Manufacturing Theories: Lean Manufacturing

Lean manufacturing is a management philosophy focusing on reduction of the seven wastes to improve overall customer value:

• Transportation
• Inventory
• Motion
• Waiting time
• Over-production
• Processing Itself

Defective Product (Scrap in manufactured products or any type of business.) By eliminating waste (muda), quality is improved, production time and costs are reduced. To solve the problem of waste, Lean Manufacturing has several “tools” at its disposal. These include constant process analysis (kaizen), “pull” production (by means of kanban) and mistake-proofing (poka-yoke).

Key lean manufacturing principles include:

• Pull processing: products are pulled from the consumer end (demand), not pushed from the production end (Supply)
• Perfect first-time quality - quest for zero defects, revealing & solving problems at the source
• Waste minimization – eliminating all activities that do not add value & safety nets, maximize use of scarce resources (capital, people and land)
• Continuous improvement – reducing costs, improving quality, increasing productivity and information sharing
• Flexibility – producing different mixes or greater diversity of products quickly, without sacrificing efficiency at lower volumes of production
• Building and maintaining a long term relationship with suppliers through collaborative risk sharing, cost sharing and information sharing arrangements.

Lean is basically all about getting the right things, to the right place, at the right time, in the right quantity while minimizing waste and being flexible and open to change. More importantly, all of these concepts have to be understood, appreciated, and embraced by the actual employees who build the products and therefore own the processes. The cultural aspect of lean is just as important as the actual tools or methodologies.

Lean thinking got its name from a 1990’s best seller called “The Machine That Changed the World : The Story of Lean Production”. The book chronicles the transitions of automobile manufacturing from craft production to mass production to lean production.

The seminal book “Lean Thinking” by Womack and Jones, introduced five core concepts:

1. Specify value in the eyes of the customer
2. Identify the value stream and eliminate waste
3. Make value flow at the pull of the customer
4. Involve and empower employees
5. Continuously improve in the pursuit of perfection.

Finally, there is an understanding that Toyota’s mentoring process (loosely called Senpai and Kohai relationship) so strongly supported in Japan is one of the ways to foster Lean Thinking up and down the organizational structure. The closest equivalent to Toyota’s mentoring process is the concept of Lean Sensei, which encourages companies, organizations, and teams to seek out outside, third-party “Sensei” that can provide unbiased advice and coaching, as indicated in Jim Womack’s Lean Thinking book.

Experienced kaizen members at Toyota, for example, often bring up the concept of “Senpai, Kohai,” and “Sensei,” because they strongly feel that transferring of Toyota culture down and across the Toyota can only happen when more experienced Toyota Sensei continuously coaches and guides the less experienced lean champions. Unfortunately, most lean practitioners in North America focuses on the tools and methodologies of lean, versus the philosophy and culture of lean. Some exceptions include Shingijitsu Consulting out of Japan, which is made up of ex-Toyota managers, and Lean Sensei International based in North America, which coaches lean through Toyota-style cultural experience.

History

Most of the basic principles of lean manufacturing date back to at least Benjamin Franklin. Poor Richard’s Almanac says of wasted time, “He that idly loses 5s. [shillings] worth of time, loses 5s., and might as prudently throw 5s. into the river.” He added that avoiding unnecessary costs could be more profitable than increasing sales: “A penny saved is two pennies in hand. Save and have.”

Again Franklin’s The Way to Wealth says the following about carrying unnecessary inventory. “You call them goods; but, if you do not take care, they will prove evils to some of you. You expect they will be sold cheap, and, perhaps, they may [be bought] for less than they cost; but, if you have no occasion for them, they must be dear to you. Remember what Poor Richard says, ‘Buy what thou hast no need of, and ere long thou shalt sell thy necessaries.’ In another place he says, ‘Many have been ruined by buying good penny worths’.” Henry Ford cited Franklin as a major influence on his own business practices, which included Just-in-time manufacturing.
The concept of waste being built into jobs and then taken for granted was noticed by motion efficiency expert Frank Gilbreth, who saw that masons bent over to pick up bricks from the ground. The bricklayer was therefore lowering and raising his entire upper body to get a 5 pound (2.3 kg) brick but this inefficiency had been built into the job through long practice. Introduction of a non-stooping scaffold, which delivered the bricks at waist level, allowed masons to work about three times as quickly, and with less effort.

Frederick Winslow Taylor, the father of scientific management, introduced what are now called standardization and best practice deployment: “And whenever a workman proposes an improvement, it should be the policy of the management to make a careful analysis of the new method, and if necessary conduct a series of experiments to determine accurately the relative merit of the new suggestion and of the old standard. And whenever the new method is found to be markedly superior to the old, it should be adopted as the standard for the whole establishment”

Taylor also warned explicitly against cutting piece rates (or, by implication, cutting wages or discharging workers) when efficiency improvements reduce the need for raw labor: “…after a workman has had the price per piece of the work he is doing lowered two or three times as a result of his having worked harder and increased his output, he is likely entirely to lose sight of his employer’s side of the case and become imbued with a grim determination to have no more cuts if soldiering [marking time, just doing what he is told] can prevent it.” This is now a foundation of lean manufacturing, because it is obvious that workers will not drive improvements they think will put them out of work. Shigeo Shingo, the best-known exponent of single-minute exchange of die (SMED) and error-proofing or poka-yoke, cites Principles of Scientific Management as his inspiration.

