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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.
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