Tag Archive: lean

JIT Might Not Be What it is Cracked Up to Be?!

April 2nd, 2020

Just-in-time might not be what it is cracked up to be! Certainly, the coronavirus impacts should give us reason to question this rule at face value. Are you running so tight that you only have one bin, pallet or small supermarket to keep your facility running? If so, the question extends to your end-to-end supply chain.

Let’s assume you are a critical manufacturer struggling to produce key items during this coronavirus pandemic. Your suppliers should not be on lockdown since they support a critical infrastructure business; however, that doesn’t mean you’ll be fine. There are many considerations to review:

  1. Source of supply: Are your suppliers located in Asia and unable to staff during the peak of the coronavirus? Do you know what type of delays you’ll experience? Do your suppliers have contingency plans?
  2. Your suppliers’ suppliers: Even if you have a good handle on your suppliers, do you know the status of your suppliers’ suppliers? In an interconnected supply chain, we are only as strong as our weakest link. Who is your weakest link?
  3. Your transportation infrastructure: Even if your suppliers have product, can it get to you? Within what timeframe?
  4. Backups: No matter how well you’ve planned, the question is whether you have backups for critical materials/ ingredients that will ramp up rapidly as needed. Hopefully your supply chain is diversified geographically.
  5. Your customers: Are you in lockstep with your customers so that you are proactively managing demand or are peaks and valleys a surprise? Of course, the coronavirus was unexpected but the degree you fully understand your customers will determine your reaction time to changes in demand.
  6. Positioning of inventory: Do you have critical inventory positioned throughout your end-to-end supply chain?
  7. Your digital supply chain: Are you able to see into your extended supply chain? It could provide quite a benefit at this point.
  8. Additive manufacturing & robotics: Are you able to keep running with less people, socially distanced people and/or print on demand?

Using JIT (or any concept for that matter) without taking a 360 degree view is a bad idea! The cousin of JIT is lean manufacturing. I gained the attention of Wiley by writing that lean is just uncommon common sense (which of course simplifies it in order to make a point), but perhaps it is something to think more about. Have you put all these trendy concepts through a common sense filter? How about a risk filter? Let’s hope so! Otherwise you can be in a critical business and still not producing and running customers out of stock.

What is the answer? It depends! If you have put thought into your supply chain strategy upfront, considered risks, diversified your supplier base, invested in quality checks and top talent, and treated your employees well, it is likely your version of JIT will prove successful. On the other hand, if you saw JIT as a way to reduce inventory and were short-sighted in looking at your end-to-end supply chain and treating your employees and partners as trusted colleagues, you will likely suffer.

Getting ahead of the curve might be the only avenue to success. Consider creating a resilient supply chain and future-proofing your supply chain. Stay tuned and read more about it, and If you are interested in discussing a supply chain assessment, please contact us.

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The Value of Demand Planning

February 13th, 2018

In supply chain circles, there are lots of exciting concepts to discuss and debate such as lean, master scheduling, theory of constraints and many more; however, we have found that our most successful clients start with the customer!  

If you concur that we are in an Amazon-impacted marketplace where the customer is king (no longer is it cash!), prioritizing demand planning is essential.  

Do you have a position focused on demand planning?  Or do you have someone who knows it is at least part of their focus?  Does anyone realize its importance?  Let’s discuss the value…

  1. Without customers, you have no company– understanding their needs and what will compel them to buy from you vs. the competition couldn’t be more important.
  2. Do you know how your forecast compares with the recent past?– Again, understanding your customers and why they are changing couldn’t be more important to positioning your business to succeed long-term.
  3. Let’s take a step back – do you have an idea of what you think you’ll sell this year?– Let’s hope so!  Imagine how hard it will be for your HR resources, your operations resources (to determine which machinery to prioritize, purchase and train on), your suppliers and more to run efficiently while serving you and your customers if everything is a surprise.
  4. Is your sales mix changing? – We’ve seen many clients who spiral into a mess not because they don’t have a forecast but because they have no idea that the product mix has changed.  Different products come with different materials, different skills, different complexity and different requirements overall.
  5. What is the timing?– We’ve also seen clients with predictable annual sales (actually incredibly predictable) yet the monthly, weekly and daily sales could be vastly different.  Operations couldn’t keep up.  The customer suffered.  Margins declined.  Timing matters!

We would venture to estimate that 99% of our clients can benefit from an increased focus on demand planning.  Why not give it a go?  If you would like an audit of your current process, please contact us.

 



Why Blame Doesn’t Work

September 19th, 2016

supply chain

I’ve been spending the majority of my time this week with two clients: one is preparing to go live on a new ERP system and the other is working to improve service levels by implementing improved planning and order flow processes. Although these specific objectives are nothing alike, they have much in common. Both have countless numbers of small issues arise on a daily basis — and some quite large ones thrown into the mix. It is just the nature of the beast in manufacturing environments. And so we need to uncover the root cause of the preponderance of the issues instead of playing the blame game!

Unfortunately, many of my clients are hard wired to worry about the blame game and related politics. Imagine how much quicker and better progress could be made if we focused on the root cause. Rarely if ever is that root cause due to a specific person. Instead, the likely categories include (in lean terms): method (process), machines, manpower (resource shortage, skills shortage, etc.), and material. If we think about our issues from this point-of-view, suddenly, we aren’t attacking each other; we are attacking the problem jointly.

And, I’d like to state boldly that it makes no difference if you are in a lean environment or whether you agree with lean principles. It is just common sense to just think of categories of causes unrelated to blaming specific people!

