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![]() Manufacturing Operations PRODUCING TO CUSTOMER ORDERS How can superiority in operations be turned into a competitive edge that results in more sales with little increase in expenses? Our experience in hundreds of companies is that almost all production operations are characterized by:
· Excess capacity – At least 25% more can be produced with little on no increasein expenses or investments (other than raw materials) · Long lead times – The "touch time" to make a product is typically only a few percent of the totallead time.
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Yet despite the prevalence of these characteristics - most companies, especially those producing to specific customer orders are:· Not reliable suppliers – delivery dates are often missed despiteexcessive inventories and longer than necessary lead times · Prone to out source/off shore/construct new facilitiesin order to lower costs or meet rising demand despite having considerable untapped capacity · Quoting longer than necessary lead times and in the processforegoing an important competitive edge · Accustomed to scrambling at the end of the month, or quarterin order to meet revenue goals The long ignored question is why? Why if it takes only a few minutes, hours or days to physically make a product, do companies quote lead times that are days, weeks or months and still not always deliver on time? Why do they out source production or invest in new facilities when they have the capacity to produce more at essentially the cost of raw materials? Why must the graph of shipments in each reporting period resemble a hockey stick? |
There is a fundamental obstacle that when addressed answers these questions and enables companies to achieve superior performance in product cost, reliability and responsiveness. The root of the problem lies in how production operations are managed.We have assumed that because of size and complexity that we can’t possibly manage manufacturing operations in a holistic fashion. Consequently we break them into smaller, seemingly more manageable pieces. Since most of these pieces are not directly connected to the demand for products, we devise local measurements focused on reducing/controlling costs.Unfortunately by micromanaging local costs we inevitably limit the output of the business and its profitability. Viable Vision’s approach to managing operations is to focus on the longest improvement lever – producing and selling more with minimal increases in expenses and investments. By aligning local measurements with this overall objective a company can eliminate the dysfunctional behaviors that prevent increased sales and improved performance. In addition we employ effective Socratic processes that facilitate this change and accelerate buy-in to new behaviors. Our teams are adept at coaching managers to institute and benefit from these changes.
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Manufacturing Operations SELLING FROM STOCK |
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