American industrialists recognized the threat of cheap offshore labor to American workers during the 1910s, and what is now called lean manufacturing was explicitly regarded as a countermeasure. Henry Towne, past President of the American Society of Mechanical Engineers, wrote in the Foreword to Frederick Winslow Taylor’s Shop Management (1911), “We are justly proud of the high wage rates which prevail throughout our country, and jealous of any interference with them by the products of the cheaper labor of other countries. To maintain this condition, to strengthen our control of home markets, and, above all, to broaden our opportunities in foreign markets where we must compete with the products of other industrial nations, we should welcome and encourage every influence tending to increase the efficiency of our productive processes.”

Henry Ford continued this focus on waste whilst developing his mass assembly manufacturing system. “Ford’s success has startled the country, almost the world, financially, industrially, mechanically. It exhibits in higher degree than most persons would have thought possible the seemingly contradictory requirements of true efficiency, which are: constant increase of quality, great increase of pay to the workers, repeated reduction in cost to the consumer. And with these appears, as at once cause and effect, an absolutely incredible enlargement of output reaching something like one hundred fold in less than ten years, and an enormous profit to the manufacturer.”

Ford (1922, My Life and Work) provided a single-paragraph description that encompasses the entire concept of waste. “I believe that the average farmer puts to a really useful purpose only about 5%. of the energy he expends. … Not only is everything done by hand, but seldom is a thought given to a logical arrangement. A farmer doing his chores will walk up and down a rickety ladder a dozen times. He will carry water for years instead of putting in a few lengths of pipe. His whole idea, when there is extra work to do, is to hire extra men. He thinks of putting money into improvements as an expense. … It is waste motion— waste effort— that makes farm prices high and profits low.” Poor arrangement of the workplace-- a major focus of the modern kaizen-- and doing a job inefficiently out of habit-- are major forms of waste even in modern workplaces.

Ford also pointed out how easy it was to overlook material waste. As described by Harry Bennett (1951, Ford: We Never Called Him Henry), “One day when Mr. Ford and I were together he spotted some rust in the slag that ballasted the right of way of the D. T. & I [railroad]. This slag had been dumped there from our own furnaces. ‘You know,’ Mr. Ford said to me, ‘there’s iron in that slag. You make the crane crews who put it out there sort it over, and take it back to the plant.’“ In other words, Ford saw the rust and realized that the steel plant was not recovering all of the iron.

Design for Manufacture (DFM) also is a Ford concept. Per My Life and Work, “Start with an article that suits and then study to find some way of eliminating the entirely useless parts. This applies to everything— a shoe, a dress, a house, a piece of machinery, a railroad, a steamship, an airplane. As we cut out useless parts and simplify necessary ones, we also cut down the cost of making. ...But also it is to be remembered that all the parts are designed so that they can be most easily made.” The same reference describes Just in time manufacturing very explicitly.
However Ford’s mass production system failed to incorporate the notion of Pull and thus often suffered from over production.

It was with Taiichi Ohno at Toyota that all these themes came together and Lean Production finally took form. Levels of demand in the Post War economy of Japan were low and the focus of mass production on lowest cost per item via economies of scale had little relevance. Having visited and seen supermarkets in the US Taiichi Ohno recognized the scheduling of work should not be driven by sales or production targets but by actual sales. Given the financial situation during this period over production was not an option and thus the notion of Pull (rather than sales target driven Push) came to underpin production scheduling. Norman Bodek wrote the following in his foreword to a reprint of Ford’s (1926) Today and Tomorrow: “I was first introduced to the concepts of just-in-time (JIT) and the Toyota production system in 1980. Subsequently I had the opportunity to witness its actual application at Toyota on one of our numerous Japanese study missions. There I met Mr. Taiichi Ohno, the system’s creator. When bombarded with questions from our group on what inspired his thinking, he just laughed and said he learned it all from Henry Ford’s book.”

Types of waste

Toyota defined seven categories or types of waste. Technically, there are now nine ‘deadly wastes’:

• Overproduction (making more than what is needed, or making it earlier than needed) .
• Transportation (moving products farther than is minimally required)
• Waiting (products waiting on the next production step, or people waiting for work to do)
• Inventory (having more inventory than is minimally required) NOTE: this is the deadliest type of waste -- excess inventory
• Motion (people moving or walking more than minimally required)
• Processing itself (relates to standalone processes that are not linked to upstream or downstream processes)
• Defects (the effort involved in inspecting for and fixing defects)
• Safety (unsafe work areas creates lost work hours and expenses)

Information (age of electronic information and enterprise resource planning systems (ERP) requires current / correct master data details)

System engineering

Lean is about more than just cutting costs in the factory. One crucial insight is that most costs are assigned when a product is designed. Often an engineer will specify familiar, safe materials and processes rather than inexpensive, efficient ones. This reduces project risk, that is, the cost to the engineer, while increasing financial risks, and decreasing profits. Good organizations develop and review checklists to review product designs.

Companies must often look beyond the shop-floor to find opportunities for improving overall company cost and performance. At the system engineering level, requirements are reviewed with marketing and customer representatives to eliminate costly requirements. Shared modules may be developed, such as multipurpose power-supplies or shared mechanical components or fasteners. Requirements are assigned to the cheapest discipline. For example, adjustments may be moved into software, and measurements away from a mechanical solution to an electronic solution. Another approach is to choose connection or power-transport methods that are cheap or that used standardized components that become available in a competitive market.

