MA Insight-Manufacturers Alliance Blog (Page 1)

Written By: Jim Drennen, CPIM - January 9th, 2019

If You Want a New Idea, Read an Old Book

“The most visible waste is not scrap but good material sitting idle.” -George W. Plossl

This simple sentence changed how I viewed the manufacturing floor. At the time, I was studying for my APICS certification when a colleague recommended the book Managing in the New World of Manufacturing, by George Plossl. As a Materials Manager, I worked with a team that handled production control (an oxymoron?), capacity planning, material resources/requirements planning (MRP and MRPII), and purchasing. 

Walking our plant floor, all I saw was “good material sitting idle.” Material. Was. Everywhere. I grabbed the Plant Manager to talk about how materials management could reduce all this work in progress (WIP) or at least keep it flowing as we added value. He replied, “Simple. Cut the run quantity for every job by one-half, then do it again. But if you do that, I will kill you.” (At the time, we had not completed our kaizen work to reduce setup times.) 

Even with a copyright date of 1991, the content of this text resonates today:

-     The key to understanding how manufacturing works and how to control it is the perception that it involves two major flows, materials and information.

We manage TWO factories: materials and information. Plossl states that when these two factories or flows are not in synch, a wide range of undesirable outcomes occur. Not only must data be accurate (BOM, routers, work instructions, inventory counts), it must be as close to real time as possible. Therefore, some portion of a continuous improvement plan must look at data accuracy and the timing of information relative to material flow.

Plossl drives this point home when he writes:

-     The concept of the two flows focuses attention on the need for integration of all the efforts of all groups to accomplish these fundamental objectives:

  • Smoothing the flow
  • Speeding it up
  • Eliminating all waste in the total business process
  • Reducing the costs of all activities

Plossl continues with, “In manufacturing operations, all benefits will be directly proportional to the speed of flow of materials and information.” Read that sentence again. 

-     The key to keeping inventory levels where desired is balancing input with output. Varying production promptly to meet demand changes makes changes in inventory level unnecessary.

There is only one reference to pull systems in Plossl’s book, but he is capturing the concept with this statement. What happens if our processes are capable of producing only what is required, based on customer demand? Demand-pull, kanban, and S&OP system are all prefigured by Plossl. “If you cannot control the balance of input and output, you cannot  control inventory.” It is that simple! (And difficult.)

Re-reading this material leads me to this conclusion, one that I did not have at the time: the planning control systems and metrics should be geared toward speed and material flow, relative to customer demand. Perhaps we measure way too many things, when truly only a few matter. 

Lessons Learned: We manage two flows: material and information. An audit of continuous improvement (CI) plans, KPIs/metrics, and rewards/recognition systems should reflect an emphasis on the speed of flow of materials and information.

Click on the image above to buy this book.

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Written By: Jim Drennen, CPIM - December 11th, 2018

If You Want a New Idea, Read an Old Book

 “No manufacturer... possesses enough knowledge and manpower to work effectively with more than one vendor for any one item.”  -W. Edwards Deming. What did the good Dr. Deming really mean by this statement? It might not mean what you think it does. Read on…

Not long ago, I was involved with setting up a vendor managed inventory program with a local manufacturer. At the start of the project, the Materials Manager informed me the company decided to reduce the number of suppliers from 453 to 250…in one year! I held my tongue while imagining the ensuing chaos. This got me to wondering about the underlying assumption for the drive to reduce the number of suppliers. Take a poll at your place of business and ask Supply Chain Managers, Purchasing Managers, Directors of Procurement, Vice Presidents-Operations, General Managers, IT Directors, and CFO’s one question, “Why are we reducing the number of our suppliers?”  What kind of answers do you get?

<Buy this book! Click on the image to go directly to Amazon.com>

My guess is that 85.7% of them will be incorrect. Typical replies may look like this:

  1. Reducing suppliers reduces costs.  
  2. Carrying too many suppliers in our system hogs a lot of memory. 
  3. Adds time for MRP regen. (Probably from an IT person or Materials Manager.)
  4. We do not have the time to manage all these supplier relationships.
  5. It is a common Lean practice so it must be good.
  6. Reduces the number of transactions, which is a cost driver.
  7. The VP told us to do it and besides, everybody is doing it.

Jumping on bandwagons without understanding foundational principles can lead to all sorts of unintended (but deserved) consequences.  Let’s look to a recognized source about this situation: W. Edwards Deming. Deming famously made the following two statements:

“No manufacturer... possess enough knowledge and manpower to work effectively with more than one vendor for any one item.” and “A second source, for protection, in case ill luck puts one vendor out of business temporarily or forever, is a costly policy.”

Based on these two quotations, one might begin to justify the decision to eliminate suppliers. Nothing in these statements suggest how best to do this, however.  And is this what Deming meant anyway? Let’s dig deeper into Deming, who was at the start of this evolution in manufacturing. The conclusions may surprise you. 

Deming divided the purchasing world of suppliers into three segments:

  1. Our wants are clearly known and can be accurately communicated andseveral suppliers offer the same product: Buy on price and several suppliers are OK.
  2. Our wants are clearly known and can be accurately communicated, andseveral suppliers offer the same product, but one has better service: Buy from the supplier with the best service. 
  3. We “think” our wants are known and we are willing to consider advice and changes: Cost of use is a factor. Consider working with fewer or one supplier and evaluate price, training/support, capacity, capability, quality, creditworthiness, and technology knowledge.

Deming realized the #1 reason to reduce the number of suppliers is to reduce variation! It follows then that parts or sub-assemblies where variation in form/fit/function is critical, a single source or major business partner makes sense.  It is ill-advised to put those suppliers on the reduced-supplier list. For everything else, the number of suppliers may not be a driving issue where the juice is worth the squeeze. 

Lesson Learned: The law of unintended consequences often comes into play when the reasons for an action are not clearly understood. It’s OK to question assumptions.