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Lean Manufacturing As A Competitive Strategy (Part 1)

Posted by vietnamwcm trên 3 Tháng Mười Một 2008

by R. Michael Donovan (www.rmdonovan.com)

The business model of “we make it, you buy it and we deliver when we can” collapsed long ago. Now customers not only evaluate product design, quality and price; they are emphasizing two additional performance dimensions:

Responsiveness – How good are you at meeting customer requests?

Dependability – How good are you at meeting your commitments?

Today, some industries are more affected than others by the increased emphasis on responsiveness and dependability, and there is no doubt that this increased emphasis has already crossed many and will inevitably cross all industries.

For top management, the business model is becoming more complex and challenging, especially with the never-ending issues of how to increase profits and market share. Ultimately, this complex challenge comes down to an inescapable key question:

What is the right competitive strategy for us to follow?

One area of particular significance in formulating such a strategy is a company’s ability to implement an effective competitive strategy. The seemingly endless myriad of operating problems such as poor on-time delivery, too much tied-up in working capital, slow response and high costs, among other problems, are often identified as the culprits that scuttle the best of strategic intents. Yet, these are only symptomatic of more serious underlying problems in information and material flow which are often the result of poorly designed processes, even after the implementation of the most modern and comprehensive of ERP systems. In practice, the processes which govern the flow of information and material are typically not issues that are focused on by the corner office, even though they should be very high priorities up, down and across the organization.

Changing The Rules

Executives are often less hesitant on large IT project investments despite the general lack of in-depth understanding. A common complaint of IT projects is that the expected return on investment was never achieved. To a large extent, the promised and hoped for results were not obtained because the focus was on the wrong issues. Basically, the problem resides in how many executives think a manufacturing company should be run. As a result of this thinking, the management endorsed rules and operating logic that people follow on a day-to-day basis can defeat the effective implementation of a competitive strategy. This is especially true when inaccurate and poorly flowing information and interrupted material flow, from any source, is allowed to continually exist.

Many executives from discrete manufacturing environments often react to the possibility of adopting lean manufacturing in their companies with an “It won’t work here” type of response. For them, lean manufacturing clearly defies the logic of their discrete operational environment. What executives need to do is to challenge the traditional mode. Understanding and accepting that the old agreed-upon operating logic with its agreed-upon but poor rules is, in fact, outmoded. The difficulty in changing mind-sets, at all levels of the organization, is a task that should not be underestimated; but the bias must be changed or you will not succeed at achieving the levels of performance of truly lean manufacturers.

The long accepted traditional rules allow the flow of information and material to be interrupted numerous times in its path. That takes up time – – cycle time and significantly increases operating expense. Even with computers that can process data at the speed of light, most of a company’s information and material flow processes are loaded with the worst kind of time – waiting time. It’s not at all unusual to find information and material waiting in queues more than 90 percent of the time. When you pause and think that central to effective competitive strategy are responsiveness and dependability, then cycle time reduction in the flow of information and material becomes of paramount importance.

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