Lean software engineering

Lean and Toyota Production System (TPS) concepts have inspired the successful Agile software development methodologies Scrum and Extreme Programming (XP). These software development methodologies apply the “lean” concept to the architecture, design, and construction/implementation software development activities. In a separate but related effort, Lean software development has adapted TPS to the management and measurement of software development projects.

Manufacturing Theories: Theory of constraints

(TOC) is an overall management philosophy that aims to continually achieve more of the goal of a system. If that system is a for-profit business, then the goal becomes one of making more money, in the present as well as in the future.
According to TOC, every profit making organization must have at least one constraint, which prevents the system from achieving a higher performance relative to its goal (Liebig’s Law of the Minimum). These constraints can be broadly classified as internal resource constraint, market constraint and policy constraint. In order to manage the performance of the system, these constraints must be identified and treated carefully.

Implementing TOC

Theory of Constraints is based on the premise that the rate of revenue generation is limited by at least one constraining process (i.e. a bottleneck). Only by increasing throughput (production rate) at the bottleneck process can overall throughput be increased.

The key steps in implementing an effective TOC approach are:

• Identify the constraint (bottlenecks are identified by inventory pooling before the process)
• Exploit the constraint (increase its utilization and efficiency)
• Subordinate all other processes to the constraint process (other processes serve the bottleneck)
• Elevate the constraint (if required, permanently increase bottleneck capacity)
• Rinse and repeat (after taking action, the bottleneck may have shifted or require further attention)

The TOC Analysis Tools

The analysis processes are a set of tools to help managers walk through the steps of initiating and implementing a project. When used in a logical flow, the Analysis Tools help walk through a buy-in process:

• Gain agreement on the problem
• Gain agreement on the direction for a solution
• Gain agreement that the solution solves the problem
• Agree to overcome any potential negative ramifications
• Agree to overcome any obstacles to implementation
• TOC practitioners sometimes refer to these in the negative as working through layers of resistance to a change.

The analysis process, as codified by Goldratt and others:

• Current Reality Tree (CRT, similar to the current state map used by many organizations) - evaluates the network of cause-effect relations between the undesirable effects (UDE’s, also known as gap elements) and helps to pinpoint the root cause(s) of most of the undesirable effects.
• Evaporating Cloud (conflict resolution diagram or CRD) - solves conflicts that usually perpetuate the causes for an undesirable situation.
• Core Conflict Cloud (CCC) - A combination of conflict clouds based several UDE’s. Looking for deeper conflicts that create the undesirable effects.
• Future Reality Tree (FRT, similar to a future state map) - Once some actions (injections) are chosen (not necessarily detailed) to solve the root cause(s) uncovered in the CRT and to resolve the conflict in the CRD the FRT shows the future states of the system and helps to identify possible negative outcomes of the changes (Negative Branches) and to prune them before implementing the changes.
• Negative Branch Reservations (NBR) - Identify potential negative ramifications of any action (such as an injection, or a half-baked idea). The goal of the NBR is to understand the causal path between the action and negative ramifications so that the negative effect can be “trimmed.”
• Positive Reinforcement Loop (PRL) - Desired effect (DE) presented in FRT amplifies intermediate objective (IO) that is earlier (lower) in the tree. While intermediate objective is strengthened it positively affects this DE. Finding out PRLs makes FRT more sustaining.
• Prerequisite Tree (PRT) - states that all of the intermediate objectives necessary to carry out an action chosen and the obstacles that will be overcome in the process.
• Transition Tree (TT) - describes in detail the action that will lead to the fulfillment of a plan to implement changes (outlined on a PRT or not).
• Strategy & Tactics (S&T) - the overall project plan and metrics that will lead to a successful implementation and the ongoing loop through POOGI.

Throughput Accounting

Throughput accounting refers to a specific accounting methodology linked to the Theory of Constraints. Throughput accounting suggests that one examine the impact of investments and operational changes in terms of the impact on the throughput of the business. It is an alternative to Cost accounting.

Application-specific TOC solutions

Operations

Within manufacturing operations and operations management, the solution seeks to pull materials through the system, rather than push them into the system.

Drum-Buffer-Rope

A fundamental principle of “Synchronous Manufacturing” can be illustrated by the example of an auditorium with one exit. If the people are instructed to leave the auditorium, the rate at which people can walk through the door is the same, regardless of the number of people in the auditorium. The particulars of the doorway set the rate (#/time) at which people can exit. The capacity of a factory to produce a certain number of products in a certain period of time is likened to the number of people who can walk through the doorway in a given period of time. The inventory of materials in process is like the number of people in the auditorium.
The realization that the inventory on hand is not simply related to the factory output is one of the most basic and important underpinnings of SM.
For reference, you can read Chapter 37 of “The Goal”, where DBR is summarized.

Plant Types

There are four primary types of plants in the TOC lexicon. Draw the flow of material from the bottom of a page to the top, and you get the four types. They specify the general flow of materials through a system, and they provide some hints about where to look for typical problems. The four types can be combined in many ways in larger facilities.

