IndustryWeek Forums - Manufacturing Talk

Why Lean Doesn't Work

GStocker — Thu, 05 Nov 2009 21:47:51 GMT

Just to be clear, I am a huge fan of lean. I am a huge fan of Toyota and have seen some great results from projects over the years. Lately it seems, though, that lean in the United States and Europe is turning into just another overused, misunderstood concept that everybody does but few actually do well.

Read more at http://corporatedeathspiral.blogspot.com

Video: New Zealand's Lean Manufacturing Initiative

Frank Chloupek — Mon, 19 Oct 2009 23:15:50 GMT

Posted on youtube by Tigadee00.

A description of New Zealand's efforts -- through their Heavy Engineering Research Association (HERA) -- to increase productivity in their heavy metals engineering industry. The speaker is HERA Director Dr Wolfgang Scholz.

Manufacturers Need To Manage Inventories in a Changing Economy

DHowardell — Mon, 12 Oct 2009 00:33:39 GMT

During the current economic downturn many manufacturing and distribution companies are discovering that a small drop in sales can result in a much larger drop in inventory turns. As planners, buyers and managers whose performance is often measured by inventory turns, we need to understand why this happens and what we can do to avoid it.

First, most companies will admit that they had too much inventory to begin with and that they din’t react to changes quickly enough. But even when we do react well to a drop in demand, our systems are typically using the same replenishment parameters that they were programmed with months or even years before.

Using one popular measure of inventory performance, IQR, confirms this fact. The IQR for most of the over 400 companies we have surveyed is in the 30% to 45% range. The Inventory Quality Ratio is the ratio of the active inventory dollars to total inventory dollars. In a theoretically perfect situation (i.e., with no excess, slow moving or no moving inventories), the IQR would be 100%. So an IQR in the range revealed in the survey means that approximately 60% of inventory dollars are tied up in excess, slow or no moving items.

The major reasons that inventories go up in a down economy are:
• Our inventory systems and metrics, like turns and Days Inventory Outstanding, are backward looking.
• Our ABC classifications are out of date.
• Our order quantities and safety stock levels are based on past usage.
• We are still planning part quantities rather than managing inventory dollars.

To manage inventories effectively – in any economy, but particularly with changing demand – we need systems that are dynamically demand driven and that provide a dollar focus. Forward-looking demand-driven ABC classifications are needed to revise our order quantities and safety stock levels. Most importantly, we need to focus on the value of the inventory so that planners and buyers can be more effective in choosing the most important issues to work on first. Since we have limited time to work the issues, we need to make it easy to identify the ones with the biggest dollar returns.

Here again, many companies have found IQR helpful. The Inventory Quality Ratio methodology provides an effective way to manage inventory dollars and improve inventory performance. The IQR technique and tools help; to prioritize improvement opportunities, to set meaningful inventory targets, and to revise safety stocks and order quantities consistent with current demand, all of which make the planners’ and buyers’ jobs easier.

Whatever tools we use, in any economy we can do a better job of managing inventory levels and working capital by using demand-driven inventory logic and having a dollar focus. This will allow us to respond more quickly and effectively in dealing with the inevitable changes in demand for raw materials, purchased parts and our finished goods.

Furniture Manufacturer Uses 'Made in the U.S.A.' to Lift Sales

Frank Chloupek — Thu, 08 Oct 2009 00:26:49 GMT

Interesting case study from MarketingSherpa on how Indiana furniture manufacturer Foamiture used promotion of it's American-made products to boost their sales 10%.

The study is available at http://www.marketingsherpa.com/article.php?ident=31383 (free for 10 days, costs thereafter).

The details are in the study, but in short after first verifying their claims (not necessarily a simple task) they launched the messaging on their Web home page, on individual product descriptions, packaging, and phone contacts.

The results after 6 months were impressive.

19.1% increase in orders per day
4.6% increase in order value
10.1% increase in total sales

(taken from the case study cited above)

Anyone know of any made in the USA case studies? either positive or not?

Penske Cancels Plans to Buy Saturn

industrialuser — Wed, 30 Sep 2009 22:00:19 GMT

So it seems that the Saturn brand will end, according to this article. Boy, I remember when Saturn was trumpeted as all that was right about General Motors. And according to the Kansas City Business Journal, "Penske cited concerns about the future supply of vehicles beyond the supply period it negotiated with GM. After that supply period was over, Penske needed to find another manufacturer to produce Saturn vehicles."

It looks like about 13,000 jobs will be lost at Saturn with this decision, although I can't tell if that includes the dealer network or not. Bad news however you look at it.

Toyota's Largest-Ever U.S. Recall Over Floor Mats

Jon Katz — Tue, 29 Sep 2009 23:17:04 GMT

A month ago it was reported that Toyota was being sued for allegedly withholding evidence relating to over 300 rollover accidents involving roof crush issues. Read about it in this forum post from last month.

Now, the automaker has issued its largest-ever U.S. recall -- over floor mats. (Read about it here).What in the name of Taiichi Ohno is going on?

Hummer Sale in Trouble?

Frank Chloupek — Tue, 29 Sep 2009 01:03:48 GMT

Time reports that the sale of GM's Hummer brand to Sichuan Tengzhong Heavy Industrial Machinery will not finish according to schedule and if the deal cannot be closed that the brand may fold.

Full story at http://www.time.com/time/business/ar...wsletter-daily

Supplier Pricing Mistake

Jerry Bernstein — Thu, 24 Sep 2009 16:10:00 GMT

This is an excerpt from a recently published article "Use Supplier Pricing Mistakes: Put Dollars In Your Pocket."

Mistake: Weak or No Discount Controls
Unnecessary discounting is perhaps the largest source of profit loss for a supplier, and one of your biggest opportunities to get a better price. Some suppliers have a discount policy, but these policies are often ignored. Test your suppliers for opportunities. For example, once you have negotiated an initial price with your sales rep and are now placing regular orders, call the customer service or order entry department and tell them you need a better price. If the supplier has little or no oversight, you might get the price you want or at least more discount on the order.

Download this article at: http://valuepg.com/Articles/Use Supp...kes online.pdf