The September issue of APICS: The Performance Advantage features an article I co-authored along with a colleague, Dr. Eric Jack, titled BTO Give and Take. The focus was on using a Build-to-Order business model that leverages operational flexibility to increase responsiveness while lowering costs beyond what Lean has achieved. Achieving flexibility sounds simple, yet few operating systems currently in place can do it. Converting to Build-to-Order manufacturing is a daunting and complex undertaking, regardless of the industry. It is easier to keep doing what you’ve been doing, even if it’s wrong.

Many sophisticated production systems are based on sequenced flow: a smooth, balanced approach to scheduling and shop floor control. These characteristics have been made possible by years of streamlining processes, reducing variations, and standardizing work. TAKT time measurements are an example of this with some manufacturers paying bonuses for adherence to a predetermined TAKT time, or drum beat if you’re a TOC advocate.

Unfortunately, all this attention to balanced flow makes for a very inflexible, costly manufacturing system. So costly in fact, that it opens the door for outsourcing to cheaper producing countries, at best, or to offshore competitors, at worst. The competitive climate has gotten so heated that it seems plausible that anyone building-to-stock (or for that matter building-to-order with extended lead times) in the U.S. will/should be closed within 5 years due to cost disadvantages. There’s hardly any product or industry sector in the U.S. that is immune.

The reason is simple. The biggest market in the world is, and will continue to be for some time, the U.S. market. More and more countries are developing the capabilities to enter this market with products of equal (some cases better) quality, greater features, and lower costs. The good news is, when they’re selling to us they’re not fighting with us. The bad news is we’re losing jobs here at home.

Lean, sequenced production was one of the changes manufacturers made to become competitive when their old, traditional, batch type production was proven too costly for the times (late 70’s). However, this isn’t the late seventies anymore. The twenty-first century is proving to be even more dynamic and volatile as competition heats up with a decidedly global perspective. Greater flexibility for faster response at lower costs becomes the new mantra.

Here’s the problem: Lean, sequenced production is often an internal operational tactic while flexible Build-to-Order is an integrated supply chain, organizational strategy. Too many Lean initiatives create islands of excellence without connection, and thereby without positive impact to the overall bottom line. It’s like a group of blind people describing an elephant by the part they touch. The companies who decide to make Lean their vehicle to regain competitiveness choose an operational tactic instead of focusing their organizational strategies on the bigger challenge. In short, you could be using 70’s solutions for a broader, 21st century challenge.