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Lean Manufacturing: Is It Really Worth It? (Part 3)

Posted by vietnamwcm trên 16 Tháng Mười 2008

Improving operating performance

The advantages of lean manufacturing go beyond just productivity gains and decreased cycle time and inventory (see Exhibit I).

Because new system enablers can link together the entire enterprise, as well as the entire supply chain, administrative productivity improves with redundancies eliminated. Orders can be processed without adding layers of paperwork that often waits in queues, sometimes with unknown or uncertain priority.

New working capital reduction techniques can be used. For example, completed products can be periodically back-flushed to decrease inventory balances, allowing automatic vendor payments based simply on that day’s or week’s material consumed at the company’s location but still owned by the vendor. This technique can also minimize the vendor’s days outstanding in accounts receivable.

In companies with poor customer service performance levels, with service levels as low as 75 to 85 percent, low quality sales planning information is often one of the culprits. Also, product specifications and bill-of-material errors exist, and inventory records are inaccurate, among other things. In many cases, manufacturers often rely on suppliers with quality problems and/or who do not ship on time. Lean requires high information quality and close coordination with suppliers whose processes and systems may need to be upgraded to get their performance synchronized with your new level of capability.

Lean manufacturing is only as good as its weakest link. In one case, a two plant company improved its overall service level from 77 to 90 percent as a result of traveling part of the way toward full implementation of lean manufacturing.

However, so far the company has missed the chance of hitting a 99 percent or better service level because the plant supplying part of the material continues to operate under the old, unreliable, and less flexible “push” method of production. As a result of the much improved performance at one plant, a change in the poor-performing plant to lean manufacturing is not only desirable, but inevitable.

How to get started

Getting started with an effective program to implement lean manufacturing requires careful planning, design and execution of the business changes needed to achieve the desired improvement goals. Implementation should not begin unless top management is solidly championing the effort with an understanding that many business processes must be changed. Starting with a pilot product line or another contained area of the business is a big help to “proof” your concept and methodology – see Implementation Methodology in Exhibit II.

Should you invest in lean manufacturing? This question, in one form or another, and management’s answer to it, will certainly set the direction for the future. First, the decision to go forward is much easier to make if lean is thought of and used as a competitive strategy for increased market-share, generating more revenue, and fostering profit growth. Certainly, reductions in inventory and costs are also big benefits. Second, if your competitors get the jump on you in terms of response time, delivery performance, working capital, etc., how long will your company be able to compete? The worst position to be in is when you are constantly trying to catch up. The leaders always make more money.

 

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