Tag Archives: overproduction

Burning Platform

blurningplatformA favorite Twilight Zone episode that played Labor Day weekend put me in mind of the stressful push production environment that many organizations still endure today. In a technical sense, push production refers to launching orders into production before customer requirements are known and then pushing them along, some faster than others as requirements become clearer. Shigeo Shingo referred to this production method as speculative, a euphemism for guessing. With a forecast and MPS at the front end of the push, perhaps this could be elevated to educated guessing.   In my MRP days I witnessed the ugly consequences of the automated push: Computer-assisted attempts to tweak the push, including exponential smoothing, safety stock, pan size, shrinkage, yield, order point, n-days supply, fixed and variable lead times, transit times, minimum lot size – all intended to optimize the guessing, but all ultimately resulting in over-production, over-time and over-burden.

The first two “overs”, over-production and over-time, chewed at the bottom line. But the mental and physical stress of push production, the over-burden, ate away at the soul of the organization. Work days were defined by expediting, bumping queues, threats, accusations, finger-pointing poison-pen letters and CYA reports intended to deflect blame when customer deliveries were missed. Over-burden created a social condition worse than push. It was push-push-push! Watching the Twilight Zone clip rekindled memories of the divisive and counterproductive behaviors engendered by push production.

Once a job had been launched to the factory, for example, it was typically impractical to de-kit it and return it to stock. In fact, having just-in-case work orders in the plant provided a false sense of security: there was always something to keep machines and people busy. With this reservoir of make-work orders, measures like machine utilization, OEE, absorption and labor efficiency could all be manipulated to paint a rosy picture of productivity.   Excess orders on hand became habitual.

Too often, those unneeded work orders would be cannibalized to fill part shortages for urgent customer orders. A sales manager once blasted me: “Production does nothing until my customer’s need becomes urgent.” In fact, while that appeared to be the case, the factory was almost always busy building something, just not the right thing. Production by heroics worked for a few key customers, but to the others who were bumped back in the queue, we were bums, not heroes.  A frustrated assembly supervisor remarked as we neared our month-end push, “You know we pump all kinds for work into the factory during the month, but almost nothing comes out until the end of the month. It feels like constipation.”  The crowning blow, however, came from a customer, visiting our factory shortly after I transferred to manufacturing: “Congratulations,” she said, “on your new job, Mr. Hamilton. Perhaps you explain why it takes sixteen weeks for your company to produce product that’s smaller than my fist.”

That was 1985, the year I resolved that there had to be better way.   The push system was bad for our customers, but my burning platform for change had as much to do with the stressful, dehumanizing environment of push, push, push.

O.L.D.

BTW: It’s not too late, even though there are only a few days left before our 11th Annual Northeast Lean Conference in at the MassMutual Center in Springfield, Massachusetts. Take a look our outstanding lineup of workshops and presenters here, and register here. Hope I’ll see you there.

Overproduction

Not wishing to rub salt in the wounds of my beleaguered Red Sox, their meteoric rise from last place in 2012 to first place in 2013 and subsequent plummet to the cellar in 2014 underscores the problems with speculative production. Last week, celebrating a birthday, I was offered a dish of “Fenway Fudge” ice cream, and was amused by the container.

overproductionCHAMPIONS?

Well perhaps the Sox were when the product was made. Or maybe the ice cream (which, by the way is delicious) was made very recently, but dispensed into packaging that was printed in 2012. Maybe a buyer got a good deal on a large print quantity. The specialty packing industry typically likes long runs to amortize pre-prep and set-ups. Or maybe the forecast for the 2014 season augurs another rise from the ashes for the Sox.   I don’t follow the team closely, so perhaps someone more in the know has a line on next season.

My guess however is the large quantities of packaging and ice cream were manufactured according to what Shigeo Shingo referred to as “speculative production.”  Fenway Fudge, after all, is not the only Red Sox flavor; Green Monster Mint and Grand Slam Vanilla, to name a couple more, also sport the “Champions” banner. So if the ice cream is good, what’s the big deal?  Diehard fans still love their Sox even if the packaging is a season behind (or ahead.) The big deal, I think, is about the need to produce packaging and product well before, as Mr. Shingo would say, they are “authorized.” When the time to produce goods and services is much much longer than the customer’s desired lead-time, then we are forced to speculate – roll the dice – in order to schedule our resources.  Not every type of manufacturer will be so obviously impacted as one that ties it’s marketing to a baseball team, but seasonality, product proliferation, and customer taste make long runs of any product a gamble. And while not every product will cost as much to store as ice cream (note the use-by date on the Fenway Fudge package is 9/30/15), the need to produce too much or produce too soon squanders resources and increases costs in a way that current cost accounting rules hide as an asset.

One of my favorite Shigeo Shingo quotes is:

“The most dangerous kind of waste is the waste we do not recognize.”

Overproduction’s stealth has been legislated into management accounting and operations policy, and until this is recognized, it will be rationalized as a necessary evil, needed to “hit the numbers.”

Is overproduction really seen as a waste in your business, or is it tacitly accepted? Share a thought.

As for the Sox? Wait for next season. Go Sox.

O.L.D. smilebruce

Hey! Our 10th Annual Northeast Lean Conference is next week! October 1 & 2 at the Mass Mutual Center in Springfield, Massachusetts. Over 550 Lean learners from 150 companies have already signed up. Click here to register today to learn, share, and recharge your Lean batteries. Hope to see you there.