The Need for Speed

Speed is important to your customers, but how important is it in your improvement efforts?

Just In Time (JIT), perfected in Japan in the 1960s and 70s, is an integral part of the Toyota Production System. Many people believe it has to do with inventory management, getting the right parts to the right place at the right time. But JIT is much more than that. It deals with waste reduction – specifically the seven wastes of the Toyota Production System – and using Kanban and flow to lower inventory levels and reduce waste.

The acceleration that results is a critical factor in today’s business environment.

In 1980, General Electric became the first North American company to implement JIT. While Henry Ford’s approach to manufacturing foreshadowed JIT, the 1980s marked the Toyota Production System’s entry into US factories. It became one of the dominant concepts in World Class Manufacturing, focusing on one-piece flow or small batch sizes. Combined with other techniques such as Total Quality Management and Total Productive Maintenance, JIT helped manufacturers, both discrete and job-shop, become more efficient, lower costs and provide materials that exactly filled sales orders, just in time.

Inventory reduction, driven by JIT, was designed as a basis for problem solving. The trouble is that problem solving is about the past; a problem happened and made someone (customers, production workers, managers, etc.) unhappy. To use a lake metaphor, if you lower the water (reduce inventory), you can see the rocks (problems) that need to be corrected.

Lowering Inventory to expose problems

Draining a lake takes a long time. What if we could avoid the waiting period and improve now?

Speed drives proactive improvement and is arguably the crucial growth factor in today’s marketplace. Speed isn’t just making people work fast, it’s the ability to bring products to market rapidly, move inventory to the right place at the right time at the lowest possible cost, get products or services to customers with short lead times, reduce cycle times for production and delivery, hire and train employees, produce financial statements within a few days of month end, and more.

Ways to Get Faster

There are many ways to improve your company’s speed:

Simplicity

Cutting back on inspections, excess handling, waiting time and poor quality products is a great place to start, but simplicity in the pursuit of exponential improvement often means completely eliminating processes.

At one client, the supply chain department was looking for a way to stage construction materials to get them to teams at remote field locations without missing parts. A parts shortage (often caused by miss picks and lack of stock at the central warehouse) in these conditions would stop the team’s work. Instead of using JIT processes to reduce the waste and improve warehouse procedures, my client eliminated the warehouse process entirely by having a key supplier kit all of the parts for the job and deliver directly to the site. Not only did this reduce inventory and warehouse costs, it increased the field teams’ productivity, saving the company millions of dollars while improving customer service.

Reduce Complexity

Reducing complexity can have far reaching positive effects on the ability to accelerate profit and growth. A common practice to reduce supply chain risk is to have multiple suppliers for parts in case one of the suppliers fails to deliver, but this creates excess part numbers, numerous purchase orders, more relationships to be managed, and variations in quality. By reducing the number of suppliers to two per part, the number of relationships, POs issued, checks written, visits to be conducted, and so on are all reduced.

Cycle Faster

By redesigning their supply chain, one of my clients has the potential to slash inventory while meeting the short order lead times (less than two weeks) that they promise their customers. At the outset their supply chain lead time was four to six months, while the planning lead time from customers was two to three months, making it almost impossible to plan inventory effectively and leaving the company with very low inventory turns and excessive costs. Despite having their plants in China and most of their customers in the US and Europe, by focusing on speed they’ll overcome their excess inventory challenges and improve their responsiveness to customer needs.

Focusing on speed means looking to the future. You can dramatically improve service, cost and growth by asking questions such as:

  • How can we shorten our cycle times and lead times?
  • How can we improve communication between engineers and plants to get products into production more quickly?
  • How can we make our field service teams more effective?
  • How can we restock our service trucks more effectively to keep them in the field?

Professional service companies, software developers, healthcare, engineering, retail and more can all use speed as the guide to accelerate their profit and growth. Have you considered how to increase speed in your company? Have you factored speed into your strategies and frameworks for the future?

© 2016 Rick Pay – All Rights Reserved.