• I-Plant: Material flows in a sequence, such as in an assembly line. The primary work is done in a straight sequence of events. The constraint is the slowest operation.
• A-Plant: The general flow of material is many-to-one, such as in a plant where many sub-assemblies converge for a final assembly. The primary problem in A-plants is in synchronizing the converging lines so that each supplies the final assembly point at the right time.
• V-Plant: The general flow of material is one-to-many, such as a plant that takes one raw material and can make many final products. Classic examples are meat rendering plants or a steel manufacturer. The primary problem in V-plants is “stealing” where one operation (A) at a diverging point “steals” materials from the other (B). Once it has processed through A, it cannot come back and run through B without significant rework.
• T-Plant: The general flow is that of an I (or multiple lines), which then split into many assemblies. Most manufactured parts are used in multiple assemblies and nearly all assemblies use multiple parts. Customized devices, such as computers, are good examples. T-plants suffer from both synchronization problems of A-plants (parts aren’t all available for an assembly) and the stealing problems of V-plants (one assembly steals parts that could have been used in another).

JDE Forecasting Demystified

The Global Marketplace has been set for many years. Expectations are high and new opportunities are hard to come by. Since FedEx raised Customer expectation by delivering shipments the next day, modern manufacturers and distributors have been trying to play catch up with the supply expectation. The Management buzzwords of today are lean manufacturing, or Kaizen, or Demand Manufacturing, or Just in Time, or the Balanced Value Stream. What industry initiative that you have implemented in the last five years has actually paid dividends to the investors? Also, what does any of this mean to a Front line Vice President or Director that has to field calls from their largest customer about substandard performance? ERP Systems, the likes of JDEdwards, PeopleSoft, SAP, etc have promised ‘nirvana’ but rarely delivered the goods.

We tend to look at this as a complex problem when really there is an obvious solution; in fact the solution is so obvious that many have failed to see it. Let me share a personal experience that I had several years ago that changed my perspective on modern Executive Management. A few years ago while attending a Total Quality training class the group I was tasked with was given some simple problem to overcome. The exercise required the group to plan, organize, staff, direct and control the particular exercise and we were judged upon our result. I remember for the first time in my career I decided that we must spend a disproportionate amount of time on the planning of the event, so that when execution was required, we would already know the outcome. Our group was given an hour to accomplish the task, and I remember fighting to keep everyone focused on the plan for 40 minutes. Other members of the group were worried because our ‘competitors’ were already ahead of us.

I stuck to my intuition that day, and we only had 20 minutes for the final phases of the project, but they went like a precision clock work and we exceeded our nearest rival by about a margin of fifty percent. I had known this all along, but really had not allowed the process to be so transparent, that I started to think quite differently about planning and Enterprise Resource Planning Systems.

What drives an ERP System? The input! How accurate, how much time, how much evaluation is put into the input, can result in tremendous down stream benefits to any organization.

I want to quote a passage on Page 100 of BUSINESS @ THE SPEED OF THOUGHT by Bill Gates where he says,

"Machines generally reach customers within three to five days of order. Dell's business model is based upon the evils of inventory. The more Dell can reduce its inventory, the more it frees up working capital to drive into other revenue generating activities. Dell's reduced inventory translates to a savings of hundreds of millions of dollars in assets. At the same time, the requirement for greater customer service means that you never want to be out of stock either. Only information technology can provide the means to balance these needs. 'Physical assets used to be a defining advantage,' Michael says. 'Now they're a liability. The closer you get to perfect information about demand, the closer you can get to zero inventory. It’s a simple formula. More inventory means less information, more information means less inventory. We're trading physical assets for information.”

So what is so hard about doing this? Many of the large companies leveraged their buying power with their vendors to decrease the amount of physical inventory sitting in an investment state. In fact we can remember the fiasco created by Cisco Systems with their entire supply chain when in their arrogance they signed commitments to take inventory should their demand subside. We now deal in Global Economies and we can’t commit our organizations to the almost bankrupting policies that Cisco and Dell’s models provide. It is nice that Michael Dell only has four days of inventory, but what are his vendors sitting on and what will they do with inventory if they guess wrong?

Also, Bill and Michael are stating the industry standards as they were prior to the national Dock Strike on the West Coast of the US in the early 21st Century. The inability to receive product from Asia into the US almost cripples US manufacturers and distributors. So, what can we do and what are our options?

Bill Gates actually hit it on the head in his book; 'Michael says. 'Now they're a liability. The closer you get to perfect information about demand, the closer you can get to zero inventory. It’s a simple formula. More inventory means less information, more information means less inventory. We're trading physical assets for information.’ But how do we leverage this ‘information’ that Mr. Gates and Mr. Dell refer to? It is simple, build a model which allows a top level view of data and allows drill down to the transaction that is causing the problem. Present it to the right person in the right place at the right time and you have the ‘nirvana’ promised years ago by the ‘paperless’ computer systems.

Utilizing Q4Bis Analysis Tools and Standard JDEdwards Planning, you can move your organization closer to the model predicated by Bill Gates. More Information and Less Inventory. What do you have to loose, other than your business, why not give us a try and we will prove it to you?
Forecast to Sales Analysis
Have you ever wondered how your forecast is scoring compared to actual sales?
What would it mean to your business if you could receive instant feedback to supplied sales data?
What is the value of scoring your customers on their forecast accuracy when it comes time for their vendor analysis of your current supply chain organization?

