Industrial Manufacturing News

Many companies are feeling the pressure to more aggressively pursue Lean manufacturing processes to avoid the risk of losing business to lower cost and faster performing competitors. These days, the competition is coming from all directions including the Far East or other areas with very low labor costs.

Manufacturing companies have sought to meet various business performance challenges by focusing internally, hoping to correct faulty processes by applying Lean manufacturing techniques to bring about needed changes. However, many of these Lean initiatives never achieved what they could and should have, primarily because many so-called Lean manufacturing efforts go only part way and fail to consider the need for comprehensive internal and external business process changes including policies, attitudes, performance measurements, peripheral business practices, organizational behavior, and supporting information technology. For most manufacturers there are still plenty of performance improvement opportunities.

For companies that are trying to become Lean, a real challenge is figuring out where they stand and where to go next in their pursuit of excellence. Donovan suggests that a simple self-assessment can get these companies at least thinking in the right direction. “Company executives should have the entire management team candidly and realistically answer the following questions and then discuss their answers to benchmark performance improvement progress:

1. Have we reduced our total order to cash cycle time by at least 50% over the past 3 years?2. Have total inventories decreased by at least 50% over the past 3 years?
3. Do 99% or more of our orders reach customers as they requested?
4. Our supplier base has been reduced by 2/3 or more over the last 5 years?
5. Our supplier lead times have been reduced by 50% or more over the past 3 years?
6. Have we reduced scrap, rework and warranty costs by at least 50% over the past 3 years?
7. Has our cost to produce decreased by 20% or more over the past 3 years?
8. Have we reduced our cost of quality by at least 50% over the past 3 years?
9. Have we reduced direct material costs by at least 10% over the past 3 years?
10 Have we reduced our product development cycle time by at least 50% over the past 3 years?

If you answer no to any one of these critical questions, it’s a solid indicator that you’re not progressing ahead as fast as you should be. Manufacturers with the best value-centric offers for their customers including flexibility and responsiveness will easily gain more market share in the future as customers push for better supply chain performance from their suppliers. The total “cost of ownership” for materials and products will become more and more of the guiding metric for astute buyers.

The successful and most profitable manufacturers will diligently and aggressively pursue Lean manufacturing as a prerequisite to getting the weak links strengthened in their entire supply chains from beginning to end. Within a few years, companies that have not achieved Lean supply chain management to drive out the unnecessary costs, time and other waste so they can deliver high quality, best value products at lightening speed will run a very high risk in customer retention. Remember that it is likely to take most manufacturers a number of years and a lot of effort to fully apply all Lean principles to achieve the excellence in a supply chain where it becomes a competitive advantage. It is important to realize where you are on the journey and keep your efforts focused on the overall objectives. Fully assessing and quantifying your Lean progress may be just the right catalyst to accelerate the pace of your business improvement.