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Best of Bill Gaw: Lean Manufacturing
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 manufacturing
success. For manufacturers to grow and consistently exceed profit
expectations, they need to fully understand and effectively execute
the 8-Basics of
Kaizen Based Lean
Manufacturing™.
While many elements of these basics have been documented and
presented in hundreds of management articles, books, video
presentations and seminars, their fundamental relationship and
synergistic importance to achieving growth and healthy profits has
not been effectively defined and communicated.
During my 30-year manufacturing career as a supervisor, manager, director and chief executive, I participated in four successful “financial turnarounds”. Throughout these experiences, I continuously researched and tested business ideas, practices, processes and systems relative to their growth and profit margin contribution. As the years passed, it became clear to me that there were a number of tools, techniques and processes that were crucial to establishing a solid foundation for growth and profits. Because of their importance, I now write, teach and counsel on the development and implementation of lean manufacturing solutions
Over
the past 30 years, we were led to believe that computerized systems
would provide the solution to all of our growth and profit problems.
In manufacturing and distribution, systems sophistication was to
provide the tools for getting the right material in the right
quantity to the right place at the right time. In engineering,
Computer Aided Design (CAD) systems were to be the high-tech
innovation for improving engineering design and speeding the
time-to-market process. In sales/service, Microsoft Office was to
provide the missing link in effective business communications while
the Internet was to improve order sales capture rates and order
processing speed.
In their efforts to draw closer to
customers, many business management teams have lost focus on what
should be a company’s primary success factor – profitable
growth. They have pursued
Total Quality Management
(TQM),
Enterprise Resource Planning (MRP/ERP),
Business Process Reengineering (BPR), ISO-9001, and
Six Sigma with
each respective guru reassuring them that if they followed their
program 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 potential.
For
a measure of their shortcomings, one needs only to spend some time
in a 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
and quality and shipment problems that deliver less than
acceptable customer satisfaction.
Companies have spent many thousands
of dollars in pursuing MRP/ERP and ISO-9001 certification, only to
see their business decline due to uncontrolled operating costs that
produced non-competitive pricing.
Other companies have won the Malcolm Baldrige Award for
Quality and Business Excellence and subsequently fell far short of
achieving growth and earnings expectations.
So, after introducing all these 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 potentials? 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 importance
of manufacturing basics and then a total commitment to the
consistent and tenacious execution of the 8-Basics
of Kaizen Based 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
the manufacturing basics. Each of
the eight basics requires 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 manufacturing
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 manufacturing basics,
companies will seldom achieve their full growth and profit
potentials. Delineated below are the
8-Basics of Kaizen Based 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, balanced scorecard
training 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 “order launch and expedite” methodology with
the simplicity of 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. It’s time to realize that there is much more to
increasing supplier contribution to a company’s growth and
profitability than simply placing purchase orders with the lowest
price bidder.
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: 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. 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.
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 believe our products
and services are best if a customer’s perception of our
”as received" quality and service is contrary. We need
total
quality management training and we need to
plan and implement proactive projects that breakdown the
communication barriers that create invalid 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 the 8-Basics of Kaizen Based Lean Manufacturing®™ 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 8-Basics of Kaizen Based 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 growth and profits.
To visit the Home page of Business Basics, LLC : Click Here
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