The intricate mysteries of forecasting at the Customer/Sold To/Part Number level is revealed utilizing Q4Bis Forecast Analysis tool. Imagine being able to drill down on a missing forecast. What does it mean to customer fulfillment if you can find inaccuracies with customer supplied information before it becomes a fulfillment inaccuracy.

Managing large databases and high customer expectations is causing more and more pressure on organizations to fulfill and to satisfy demanding customers beyond any limits that were placed in the twentieth century. By utilizing a simple to use and highly accurate scorecard, you can have the visibility of on line analytical processing allowing your organization to drill down to the transaction level and provide immediate feedback to either you internal organization or to assist your customers in supplying a much more meaningful and accurate forecast.

Getting the most out of your JD Edwards Installation

The Problem

I hope to stop the insanity of your day to day responsibilities and in the process de–mystify your enterprise system as it relates to the human beings that interact with the computer software and do their best for your company. Even if you feel you have a well running enterprise there may be something that you can gain from the contents of this book. Have you ever wondered about some of the following statements during the course of an average day on the job?

· why can’t I get my orders out the door on time?
· we are a product driven company and can’t get our products out the door?
· we’ve implemented JDE and yet still don’t have visibility into our shop floor
· our sales orders at an all time high and our on–time deliveries at an all time low
· our inventory is going up and our on–time deliveries going down
· how do we know when someone has fat fingers while entering an order

It is the intention of this white paper is to help you to gain visibility to the details of your enterprise system….to see the proverbial needle in the haystack. Most managers today view their enterprise system as a black box, some dark hole where information goes in and then comes out somewhere else in the enterprise cosmos. Most modern Executives do not thoroughly understand how their Enterprise System functions, they simply want their employees to stop complaining and do their jobs. A modern ERP System which is properly installed may seem to some members of an organization to cause them more work; however, if the entire process is examined you will usually find that the overall efficiency of the organization has been increased or downstream tasks have been completely eliminated.

I have experienced, first hand, countless installations of software that were completely botched by the installation consultants, by trying to make some pet employee happy, or trying to satisfy the individual workers who interface with the software demanding that they have some unnecessary information or process and not educating the enterprise on the overall health and information flow required to maximize the benefit of the software installation.

JD Edwards, as it is for the other Large Enterprise Software Packages like PeopleSoft and Oracle, is like the nervous system of a human being, information flows upon predetermined routes and if this happens unhindered by the surrounding environment, the entire organization will function correctly. This means that the more you tamper with the core process imbedded in the software the more problems you will have in running your business smoothly. Modern Executives believe their business’ are unique, and that somehow they are special and require custom programming and modification. Although this may be gratifying to the ego of the founding members of the organization, it really doesn’t stand up to common sense or scrutiny.
Software companies, like Oracle and Microsoft, spend an enormous amount of their profits on research and development. It is easy to throw stones at them because we might think that we know how something “should” work; however, if we stop and think of software as a living organism that needs to function in a precise manner, then we can get over our own resistance which ultimately is causing our organization all of its problems. Why not view the software with an open mind? Why not think that perhaps the ten thousand engineers that developed the interfaces might have actually known what they were doing? Why not try and understand the software as well as we understand our businesses? After all, it is usually one of the largest investments that any large enterprise will ever make.

Too many enterprises are implementing software without understanding its full functionality. Too many consultants are just trying to make users happy and not doing their job. Now you are probably wondering what that means, so I will spell it out plainly. Your organization made a commitment to implement JD Edwards to save your company money. Why else would some sane person commit to spending millions of dollars only to end up with the same inefficient system as was in place before the implementation? This is the problem is it not? Think about it for a moment.

The Process

Are you thinking about it?.............
The consultants come in to assist you in your implementation. They interview the employees and assess the situation. Each employee can only see their own sphere of influence and their own individual processes. Each employee is only concerned with the job that they have and probably only understand that job from the way they have always performed their job. Eventually, the consultants try to make the employees happy because if they don’t the employee will go to management and complain that they now have more work than ever before. They will say things like, the old system handled this much better than this new system. The executives, who can’t be bothered to understand the biggest investment their company has ever made, say to the consultants that this is not acceptable. My accounts payable clerk can’t possibly be expected to do that.

At this point the implementation has failed and any hope even for moderate success is doomed. The consultant, who doesn’t want to lose this great opportunity for income, will find a way to make each of the employees happy at the expense of the overall organism called ERP. The consultant will try to modify or shortcut some process which may be vital for the correct information to flow to the rest of the organization and they may not even know they are doing this.

The Implementation

Look, I want to be perfectly frank with you. All ERP software works fine. But time and time again I have seen failed implementations because some of the lowest paid employees in an organization have complained about the “complexity” of the system. The investment was made for R.O.I. But what is R.O.I. Also, consulting companies now talk about T.C.O. So are you gaining R.O.I. and reducing T.C.O. from your E.R.P? This is the insanity of our world today. Too many T.L.A.’s (three letter acronyms) and too many people nodding their heads and saying yes!
How much overhead will be reduced by implementing this software? Of each department interacting with the software, which will be affected the most? What processes will be eliminated my implementing this new software? These are questions that get lost during the implementation, yet if they aren’t held as goals they will never be accomplished. It is not popular to perform cost cutting on the ‘indirect labor’ force; especially if the consultants are asking for their assistance in doing the implementation.

