In their efforts to draw closer to customers, many manufacturers have lost focus on what should be a company’s primary success factor – profitable growth. In today’s competitive manufacturing environment, it takes more than quick fixes, outsourcing and downsizing for companies to consistently achieve their Non Profit Growth growth and profit objectives. While these options may yield temporary financial relief, they will not lead the way to long-term growth and profitability. For companies to grow and consistently exceed bottom line expectations, they need to get lean. And, to get lean they must master the basics of lean manufacturing.
Over the past 30 years, we were led to believe that computerized systems would provide the solution to all of our growth and profit challenges. Material Requirements Planning (MRP) and Enterprise Resource Planning (ERP) System gurus assured us that if we implemented their software programs the bottom-line would take care of itself. Well it hasn’t happened! Like most perceived panaceas, each of these programs received a lot of hype, produced a few success stories but in general, contributed little towards helping companies identify and achieve their full growth and profit potential.
For a measure of their shortcomings, one needs only to spend some time in an MRP scheduled manufacturing facility – especially during the last weeks of the final financial quarter. In a typical company, you’ll find that converting the quarterly financial forecast into reality still requires overtime, internal/external expediting, last minute “on-the-run” product changes and even a little “smoke and mirrors”. Results are scrap, rework and warrantee costs that negatively impact profitability and quality and shipment problems that deliver less than acceptable customer satisfaction. Companies have spent many thousands of dollars in pursuing MRP and ERP only to see their growth and profits decline due to uncontrolled operating costs that produced non-competitive pricing.
So, after introducing MRP/ERP computer systems and more, why is it that most businesses are still struggling to sustain profitable growth and are no where close to achieving their full growth and profit potential? The first reason is simple – the results achieved by any computer system are only as good as the people at the controls and the integrity of the data they provide. The second is complex – most manufacturing managers facing major day-to-day problems and constraints adopt a totally reactive management style. Consequently, their time is consumed with “band-aiding” and/or finding ways to work around system and process problems – leaving them little or no time to analyze and eliminate the root causes of ineffective systems and processes. How does one turn around such a classic “cart before the horse” syndrome? What’s required is first a company-wide, in-depth understanding of the fundamental of lean manufacturing and then a total commitment to the consistent and tenacious execution of lean manufacturing basics.