Brian Jones, ex CEO, NYPRO Corporation,
USA tells us how we can create sustained competitive
advantage in the UK. (Brian is President of AME in the USA - see
below.)
|
There is one vital requirement: cut costs by
reducing wasted effort. Most companies don’t realise that they
have huge potential to reduce their operating costs radically by
this means, as illustrated above. But most UK manufacturers have
not even started to appreciate the magnitude of cost reduction
they can achieve. And even fewer realise that it will cost them
so little to do so.
|
Waste is anything other than the minimum
amount of equipment, materials, parts, space, and worker’s time,
which are essential to add value to the product.
|
Waste is any activity that consumes resource
but creates no value for the customer. The 8 classic wastes are
overproduction, waiting, transport of materials, inefficient
processing, inventory, unnecessary motion, defects and redundant
information.
|
Inventory is the narcotic of business.
Inventory is addictive: more is never enough. You have to
increase your prices to support the habit. It dulls the senses
to the real world. It grossly over-complicates your production
operation. And soon the cure becomes a larger problem than the
one it was intended to relieve.
|
20 years ago inventory turns in automotive
suppliers were around 10-12 a year; now they are over 20 and
still increasing. The rest of manufacturing industry is not yet
even making 8 a year.
|
But why should you bother to get Lean?
Because you will lose your sales to those who are, and to
imports from lower cost foreign competitors. You need the right
product, at the best quality with quick response to what the
market wants - all at the minimum possible cost. Most UK
manufacturers say they know this; but most do nothing to get
there.
|
To achieve these reductions in waste you need
a high velocity system: a system that is triggered by the pull
of customer orders, that hits all activities that design, build,
and deliver products and services to the customer.
|
You produce only when the customer orders in
a very short lead-time. You do not deliver from stock to a
forecast; that causes stop-start high rate production that
creates mountains of stock and work in progress.
|
The goal is to make your production cycle
time the same as the rate at which you sell your product to
avoid over or under production.
|