I once entered into the complexity issue with the Vice President of Marketing and Sales in a very large Manufacturing and Distribution Company. At some point in the interview process he said to me that he felt the enterprise system should present the information simply to his team members. He said, “It should be like at Burger King, we should have a picture to select instead of these complex numbers and then everyone’s job will be easier.” So I asked him how he expected to present the one hundred and seventy seven thousand pictures (which was the size of the Item Master at the time) in a concise and easy to understand set of different pictures to his team members.

· The Sales Department wants more finished goods.
· Finance want you to reduce inventory.
· Production wants more raw materials.
· Purchasing can’t seem to support manufacturing.
· Inventory accuracy is causing everyone problems.
· Customers are complaining about deliveries.
· Planning and sales are fighting over the forecast.
· Vendors are complaining that your aren’t giving them enough lead time.
· Work orders are never finished on time. Obsolete inventory is increasing.

Modern Manufacturing Theory

In 1990, Eliyahu M Goldratt[i], the famed Israel–born physicist turned business consultant, and the originator of the theory of constraints published a book titled The Haystack Syndrome : Sifting Information Out of the Data Ocean[ii]. Early in the book Eli says something rather profound about modern computer systems, “I think we should cut out the middleman and hook up the computer printers directly to the paper shredders.” This book, along with others who picked up on Eli’s simple idea gave birth to the idea’s of “paperless environments” as well as modern Business Intelligence software.

Effectively managing enterprise operations in today’s demanding business environment is a difficult task. Market demands require flexible agility to deliver perceived value in the eyes of the customer. Economic pressures call for continual process improvement in the seemingly elusive goals of the “lean enterprise,” “constraints balancing” or “just in time inventory.” We live in an era which has been consumed by “TLA’s” (three letter acronyms) and competing management theories. While working for TRW Automotive I began to call this phenomenon “buzzword du jour” as the theories and policy changes were coming faster than their implementations could be completed. The real question we should be asking ourselves is, “what value will this particular change or enhancement deliver to the bottom line of the organization. Whether production is driven from discrete work orders, repetitive schedules or demand pull signals, any disruption in the execution process is extremely costly. In the two short years at TRW I estimate that top management spent about seventy percent of their time in meetings talking about new programs and only thirty percent of their time in direct work with the staff and the tasks of running the business.

When the inevitable finally occurs and either customer demand changes, equipment malfunctions, or material shortages occur, it is important that every key person in the organization has immediate access to “real time” information allowing the free flow of decisions or changes to be communicated across the entire enterprise. Meeting these and other challenges requires only to embrace the very basics of enterprise execution theories that will allow every organization to leverage real–time information and ensure goods or services are delivered according to stringent customer demands. These basic theories address all of the challenges any enterprise organization faces today, and once completely embraced by the entire enterprise they also empower you to configure new processes as you continuously improve operations through the principals of Lean Execution® which have evolved through my own introspection during my thirty year involvement with Manufacturing and Distribution.

The Results

On page one hundred of Business @ the Speed of Thought[iii], which was written by Bill Gates, he says; “Machines generally reach customers within three to five days of order. Dell’s business model is based upon the evils of inventory. The more Dell can reduce its inventory, the more it frees up working capital to drive into other revenue generating activities. Dell’s reduced inventory translates to a savings of hundreds of millions of dollars in assets. At the same time, the requirement for greater customer service means that you never want to be out of stock either. Only information technology can provide the means to balance these needs. ‘Physical assets used to be a defining advantage,’ Michael says. ‘Now they’re a liability. The closer you get to perfect information about demand, the closer you can get to zero inventory. It’s a simple formula. More inventory means less information, more information means less inventory. We’re trading physical assets for information.’”

Utilizing core Oracle JD Edwards Enterprise Software along with Lean Execution® methodology will empower any enterprise to create a “paperless and information rich environment,” and gain immediate benefits such as:

· Reduction of enterprise cycle times
· Reduction of order lead time
· Reduction of indirect labor costs
· Reduction of direct labor costs
· Reduction of data entry time
· Reduction or elimination of paperwork
· Reduction of work in process (WIP) inventory
· Increase in equipment utilization

Implementing Lean Execution® techniques enables critical information to flow throughout the organization—including the often–forgotten areas of distribution and manufacturing. This requires that the information is within the control of those who actually produce your goods or services. “Paperless and information rich environments” have been created for a few forward–thinking enterprises, producing dramatic gains throughout their entire organizations. Now you will learn how the same results are possible for your enterprise.

for more information:

Lean Execution and Lean Enterprise Intelligence System for JD Edwards Enterprise Software
[i] Eliyahu M. Goldratt (1948 – ) is an Israeli physicist turned business consultant, the originator of the theory of constraints (abbreviation: TOC). He claims that he applied the scientific method to resolving some permanent problems of organizations. He obtained his Bachelor of Science degree from Tel Aviv University and his Masters of Science, and Doctorate of Philosophy from Bar–Ilan University. He is the author of several business novels: The Goal introduces TOC's accounting and process improvement aspects; it is considered by some to be an important work on the topic of focused performance improvement. It was followed by: It's Not Luck applies TOC to marketing. ritical Chain applies TOC to project management and illustrates the so–called Critical Chain theory, and Necessary But Not Sufficient applies TOC to Enterprise resource planning (ER) and operations software.

