You Can't Ignore the Fundamentals

   

Several years ago I pull up to a KFC drive up window with my kids only to be told that they were out of chicken … but I could order anything else on the menu. I remember thinking ‘what’s the point of their even being open?’ If KFC doesn’t have chicken it really doesn’t matter what else is on the menu. It is the same with manufacturers striving to be lean, but largely ignoring the factory scheduling and flow process.

It doesn’t matter how many kaizen events you have, how good your quality is, how 5S’d you are or how many value stream maps have been drawn. If a manufacturer does not have the planning and control of production through the plant – what used to be called materials management – it is not lean and never will be. It is surprising how many companies and their leaders have missed this basic point.

The factory is the wide spot in the supply chain where value is actually created. It is the heart, soul and only reason for the manufacturing company to exist. That fundamental process of how material moves from the receiving dock to the shipping dock (and in the process is transformed from something relatively worthless to something valuable) is the whole enchilada. The rules the factory operates by that dictate what will be done at each step – and when it will be done and in what quantities – are the single most important element of the business. If this process isn’t excellent it doesn’t really matter much how good anything else works, does it?

In some cases it seems to be the result of unwarranted faith in an ERP system – the notion that the big computer has this humming along as well as can be expected so there is no need to improve it. Or perhaps the fact that the big ERP system is so inflexible that there is no point in trying to change anything it controls.

I suspect it is also the product of senior leaders who don’t really understand the factory scheduling, flow and control processes, so they simply choose to ignore it. After all, it is a pretty complicated process, and one leaders from financial, engineering or engineering backgrounds typically have not mastered.

Perhaps even more significant is that this is where lean collides most forcefully with accounting. Improving factory flow means reducing inventory … and everyone knows that inventory is an asset.

Regardless of the cause the number of companies that have determined that demand pull – kanban – doesn’t apply to their sort of factory, that are wholly ignorant of the Theory of Constraints, that plan inventory levels by elementary school level math in the form of ‘average weeks of demand’ policies pulled from thin air, or simply treat the logic embedded n their ERP system as a sort of religion to be followed blindly is disturbing.

Ohno’s assertion, "All we are doing is looking at the time line, from the moment the customer gives us an order to the point when we collect the cash. And we are reducing that time line by removing the non-value added wastes," can’t be simply ignored. The time line runs squarely through the factory, and how production is planned and executed through the factory governs the time line. Pay short shrift to this in the pursuit of lean and you are not much different from a KFC with no chicken.

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