Here’s a personal reflection from my distant past, but which might still be a current state for some of you.
When I began working in manufacturing back in the pre-Lean era, the quoted lead-time for my company’s products averaged twelve to sixteen weeks. By the 1980’s, however, many customers began to routinely object to our promised deliveries, and we would then try to accommodate them by bumping hot jobs to the front of the queue. Bumping, of course, is like cutting in line except not immediately obvious to the bump-ees. But eventually they too become “hot.” One long-time customer remarked to me, “I always give you plenty of lead-time, but you still miss the due date.” This unfortunately was true – and inevitable. We bumped them until they were late. To paraphrase W. Edwards Deming, our bump and grind production system was “perfectly designed” to produce long lead-times, late deliveries and dissatisfied customers. We tried mightily to mask our problem with tactical workarounds, but they were doomed to fail. Here’s a short list of perverse tactics we tried:
- Visual Management. As the number of customers expecting shorter lead-times grew, it became apparent that we couldn’t bump the queue for everyone. So we prioritized the queue. Orders for export were stamped with a big red “F” (for foreign.) Orders from new customers were marked with an “N,” and big customers, “$”. Then, there were orders that were deemed hot only on the basis of external pressure. For example, a few customers sent expediters to sit in our lobby until their order was complete. These orders were marked with a colorful bull’s-eye. Regrettably, orders with no special mark were deemed unimportant, and due-dates printed on them were largely ignored.
- High runner products were built to stock with a rationale to create an apparent just-in-time supply to our customers. Unfortunately, factory orders for stock became fillers, to be completed after all of the aforementioned hot jobs were finished. “We build for orders first, and then for stock,” a scheduler told me. Consequently, our pick rate from stock was less than 60%.
- Daily Huddle. Because of our new taxonomy of hot jobs, (F, N, $, etc.) it became necessary to meet each morning to further stratify the hottest of the hot from the more tepid. This was a least worst choice meeting. The reality is that when you can’t deliver, there are no good choices. We also covered part shortages at this huddle. We were always robbing from Peter to pay Paul, and as we jerked our schedule around in response to customer complaints, we inadvertently created shortages and expedites with suppliers. Managing stock-outs became the major activity for buyers. (It was also supported by a multicolored visual stock-out system.)
- Concierge Service. As a countermeasure to poor delivery performance, some customers placed orders well in advance of need to assure they were in the queue. Our FISH scheduling (First In Still Here) however essentially neutralized that ploy. More savvy customers realized the best path for service required a demand for very short lead-times. This gave them visibility in the queue, but soon led to the dubious imposition of premium charges for fast delivery. In other words, “We can’t deliver in the time frame you want, but if you pay us more, then we can.” Some customers balked, but others just passed the increase on. From an accounting standpoint, this pay to play model seemed like a moneymaker, while in reality it was a reward for poor performance. (As a footnote, a few customers realized that if they needed an order for, say, 10 products, they could place two separate orders, one for one piece at the premium price and a second for nine pieces at the standard price, and all would be shipped on the premium date. They saw through our tactics.)
Altogether, our bump and grind production system created a high stress environment for provider and consumer alike, a cat and mouse game where each system tweak by the provider missed the mark and created unanticipated reactions from the customer. Production scheduling became a juggling act and we staffed with persons who could tolerate that pressure. The painful lesson for me was that no amount of tactics can overcome a bad strategy. Fortunately, my company discovered TPS and everything changed. That was thirty years ago. It’s incredible how hard we will try to tweak a system that’s fundamentally wrong before we recognize the need for an overhaul.
How about you? Is your production system in need of an overhaul? I wonder if any of my examples sound familiar to you. Please share a story.
By the way, GBMP launched its new On Demand Streaming Video Training Content site this week. We call it Leanflix. We hope you’ll take a look, try it out and provide us with any feedback you may have.
GBMP also has a full schedule of Shingo Institute Workshops coming soon. These workshops provide an excellent methodology to anchor improvement initiatives to principles – to understand the “why” behind the “how” and the “what”; Students will learn how to use The Shingo Model, The Shingo Guiding Principles and The Three Insights of Enterprise Excellence to get significantly better results from their Lean business transformation. Watch a little video I made to learn more.