MRP/ERP

Answers to Minimizing the Impact of System Dynamics
by Sal Ganino

In our previous issue, we talked about the Impact of System Dynamics on our industrial operations. Today, I would like to discuss with you the Principles of Lean Enterprise and how they can be employed to counteract some of the negative Impact of System Dynamics.

It would truly have helped had you first participated in our “Understanding the Impact of System Dynamics” simulation. This simulation quickly demonstrates how the dynamics of any system, in our case a very simple distribution system, can adversely impact a previously stable system.

Lean enterprise--often these words give us the heebie-jeebies because of the one word: “LEAN”. We have an immediately, preconceived the notion that lean means “Do Without”, and in today’s global enterprise (with customers demanding immediate delivery with no warning) doing without inventory has got to be the most scary thing we conceive. I was recently at a plant that is carrying $22 million in finished goods inventory and all of it specific to customers’ specifications and no guarantee of a sale. Talk about scary!

Many an over-exuberant consultant has insisted that you should throw out your MRP or ERP and replace it the principles of lean. Well sometimes that would be like throwing the baby out with the bathwater. Let’s approach this like any true artisan would. It’s a bag of tools just like MRP/ERP, ISO 9001 etal. Like any other bag of tools, it contains tools that cannot be used on every job. A carpenter might have three different hammers in his tools bag--one used for roughing, rather long handled, with straight claws, and weighting 20 ounces or more; one with a shorter handle, curved claws, weighing around 16 ounces (used for framing), and the one he uses for finishing work. It’s much like the framing hammer but weighs in at about 12 ounces. Is building a house any more complex than operating a manufacturing business? Then why should we have to select only one tool with which to operate our business?

So what does all this mean? It means that we must choose the right tool for the right job. We must select those products or those operations where the tool can and should be used. By using only the framing hammer, the carpenter can still build the house, but the roughing job would undoubtedly fall behind schedule (missed delivery promises) while the framing hammer is much to large for finishing work (excessive inventory), causing damage to the woodwork (defects).

How do we select the right products and right operations? One of the tools in that bag of tools is Value Stream Mapping. Value Stream Mapping (VSM) is a variant of Process Mapping, which in turn is a variant of Flow Charting. Jim Foose, you were right: There is nothing new under the sun. When used correctly, VSM can provide us the one or many “Product Families” that exist within our operation. A Product Family consists of those individual products that follow the same routing through the manufacturing operations with little or no changeover required.

After selecting one of the Family of Products, a simple, non-scaled, flow diagram is constructed of how this family of products currently flows through the factory. This is known as the “Current State”. Once the “Current State” is defined, we design the “Future State”; that state we would like to be in if we had the where-with-all to get there. Many things may have to be accomplished before we can achieve the future state: Changeover time might need to be reduced, maintenance may be required on some or all of the equipment, and equipment may need to be relocated.

The process of going from current state to future state may require the use of some other tools:

a. 5S
b. Setup/changeover time reduction
c. Cellular Flow
d. Pull and Kan Ban
e. Total Productive Maintenance
f. Visual Controls
g. Continual Improvement
h. Team Work and Team Building

An Operation Manager once told me that a well-running operation sounds like a symphony. I didn’t understand what he meant until one day, for ever-so-short-a period of time, I stepped out of my office, and I instantly understood what this Operations Manager was trying to tell me: Does your operation sound like a symphony or a junk-yard band?