We hear much about how important process reliability is to achieving our objective of lean manufacturing, but what about the sometimes contrary goal of flexible manufacturing? As a consultant in the field of process reliability, I regularly encounter interfunctional conflict regarding the sometimes opposing goals of maintaining flexibility and reliability in the manufacturing process. Sales and marketing wants to offer the customer unlimited customization, both in terms of product and delivery, which increases the variety and frequency with which the manufacturing machines are set up. This, of course, can reduce availability, yield and quality - the three elements of overall equipment effectiveness (OEE), or overall business effectiveness (OBE), as I prefer to view it. Can the goals of flexible and reliable manufacturing coexist? I believe that with foresight and planning, the answer is yes. Let's explore this further.
Generally, machines are most reliable when they are run at constant speed, under constant load and under constant conditions. For example, highway driving yields the longest life from a passenger car - whereas short-tripping, frequently starting and stopping the vehicles, reduces life. Managers and engineers who are responsible for the machines in manufacturing plants prefer to minimize starts, stops and changeovers for the very same reason - starting, stopping and retooling machines reduces process reliability. However, for many manufacturers, customers are expecting to "have it their way," and sales and marketing executives are screaming "give the lady what she wants!" This required flexibility, in terms of the product and its packaging and logistics and distribution, is the new business as usual for many manufacturers.
The desire to turn back the clock to a simpler time when customers simply bought what the manufacturer put in front of them - and be happy to get it - is a pipe dream. In today's environment of micromarketing, the ability to customize the offering to meet the varied desires of different customers isn't just an optional differentiation strategy, it's a necessity for survival. As manufacturing pros, we must adapt. Complaining about the disruptions customization causes will fall on deaf ears if customization is required for the firm to survive and thrive.
The demand or flexibility in manufacturing will increase, not wane. At the same time, we must be reliable. This is a tough challenge. Here are some survival tips to minimize interfunctional conflict between your sales/marketing and manufacturing organizations.
Take plant and equipment design seriously. If you've read my columns, attended my classes or utilized me as a consultant, you've no doubt heard me pontificate about the importance of designing equipment for reliability, maintainability, operability and minimized life cycle cost. A major component of operability is the ease with which you can change over from product to product - design the equipment to enable you to quickly change over from one product to the next and stabilize production as quickly as possible. Also, design in a modular fashion so it's easy to retool the machine for future generations of products. This reduces your time to market for new products. An old approach to equipment design that gets you functional at the lowest up-front cost is likely to yield undesirable results when it's time to make any changes.
Develop risk-adjusted pro forma profit models. Regrettably, sales and marketing organizations often commit to delivering product customization, packaging customization and/or special delivery provisions before checking to see if the production plant and equipment is capable. In some cases, it simply can't be done, which causes you to lose face with your customers when you have to tell them. In other cases, you can deliver on the promises, but when all the costs associated with retooling, setting up, stabilizing production, yield reductions, etc., are added up, it's a losing proposition.
Customization is supposed to give you a competitive advantage, not send you into bankruptcy. Risk-adjusted pro forma profit models (if enforced) require that you evaluate the impact of a decision across all functions that influence the value stream. If you must customize to survive and you can't make a profit doing so with your current plant and equipment, see Item 1.
Lock down your SOPs. Deming taught us that managing variability is the key to quality and reliability. Sorry, folks. For most of us, reducing variability in the products we make and/or the way in which we package them is no longer an option. So, we need to reduce variability by applying single minute exchange of die (SMED) principles and locking down your operational effectiveness by standardizing and documenting your practices, and by supporting your team with training and knowledge logistics solutions that give them the knowledge and information when and where they need it.
Communicate. Most of the waste in organizations does not occur within the functional silos (sales, manufacturing, supply chain, etc.) but in the connection points. Manufacturing acts locally, scheduling a shutdown without considering commitments to your customers. Sales and marketing acts locally, committing products to customers that the manufacturing process can't deliver. Plant and equipment designers act locally, without fully considering how their decisions will influence manufacturing effectiveness or your ability to satisfy customers. Procurement acts locally, purchasing from the low-cost supplier without considering the impact of raw material quality and/or delivery performance. To uncover the waste that's created between functional groups, it must be understood and modeled. This requires communications and leadership to drive the business to act locally but think globally.
Two business imperatives - flexibility and reliability - how can they coexist? For many industries, the answer is simple: You must do so to survive. The demand for customization will increase. The winners will deliver it, and do so reliably. Reliability professionals should not fight the trend toward customization. Rather, do your part to enable it! To the victors come the spoils: increased return on net assets and rising share price.