[ii] The Haystack Syndrome: Sifting Information Out of the Data Ocean by Eliyahu M. Goldratt, Hardcover: 262 pages, Publisher: North River Press (January 1991), Language: English, ISBN–10: 0884270890, ISBN–13: 978–0884270898

[iii] Business @ the Speed of Thought: Succeeding in the Digital Economy (Paperback) by Bill Gates, Paperback: 496 pages, Publisher: Business Plus; 1st edition (May 15, 2000), Language: English, ISBN–10: 0446675962

Methods of Reducing Paperwork

In 1990, Eliyahu M Goldratt, the famed Israel-born physicist turned business consultant, and the originator of the theory of constraints published a book titled The haystack syndrome : sifting information out of the data ocean. Early in the book Eli says something rather profound about modern computer systems, “I think we should cut out the middleman and hook up the computer printers directly to the paper shredders.” This book, along with others who picked up on Eli’s simple idea gave birth to the idea’s of “paperless environments” as well as modern Business Intelligence software.

Effectively managing production operations in today’s demanding business environment is a difficult task. Market demands require flexible agility to deliver perceived value in the eyes of the customer. Economic pressures call for continual process improvement in the seemingly elusive goals of “lean manufacturing,” “constraints scheduling” and “just in time inventory.” We live in an era which is consumed by “TLA’s” (three letter acronyms) and competing management theories. While working for TRW Automotive I began to call this “buzzword du jour” as the theories and policy changes were coming faster than their implementations could be completed. The real question we should be asking ourselves is, “what value will this particular change or enhancement deliver to the bottom line of the organization. Whether production is driven from discrete work orders, repetitive schedules or demand pull signals, any disruption in the execution process is extremely costly.

When the inevitable finally occurs and either the demand changes, equipment malfunctions, or material shortages occur, it is important that every key person in the organization has immediate access to “real time” information allowing the free flow of decisions or changes to be communicated across the entire enterprise. Meeting these and other challenges requires only to embrace the very basics of manufacturing execution theories that will allow the organization to leverage real-time information and ensure products are produced according to stringent customer demands. These basic theories address all of the challenges any manufacturing organization faces today, and once completed embraced by the entire enterprise they also empower you to configure new processes as you continuously improve operations through the principals of Lean Execution™ developed by me over the past 27 years.

On Page 100 of Business @ the Speed of Thought, which was written by Bill Gates, he says, "Machines generally reach customers within three to five days of order. Dell’s business model is based upon the evils of inventory. The more Dell can reduce its inventory, the more it frees up working capital to drive into other revenue generating activities. Dell’s reduced inventory translates to a savings of hundreds of millions of dollars in assets. At the same time, the requirement for greater customer service means that you never want to be out of stock either. Only information technology can provide the means to balance these needs. ‘Physical assets used to be a defining advantage,’ Michael says. ‘Now they’re a liability. The closer you get to perfect information about demand, the closer you can get to zero inventory. It’s a simple formula. More inventory means less information, more information means less inventory. We’re trading physical assets for information.’”

Utilizing core JDEdwards EnterpriseOne Manufacturing software along with our Lean Execution™ methods can empower any manufacturer to create a “paperless shop floor,” and gain immediate benefits such as:

• Reduction of manufacturing cycle time
• Reduction of order lead time
• Reduction of direct labor costs
• Reduction of data entry time
• Reduction or elimination of paperwork
• Reduction of work in process (WIP) inventory
• Increase in machine utilization

Implementing Lean Execution™ techniques enables critical information to flow throughout the organization—including the often-forgotten areas of production and manufacturing. This requires that the information is within the control of those who actually produce your products. “Paperless shop floors” have been created for a few forward-thinking manufacturers, producing dramatic gains throughout their entire organizations. Now you will learn how the same results are possible for your company.

The Foundations of Lean Execution™

Quite simply, by introducing actionable, real-time information into the traditionally paper-based shop floor environment, it is possible to create a “paperless shop floor.” This real-time control empowers the organization to streamline production and ensure products are delivered according to stringent customer demands. Lean Execution™ allows manufacturers the flexibility to address the key business processes and functional activities that provide them with the quickest time to benefit. All of this can be implemented by simply using the basic Manufacturing Suite of software from JDEdwards.

The simple utilization of Operation Sequence and Operation Status Codes can leverage the existing Work With Operation Dispatch solution to control the event-driven notification and workflow and to provide proactive visibility into disruptions in the manufacturing process. Work instructions are communicated to workers in real time using a media object attachment to the routing master file. This approach replaces error-prone, paper-based communication with a streamlined, “paperless shop floor” environment.

Lean Execution™ With JDEdwards EnterpriseOne
Fast Cost Reduction

Now that we have defined how proper implementation of JDE Manufacturing can create “paperless shop floor environments,” the next question to be answered is “What benefits will my company realize?”

Increased Levels of On-Time and Complete Shipments

JDEdwards provides the workflow, visibility and event notification required to ensure that manufacturing is meeting customer demand. Additionally, these systems reduce non value-added activity, increase data accuracy and provide the other ERP systems with the real-time data needed to maximize processing, planning and scheduling activities. This results in the ability to increase levels of on-time and complete shipments.

