Sowell Manufacturing Consulting

Educational Blogs

The Value of Time
There are two ways to look at the value of "time."  Most of us think of the concept of time as something that adds value; rather, time should be considered as a factor that diminishes value when it is not properly utilized.

Throughout the manufacturing industry there is a considerable amount of time wasted on the production floor. Eliminating waste creates a tremendous opportunity to increase efficiency. We tend to ignore the waste that encompasses our facilities and to overlook the opportunities that exist to reduce costs and to improve the manufacturing operations.

It is important that we take certain actions to improve all manufacturing operations so our facilities will run more efficiently.  Whenever I ask my clients to tell me what the plant efficiency level is that they believe their operations are producing at , they usually state between 85% - 95% efficiency. But from the many companies I have consulted, I see them achieving only 60% - 65% efficiency.

And here is why. On the production floor, people are often concerned about doing the best they can to resolve daily problems.  They may be attending meetings, seminars and educational programs, or they may be reading up on the latest management techniques. But they are unable to grasp the full picture  and they feel confused. Some simply give up, or there may be an uneasy feeling of disappointment that people have done their best and therefore they cannot do any better. 

It is very wise to develop cross-functional teams and understand initiatives, as this is an important process when attempting to implement manufacturing competitiveness, but a fundamental question is whether enough analysis has been completed to learn what is really occurring on the production floor.

Inventory Waste

Excess inventory increases the cost of product. It requires additional handling, additional space, additional finance charges, additional people, additional documentation, etc. Because of the problems associated with excess inventory, we should consciously try to reduce inventory levels using the following methods;

• Whenever feasible, manufacture products in small lot sizes to reduce set-up and changeover times.
• Do not purchase or bring in items in large lot sizes because any savings achieved through volume discounts could be offset by actual carrying inventory costs. 
• Do not produce components if not required by the subsequent process, e.g. secondary operations or components required for line balancing.
• Dispose of obsolete materials  to keep shop clean and orderly.

As we begin to reduce inventory levels, you may discover or determine more problems that need to be addressed before the inventory level can be reduced further. Example of problems which may be exposed by reducing inventory levels are as follows:

• lack of communication
• vendor delivery
• quality problems
• documentation and record keeping
• work station or cell layout / housekeeping
• communication problems
• inadequate scheduling
• transportation costs and requirements

Due to the many problems associated with carrying inventory, it is necessary to analyze the inventory function and pay close attention to eliminating the waste associated with inventory. It is time for your organization to start thinking lean.

Integrating the Concept of Strategy
The concept of strategy embraces the overall purpose of an organization. It is not surprising that many dimensions are required for its proper definition. The individual ones that are presented simply emphasize the various components of the concept of strategy. All of them are meaningful and relevant and contribute to a better understanding of the strategy tasks. By combining them we could propose a more comprehensive definition of strategy. Therefore, strategy is:

• A coherent, unifying, and integrative pattern of decision making.
• Determines the organizations purpose in terms of long-term objectives, action programs, and resource allocation priorities.
• Attempts to achieve a long-term sustainable advantage in each of its businesses by responding properly to the opportunities and threats of the firm's internal and external environments. 
• Engages all levels of the firm: corporate, business and functional.
• Defines the nature of the economic and non-economic contributions it intends to make to its stakeholders.

The Strategy Formation Process
Strategy separated from strategy formation is academic at best. It is impossible to comprehend the difficulties encountered in formulating and implementing strategy if one ignores the fact that the concept of strategy and the process of making it a reality are inseparable in any organizational setting. Many view strategy as the outcome of three different processes contributing to strategy formation, which include;

• The cognitive process of individuals where the rational understanding of the external environment and internal capabilities of the firm reside.
• The social and organizational process that contribute to the internal communication and the development of consensus and opinion.
• The political process that addresses the creation and transfer of power.

Within this perspective, the task of the CEO is viewed as the administration of these three processes. This requires  the CEO to develop a broad vision of what to achieve and to manage a network of organizational forces that lead to the discovery, evolution, and enrichment of the vision. 

Innovation
In today's global economy, evidence shows that both product and process innovation is becoming linked with superior profitability in the manufacturing industry. Some research implies that firms with the highest performance also invested the most in R&D.  A contributing factor to the productivity and technology problems experienced by U.S firms has been managers' unwillingness or inability to spend capital, absorb cost, and take risk to long-term development of both product and process innovation. In order to be a market leader, a firm needs to innovate. Then they need to deny access to the technology for as long a period of time possible in order to sustain competitive growth.  No matter how large, fast, bureaucratic and innovative organizations are, there is one underlying factor which can affect a firm ability to achieve strategic competitiveness in global markets. That is product quality.

Quality 

Product quality has become the universal theme in the global economy and continues to shape the global dynamics in many manufacturing companies. Product quality is important in all industry settings. Without quality goods and services, strategic competitiveness cannot be achieved. Quality means meeting or exceeding customer expectations in the product or services rendered. While there are many dimensions of product or service quality, the philosophy must be formulated and adhered to from the top of the organization. These values should be built into strategies, which reflect long-term commitments to employees, customers and stakeholders.When this happens, a process known as Total Quality Management (TQM) passes through the firm in all activities and processes. Although there are skeptics, when implemented properly, the principles and practice of total quality management can assist firms achieve strategic competitiveness and earn superior profits. The major benefits to be obtained when practicing company-wide total quality management is to increase customer satisfaction, achieve a reduction of time required to introduce and release a new product into the marketplace, and to decrease manufacturing cost.