I’ve given this subject a lot of thought, and I have derived a somewhat complicated, yet elegant hypothesis. A manufacturing company wants to make something that it can sell to someones for more money than it cost the company to make it. That being said, how do you go about achieving that objective? What do you need in order to start?
- A product
- A place to make the product
- People to do the work
- Materials to make the product
- Machines and tools for your people to use Since we are talking about lean manufacturing,
I will accept as a given that there is a product. That leaves us with a place, people, materials, and machines and tools. Seems pretty easy so far. What have we forgotten? yes, one very important item: a customer who is willing to buy your product.
This very important component is at the heart of the lean manufacturing message. When I talk to various executives about their primary performance drivers, I am invariably told that customer satisfaction is the number one indicator. Then the conversation usually turns interesting.
Mr. Exec: Yes, Bill, we are truly a customer-driven company. Our clients are king.
Me: What is your on-time delivery rate? Well, it’s running about 85 percent right now, but we’ve been very busy lately.
Me: I see. Is that to your customer’s requested date or to your negotiated delivery date?
Mr. Exec: Well, to our date, of course. We can’t always react to customer requests because they are simply not realistic.
Me: How so?
Mr. Exec: Well, sometimes the customer will call and request delivery within two or three days. Sometimes even the next day.
Me: Imagine that!
Mr. Exec: Exactly.
They don’t understand that such a short lead time is simply not possible. At the center of the lean philosophy is measuring all activity from the customer’s point of view. I’m sure you have heard the story of the extremely complicated product that was developed by a group of extremely talented engineers. I won’t tell you what the product was, just that it was a marvel of complexity. It was just the sort of product that strokes an engineer’s ego into hyper-drive. When the product failed to sell, it wasn’t the engineers’ fault.
Mr. Engineer: Yes, Bill, our triangulation gizmotrometer is truly a marvel of cutting-edge technology.
Me: Very impressive! What’s the selling price?
Mr. Engineer: Well, it’s quite expensive; the complexity of this design does not come cheaply. Not to mention the research and development expense that we need to cover. Me: With such a complicated design, what’s the cost of maintenance and repair in case of a malfunction? Mr. Engineer: Again, quite high. Troubleshooting malfunctions is complicated and time-consuming and require a high-level technician.
Me: I see. So why is this product not selling?
Mr. Engineer: We believe that the average consumer simply lacks the sophistication to appreciate what we are offering. Consumers just don’t seem to understand the value of this product.
Me: Lack of demand is the customers’ fault because of their lack of sophistication?
Mr. Engineer: Exactly!
I do run into some interesting examples in my travels. I recently spent a few months with a client doing an extensive lean-engineering analysis of two of the company’s main assembly areas. As I learned more about the business, I kept hearing comments that lowest cost and best lead time (quality is a given) did not always mean being awarded a project in this industry. The claim was that a lot of politics were involved in awarding a project and that performance was not always the deciding factor. As I became privy to more of the details surrounding these comments, it became clear that the company had lost a major job that it had bid on to a competitor whose price was significantly higher and that did indeed have a longer lead time. In talking to some of the engineering types, I learned that a major characteristic of the product had changed and that the customer had specified this new feature as a requirement in its product quotation process.
My client would have had to do a considerable amount of engineering design work and process redesign to accommodate this new characteristic. My client chose to take the position that the product as it was currently produced was better, and it submitted a bid that ignored the newly specified characteristic. Its price was lower, its lead time was better, and its quality was excellent. The job was awarded to a competitor with a higher price and longer lead times. Curious indeed? Clearly a political issue! Even though the company had completely ignored the customer’s specific description of the desired product, when it failed to get the job, the reason was politics, not the fact that the company had submitted a quotation on a product design that the customer clearly was not interested in. Amazing but true.
The lesson: Give customers exactly what they want—no more, no less.
In Lean Manufacturing company manufacture goods as per need and & demand of the customer. If you are a company who is not focused on customer need and what they need your product will not create positive market growth. Implement Lean Manufacturing in your company and get the best from your resources
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