As stated earlier Lean Execution™ requires putting information in the hands of those who actually handle the inventory or produce the products. This is sometimes the biggest stumbling block in entire process because managers and supervisors don’t readily believe that the production and manufacturing workers can be trained to input the correct data. However, once this hurdle is overcome the solution creates a paperless environment by giving operators instant access to work instructions and CAD drawings, so they always have the up to date information required to build products that meet the customers’ demanding specifications.

More importantly, having information about events as they occur allows decision makers to easily identify or prevent potential problems and bottlenecks. For example, the planners may already be well aware of the problems created by shortages of key manufacturing materials that may halt production, shipments arriving late or incomplete, and backorders; however, with a few properly implemented steps the material pickers, the purchasing agent and the receiving department can also be updated as to the status of critical parts. Additionally, the lack of visibility into machines operating outside control limits or processes not meeting appropriate yields can ultimately delay customer shipments. With JDE Workflow, real-time notification of events and exceptions—often before they occur—allows the appropriate parties to take proactive steps to manage them. This will likely save the cost of expediting shipments that were unexpectedly completed late. Ultimately, the ability to keep costs in check, production and shipments on schedule, and customers happy increases bottom line profitability.

By streamlining data acquisition and execution for operators on the factory floor, it is possible to create efficient processes that consist only of the value-added activities. The result is a lean and efficient environment. Additional investment can be made into mobile data terminals for material handlers or strategically placed WIP stations or terminals on the factory floor, workers can then be directed to perform tasks and collect information in real time using either third party tools or standard user interfaces. In addition, new employee training time is significantly reduced, while workflow notification and electronic communication provides crosstraining opportunities within the existing workforce. Lean Execution™ solutions empower JDEdwards EnterpriseOne users to easily implement and manage truly paperless manufacturing processes.
Strengthened Decision-Making Based on Real-Time Information A Lean Execution™ implementation supplies key personnel the decision-making data necessary to optimize manufacturing performance. From any location, the technology will allow managers to make immediate decisions on staffing, maximize labor efficiencies, control order fulfillment and monitor machine utilization. Real-time performance reports such as actual versus plan, production unit cycle time, production efficiency, scrap and downtime by machine or work cell can all be specifically configured for up-to-the-second review and action by management.

When unexpected events do occur, Lean Execution™ also helps managers and lead operators take proactive steps by utilizing your customized set of alerts and alarms. Using workflow notification key individuals are notified about potential issues—before they become costly problems. Manufacturing execution solutions do not stop after notifying operators of unexpected events. This type of system pairs event notification with appropriate workflow so operators take suitable resolution steps in real time without affecting operations.

Production order status and work in process are readily accessible via standard JDE Video Screens. This can also empower managers and other decision-makers to communicate information electronically to customers and other manufacturing locations. Ease of information access also smoothes the daily transition between shift managers and provides updated statistics on key performance indicators (KPI), wellness views and other important reports.

Continuous Improvement: “Adapt or Fail” Manufacturers have learned that staying competitive means they must continually improve their processes or face the consequences of technological Darwinism—”adapt or fail.” Whether the initiative is Six Sigma or kaizen, traditional implementations of JDEdwards EnterpriseOne are nearly impossible to change when needed because they require expensive, time consuming custom code-based modifications. Because of this, the software becomes a barrier to operational excellence. This usually means that improvement opportunities are lost, or work-arounds are developed to accomplish tasks outside of the system. This results in poor data accuracy.

A new approach, called Lean Execution™ has recently been compiled on the belief that software should be a catalyst for continuous improvement—not an obstacle. Our implementation methodology not only provides a detailed view of plant history, but the flexible architecture also allows reconfiguration quickly and cost-effectively as the manufacturing operations change and evolve. We also provide the Business Intelligence needed to make fact-based decisions and adapt as manufacturing operations improve over time.

Gain More Value from your JD Edwards ERP System

Your JD Edwards ERP System is like the nervous system of a human being, information flows upon predetermined routes and if this happens unhindered by the surrounding environment, the entire organization will function correctly. This means that the more you tamper with the core process embedded in the software the more problems you will have in running your business smoothly. Modern Executives believe their business' are unique, and that somehow they are special and require custom programming and modification. Although this may be gratifying to the ego of the founding members of the organization, it really doesn't stand up to common sense or scrutiny.

Customized views for JD Edwards that allow the decision makers in any organization to find the piece of information they need when they need it. For the first time there is a real world solution ready for installation and rapid deployment. The views are customizable but should meet the requirements of even the most discerning front line manager or supervisor.

JDE Business Intelligence for Financials
JDE Business Intelligence for Sales
JDE Business Intelligence for S & OP
JDE Business Intelligence for Material Control
JDE Business Intelligence for Production Planning
JDE Business Intelligence for Shop Floor Control
JDE Business Intelligence for Purchasing
JDE Business Intelligence for Distribution
JDE Business Intelligence for Inventory

As an Oracle Partner, InSyncTechnologies, LLC has a strong JD Edwards practice and has provided implementation, upgrade and maintenance solutions across the various modules of Manufacturing & Supply Chain Management, Customer Relationship Management, Financial Management, and Human Capital Management on current versions of JD Edwards EnterpriseOne and World for numerous clients. We have team members who can handle all of your Infrastructure Support, from IBM i-Series, to Microsoft Windows, to Unix, we have the resources to do it right. We offer implementations, training, customization, offshore development, application maintenance, upgrades and support