One tip to implement this week:

The good news is that there is VAST progress that can be made in a week. Simply stop blaming people. Instead, think about the root cause. Even if you think it comes back to a person, look for every other potential cause that could help that person be successful. If they had a new process and were trained on the new process, could they perform the job? If they were overloaded, would he/she have made the mistake?

Practice talking in these terms. Instead of complaining about Mary or Steve, how could you re-phrase your concern into a productive conversation? Hold off until you’ve thought about it. At a minimum, I bet you’ll waste less time.

Looking for more ideas to keep your supply chain connected? Access more tips and resources on my blog. And keep connected by subscribing to my newsletter and email feed of “I’ve Been Thinking…”



Which Inventory Management Planning Method Is Best?

March 8th, 2016
inventory management planning

Use a combination approach to inventory management planning to promote growth, increase profits, free up cash flow and improve operational efficiency.

I’ve incorporated three planning method options into a presentation on inventory management best practices. I’ve been receiving more and more requests for this topic as executives experience the impact poor inventory management can have on an organization — it can stunt growth, weaken profits, tie up cash unnecessarily and negatively impact operational efficiency.

I run across conflicts frequently among these options. Unfortunately, the method is often dictated. Resources are not valued. And results struggle. On the other hand, my best clients view these as complementary options to be used at the “right” time in the “right” situation for the “right” products.

Briefly reviewing these methods:

  1. Lean: In lean circles, planning is seen as a Kanban process. In essence, the demand is pulled through the system by the customer. For example, when a customer consumes 5 pieces, the manufacturer produces 5 pieces. This type of process works effectively when demand is even.
  2. MPS/MRP: Master production schedules and material requirements planning are system tools and related processes that derive production requirements and purchase plans from a compilation of demand (sales orders, forecasts, independent demand), inventory levels, expected production plans and receipts, etc. This process looks at lead times and calculates what should be produced, regardless of the environment (make-to-order, make-to-stock, configure-to-order, etc.). This type of planning can work effectively with uneven demand.
  3. TOC: The theory of constraints focuses on subordinating all resources to the bottleneck or most overtaxed resource. The focus is often-times on throughput. Since throughput will be limited by the bottleneck, it makes sense to focus there.

I cannot tell you how many disagreements I’ve seen over the years on the optimal planning method. In some companies, executives have become purists to one method or another, and it created havoc — unhappy customers, high costs, etc. Instead, I’ve found it is well-worth it to evaluate what combination of methods makes the most sense for each particular company, product line, machine, team, etc. My most successful clients use a combination approach.

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Lessons Learned from a Genius Businessman

February 23rd, 2016
businessman

Harry used uncommon common sense to spot opportunities to turn around companies. His wisdom, integrity and generosity will be missed.

My best friend’s dad was as close to a business genius as I’ve stood. He made his employers rich beyond their wildest dreams yet he was happy with this outcome as he enjoyed what he did and lived to 98 including many travels to exotic places — not the ones you might think of but ones he enjoyed. For example, he went to Nicaragua and had many wonderful stories to tell about crocodile farms and uzis. Somehow, he and his wife managed to trust people they probably shouldn’t have, travel to a country not recommended, even by people they met along the way in the country, and come out of it in one piece — and with great stories and excitement.

In his work life, he spent many, many years working for the owner of Sealand, functioning as an investment banker and turnaround CEO. Thus, he’d source great deals and then if they weren’t living up to the expected value, he went in and had a 100% success ratio in ensuring they did. What else can you ask for??!! He could turn around transportation companies to banana growers. Uncommon common sense applies to more than you’d think! One day, I asked him what he thought was most important in turning around these companies, and here are some of the key points that pop to mind:

  1. Observe – Interesting that one of his top points is common sense (oh, wait, I actually think they all were uncommon common sense). He said it was amazing how much he saw in walking a facility that showed opportunities. It reminded me of what has become known as Lean — turns out it doesn’t have to be part of some fancy program; just observe and you’ll uncover gems.
  2. Watch the money – This next tip is unfortunately more common than it seems it should be. Too many companies have someone committing fraud or “on the take”. I certainly would never recommend implementing the cumbersome Sarbanes Oxley if not required by law; however, I would recommend implementing some uncommon common sense approaches to making sure you have the right checks and balances in place. I did a webinar for Financial Times’ ExecSense on this topic a while back, and it is scary how common this can be. My research found that a typical company loses 5% of annual revenue to fraudulent acts. Hard to believe!
  3. Deal with sacred cows – Again, do we really have to be a genius to realize this is a good idea? He said that there are obvious examples of this in family-owned businesses. Perhaps a son or daughter is creating havoc and wasting money but remains in position. Worse than the waste of money, it demotivates the rest of the team. Another example of a sacred cow is a ‘big’ customer we try desperately to keep even though money flies out the door at a faster rate than it flows in the door when this customer calls. There are countless examples. The key is to observe, find the sacred cows and be willing to address them head on.
  4. Persistence I’ve titled what he described as persistence. One of his doozy assignments was to go to Vietnam during the war and turn around a facility (this sounds quite appealing, doesn’t it?). He was the MacGyver of the business world. Leverage underutilized assets. Find new solutions for old problems. Treat people fairly. Don’t give up. He managed to turn the place around — of course.
  5. Integrity – I’m reminded of this quality since he spoke of it near the end. He felt that it was of critical importance. He isn’t alone. When I performed a survey of executives, it came out as a top quality for success.

Harry was a guru and knew more about almost any topic at 98 vs. anyone I know. He’ll be missed. We will help ensure your wisdom carries on!    

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