Levers of Planning

One of my colleagues recently mentioned that “If we produce the same material as the past – who needs Lean”. It is an interesting thought. If the company produces the same product mix as the past –the operations were time tested to enable such a product mix to flow through the facility.

This raises a good point. If the operation can sustain the same kind of performance which can satisfy the customers - Why change? I think we need to investigate the operations in detail – What were the issues that were faced during the past. Questions such as – How many escalations of production were introduced? How many times have the orders not been delivered on time? How many times have the maintenance schedule been violated? How many times the schedule was changed due to unavailability of the materials? How many times were the resources used for rework? How many times the inventories build ahead and sitting on the floor? And this goes on….

It is good to know the past to predict the future. The past is a learning experience and the experience is obviously very important so that we do not make the same mistakes again. However, the future is unpredictable and unmanageable – It is like a Christmas present – You can certainly hope that your rich Grandpa gives you the similar present as last year but the changes in his lifestyle may affect this year’s gift.

As Eli Goldratt has discussed in several forums, that there are only a few variables that can be managed effectively by an individual or an organization. The more complex system in place the fewer variables can be effectively managed. The key levers for manufacturing are capacity, forecast and material availability. During planning the capacity and forecast are the main variables. Material availability should be an outcome of the process and should not be a constraint to planning. The question planners need to answer, if customer requires a part on a particular day – Is the planner going to go back to the customer to change the request date based on material availability. That not only causes changes in the plan but affects a lot of decisions that the planner has to manage. Material availability usually becomes a constraint during execution due to several factors – some of which are quality, vendor related; material handler could not find the material, production variability etc. Lean principles can be extremely valuable to determine the right amount of material to maintain against such uncertainties. For capacity planning, lean manufacturing promotes level production and lets the inventory vary to sustain the shipment of material to customers. The kanban system as astutely implemented by Toyota keep the production steady and helps manage the inventory levels while making the supply chain responsive against changes in planned versus actual.

Lean has previously been synonymous to repetitive manufacturing. It is not. It can be implemented in a make to order industry as confirmed by many research institutes. The benefits of Lean are also well documented – but the biggest benefit to manufacturers is helping them to build a steady production plan which deviates minimally due to forecast inaccuracy. For the production folks – having a steady repetitive plan on a daily basis is a panacea from the discomfort of determining what they need to build next. As discussed in earlier articles – Mura (steady production) helps reduce Muri (Discomfort and Stress) in planning.

I would like to hear back about your experiences. My next article would be around material management and inventory.