partner for product development input, cost
containment
ideas and high quality parts/components/assemblies delivered to the right
place at the right time.
Most business leaders underestimate the depth and breadth of business
skills that are required to initiate and nurture an effective supply chain
program. Usually, these leaders hold suppliers at arm's length and
struggle to keep any economic gains to themselves. In fact, organizations
often try to weaken a supplier to ensure their own control of profits.
This of course is ridiculous and is the first obstacle to be overcome if
point-of-use logistics is to be successfully implemented-for without a
strong supplier network there can be no point-of-use logistics.
Business people in pursuit of point-of-use logistics should be advocates
of: 1) business integrity, 2) day-to-day supplier cooperation, 3) free
exchange of information, 4) responsive decision-making and 5) supplier
profit sharing.
Supplier development and strategic outsourcing requires a "from the
top down" commitment and a serious human resource investment. Only
then can a company produce a "make-it-happen" supply chain
development team that
contributes significantly to a company's growth and profits.
Logistics Operations for Winners
II. Pricing Trends
Courtesy of Bottom Line Business.
MIXED OR WEAK
Autos: Good buys on midsize sport
utility vehicles. Discount incentives now average near $4,000---up from
about $800 just one year ago.
Computer screens: Flat-panel LCD types
are beginning to edge lower--with some 15-inch models now selling for as
little as $900.
Lumber: Slowing construction points to
new price drops--with southern and western softwood quotes dipping more
than 15% by year-end.
Microprocessors: More declines as Intel cuts
some chip prices by more than 40% to spark lagging PC demand. It follows a
similar move by Advanced Micro Devices.
NEW PRODUCTS/NEW PRICES
Servers: Worth exploring: Sun
Microsystems's new low-end computer servers (priced under $1,000). Sun is
also introducing server appliances dedicated to just on-server task.
HEADING HIGHER
Auto Rentals: No relief here--with all
signs pointing to another 5% to 6% increase in the current year.
Office Space: Despite slower demand, center
city rental rates should rise about 6% this year. Suburban markets should
see a 4% advance. Package
deliveries: Both FedEx and UPS are boosting rates. Domestic
FedEx rates are up 4.9%. UPS increases are in the 3.1 to 3.7 range.
Trucking: Less-then-truck-load rates
are leading the 2001 freight advance. Some of the bigger carriers are
posting increases in the 5.5% to 6%
range.
Logistics Operations for Winners
III. Turn Diversity to the Team's Advantage
By Price Pritchett
You have to question the wisdom of putting together a "cookie-cutter
team" made up of look-alikes, think-alikes, and act-alikes.
Differences can add depth. Create strength. Broaden the group and bring
balance.
A dozen drummers couldn't create much of a musical group. A six-person
team of people with the very same opinions, values, and viewpoints show
less promise of crafting good solutions than a more diverse group
could.
Teams perform best when the teammates bring a variety of abilities,
experiences, personalities, and problem solving approaches to the table.
But for diversity to bring value, you have to take advantage of it. You
have to respect and use those individual differences to round out the
team.
So don't sideline the person who is "different"---whether that
person happens to be you, or somebody else. All too often people pull
themselves out of play. Maybe because they feel like they don't fit in. Or
maybe because they look,
think, or act different from the rest of the bunch. Do your part to help
the team identify, and benefit from, its full set of people resources.
Also, if you happen to be in the minority, don't use that as a crutch and
hit your teammates over the head with it. Team play takes a beating when
someone decides that being "different" means he or she deserves
special treatment.
Diversity can make teamwork seem more difficult at first, but it produces
a more powerful unit. So honor people's differences. Make a conscious
effort to use the unique talents of everyone on the team.
Logistics Operations for Winners
4. How to Get the Department Budget You Need
From Supervisory Management
Getting a budget approved can be a difficult process, especially as
companies try to cut back and reduce expenses. When you begin working on
your budget proposal, resist the temptation to take an adversarial
approach. Instead, concentrate on what your organization needs and how
well your department can provide support for those necessitates.
Step #1: Decide on your needs. Instead of demanding every cent available,
take a good look at what your department really requires in order to
function.
Step #2: Evaluate the company's needs. Justify each item according to your
company's requirements. You'll be able to define your proposal in a
meeting by saying, "Our goal this year is to do A, which means my
department must do B and C, to do that, we need…."
Step #3: Consider the consequences. Describe the consequences to the
company if your budget requirements aren't met. This will help you argue
persuasively.
Step #4: Examine last year's budget process. Compare what you asked for
last year to what you received. This will help you tailor your proposal to
upper management's viewpoint. Also, take a look at what you could have
accomplished if you'd gotten the budget you asked for.
Logistics Operations for Winners
5. What They Are Saying
From the Front Line Supervisor's
Bulletin
Training may be a manager's most important task. Be sure you take the time
to train your employees thoroughly. Whether they're new to the company or
just learning a new process, keep these points in mind:
Be available: Trainees usually require
lots of attention. Stay close by to answer question and check their
progress. And be prepared to answer some questions more than once.
Be organized: Break complicated tasks
into smaller steps.
Demonstrate each step: Then have the
employee demonstrate it for you. If he or she makes a mistake, show the
correct procedure and have the employee
do it again.
