Mike on Manufacturing

Does Your Software Address the Manufacturing Fundamentals?

By Mike Hart

Business software packages address all kinds of functions, including inventory, purchasing, sales, CRM, e-commerce, service, project management, financial applications, and human resources. 

These functions are important, but if you have a manufacturing company and your software does not address the fundamentals of manufacturing, you will never reach your efficiency potential, no matter how good your software might be in these other areas. 

How to Make Money with Lean Manufacturing

By Mike Hart

You hear about “lean manufacturing” all the time, but just what is it?

Simply put, lean manufacturing means completing jobs on time using the least amount of inventory and WIP possible.

Your overall efficiency is measure by how much inventory and work in process is required to support your sales.  The less you use, the more efficient you are.

Cost for Efficiency

By Mike Hart

Traditional cost accounting can lead to bad decision making.  This is because it measures and rewards local efficiencies at the item, job, and work center level, which is actually counter-productive to overall efficiency. 

Cost precision is a myth

The most common mistake in manufacturing costing is to assume that each job has a precise cost.  Taking each job cost as a literal cost leads to poor decision making in regards to job scheduling, inventory, and product pricing.  These poor decisions can have a profoundly negative impact on your overall efficiency that gets translated into longer delivery times, increased inventory, and higher product costs. 

Don't Overload Your Shop!

By Mike Hart

A core principle of lean manufacturing is to not overload your shop.  Overloading the shop has the same negative impact on efficiency as overloading a freeway.

The Freeway Analogy  
 
A freeway has an optimal carrying capacity in terms of the number of vehicles it can accommodate for maximum efficiency.  Once that carrying capacity is exceeded, the freeway’s efficiency drops severely because of traffic jams and accidents.  The optimum carrying capacity is a tipping point where it may take only a small number of extra vehicles to trigger a drastic decrease in efficiency. 

What Is Manufacturing Planning?

By Mike Hart

In my last post, I stated that “expediting is easy, planning is hard.”  I think we all know what expediting is, but what exactly is manufacturing planning?

Manufacturing planning simply means that you will operate the factory according to a plan rather than reacting to events with expediting. Manufacturing planning involves five basic elements – capacity settings, lead times, reorder levels, MRP, and work center scheduling – each of which I will now briefly describe. 

Manufacturing Scheduling -- Expediting Is Easy, Planning is Hard

By Mike Hart

In manufacturing companies, the expeditor is the hero, the firefighter, the “go to” guy who gets things done.  When a key customer pushes for his order, the expeditor does whatever it takes to get the job out the door on time.  We admire the expeditor and can’t imagin operating without him.

The Expeditor Gets the Glory

The expeditor gets the glory because his success is visible.  That one big job got out on time and your biggest customer is happy. 

Does the expeditor deserve the glory?  If expediting is only done on an occasional basis,yes.  But when expediting becomes the normal way of operating, the hidden costs far outweigh the benefits and the expeditor’s role should be questioned.  

How to Survive the Recession and Become a Stronger Manufacturing Company

By Mike Hart

The "great recession" that started in 2007 has walloped small manufacturing companies all over the world.  To survive, companies have had to cut their work force, reduce overhead costs, and eliminate unnecessary expenditures.  Credit is tight and cash flow is king.  In uncertain times, it is a sensible strategy to postpone capital investment in plant and equipment until the economic outlook is more predictable.

Spending Cutbacks Aren't Enough

In response to such a severe downturn, it is a natural impulse to overreact and arbitrarily cut all discretionary spending to the bone.  Taking aggressive action on spending feels like the right thing to do.  But if you fight the great recession solely with spending cutbacks, you will emerge from the it weak and vulnerable to healthier competitors.