Challenges

Managing operations in a manufacturing plant is a complex task.  Variability in areas such as supplier performance, raw materials, equipment, people, and market demand all conspire to challenge even the best of managers.  In spite of using advanced computerized systems and decades of implementing ground-breaking management methodologies, many manufacturing organizations still suffer from a common set of challenges:

• High net working capital (raw material, WIP, and finished goods inventories)
• Order backlogs
• Long lead times
• Poor due date performance or heroic efforts to get the product out the door
• Frequent customer complaints
• Employee morale challenges

Causes

Traditional manufacturing companies strive to make all resources (people and equipment) as efficient as possible, believing that doing so will maximize the performance of the entire plant.  Plants often take a multitude of actions to accomplish this, like releasing large amounts of WIP to the shop floor to improve ‘uptime’; running batches as large as possible; attempting to reduce the number of changeovers; and many others.  These actions are often helpful to a point, but if not done thoughtfully can often also greatly reduce overall throughput and considerably lengthen lead times.

Also, many companies have implemented well known improvement methodologies such as LEAN and Six Sigma.  For those who have done so, recent research has shown that the benefits of these initiatives can be enhanced over tenfold when used in conjunction with a constraints-based approach.  For companies who haven’t implemented these methodologies, our approach utilizes the most applicable tools from them with constraints-based foundation to achieve remarkable results.

Results

Our combined approach to improving the flow of operations will result in:

• 99% Due Date Performance (from the first commitment date)
• Greater than 50% reduction in production lead times
• Greater than 30% increase in throughput (increased flow)
• 50% reduction in work in process
• 50% reduction in finished goods inventory
• Significant increase in customer satisfaction
• Highly focused, energized, engaged employees

In environments where lead time,  delivery performance and/or product availability are important to the customer, a company that achieves this level of performance will not only exceed their customer’s needs but can potentially do so in a way which no other significant competitor can. This level of operational performance can potentially be developed into a competitive advantage to capture significantly more profits.