Leading a horse to water is
easier than getting it to drink…
What to do before
I.T.!
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As JIT gives way to
demand-based build-to-order, we face a growing complication to
the traditional sequenced flow of orders: more frequent
resequences. Resequences occur for a variety of reasons
including unexpected quality problems, supplier delays and,
increasingly, changing customer demands. Continuous improvement
efforts help with quality problems, but changing customer
demands can play havoc with the smooth flow of orders. As
production planning shifts away from forecasting to demand
driven, the cost of manufacturing will likely go up due to
increases in just-in-case inventory and capacity misallocations
unless the operation can provide a good connection to the rest
of the supply chain for the inevitable resequences that will
occur. To solve this dilemma, companies often focus on real
time, comprehensive communication support. That support is often
provided in the form of Information Technology. But is it really
the key?
Granted, providing instant updates to sequence
changes, priority shifts, and flow disruptions is vital.
However, even with that we see too many suppliers making
expensive reshuffles to their production plans while scrambling
to meet last minute changes. There’s nothing cost effective when
buffer inventory is growing. Increasingly the supplier becomes
locked in a downward spiral of increased costs while being
pressured to decrease their selling prices. Something is
missing.
Many Manufacturers pride themselves on being
good at sequenced production flow. They are sequencing the flow
of work through their plants to reduce manufacturing cycle times
and work-in-process inventory levels. Nissan uses the term Douki
Seisan, “Sequenced and Simultaneous”, to describe the full scope
of its Nissan Production Way (NPW) manufacturing system that
achieves very high productivity. Many others have also
experienced increased productivity and better quality that
sequenced order flow provides. But all is not rosy. If
sequencing is so good, why are many still saddled with too much
inventory, slow response time, and low productivity? Being good
at sequencing is no longer enough. Now, a manufacturer has to be
a good sequencer as well as being flexible when the sequence
changes. Achieving flexibility with lower inventory affects the
very structure of an organization.
While sequencing is
often approached as just an operational issue (making sure the
mechanics of sequencing processes are implemented) we think it a
bigger challenge organizationally. The ability to remain focused
and responsive without losing its cost effectiveness gets to the
core of how an organization enables the operational tactics
needed to be both sequenced and simultaneously resequenced.
Frequent schedule changes can be extremely demoralizing to
suppliers unless there’s a clear understanding of why they occur
and a well understood system to resequence the changes without
disruption. Just dealing with the organizational challenges of
collaboration requires more focus, training, and structure than
all the other aspects of sequenced work flow implementations
combined.
Before placing the emphasis on technology to
manage information that drives the sequenced supply chain, the
supply chain must be organized around the collective benefit
that faster response, lower costs, and better quality will
bring. Doing that in a structured way will expand the dividends
received from a demand-based build-to-order manufacturing system
implementation.
But there’s more. For collaboration to
work in a supply chain, it must first be an integral part of
YOUR organization’s culture. Instilling it in an organization
where it hasn’t existed is problematic. It can be done but it
requires compelling focus.
In the adage, “You can lead a
horse to water, but you can’t make him drink”, it’s always
easier to get the horse to water than it is to get it to want to
drink. Many focus too much on the implementation of the tools of
demand-based build-to-order such as IT technology and not enough
on the implementation of a holistic demand-based build-to-order
strategy; the “wanting to drink” part. A recent article in the
Wall Street Journal stated that for every $1 spent on
technology, $5 must be spent on the organizational side. Think
about that the next time you develop your IT budget or lean
initiative effort.
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