Ramlee Ibrahim & Associates

Some years ago, I was the new director of materials for a company suffering from poor inventory accuracy – probably because we had no performance measurements for inventory accuracy and none of the areas generating inventory transactions reported to the director of materials.

One day, while I was in the President’s office, his coveted performance measurement landed on his desk. He rushed through the remainder of our conversation. His eagerness to view these latest reports gave me an idea. Because he wouldn’t surrender control of those areas generating most of the inventory transactions, would he, I asked, consider adding inventory measurements to hold appropriate supervisors accountable? He said yes.

I needed a performance measurement that would identify responsibility even if we didn’t know the cause of the error. I decided to copy a measurement I had heard about. A few days later, the president explained the measurement in a shop floor supervisor meeting.

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Several weeks back, I shared about the physical inventory disaster I witnessed at a Thai company. Here’s how the story ends…

Where to start? To be honest I could have started any place and made progress. However, I decided to start witha an aggressive attitude change about physical inventory. All departments had to embrace ownership. The company issued a letter listing the many failures of the recent inventory requesting suggestions on how to do better. Many people made suggestions; it was obvious there was a nucleus of concerned employees and managers. For the first time in the corporation’s history, operations and finance worked together to solve a problem inherent to both. These people were given tasks such as training and writing procedures and, in doing os, they learned how to work together.

We agreed to take a small physical inventory each month, in a selected area, prior to the “big one”. We started with stores for the first month and added an area each suceeding month. This helped people become trained and confident as accuracy improved. (more…)

Today’s business world is rapidly changing, bringing a combination of danger and opportunity for materials and operations professionals. Every company is looking at the Internet, some eagerly and some because they are frigthened about being left behind. There are success stories about companies changing how they deal with their customers and their suppliers and how they leverage Web technology to bring their employees together.

However, there are other stories in the press about companies putting in ERP systems that took years of effort and millions of dollars, which ended up failing miserably, or companies losing market share and sales because of computer sustem failures. These events have led to a question quietly being asked: Do we need ERP or is there another way? (more…)

Someone recently wanted me to explain the difference between lean manufacturing and kanban. The difference between lean and kanban according to the Toyota Production System (TPS) architect, Ohno-san, is “….TPS is the production method, and the kanban system is the way it is managed.” To see how kanban fits in, consider the evolution of TPS. (more…)

It may surprise some of you that not all manufacturing managers value excellent customer service, low inventory and fast throughput. What we have come to know as the “bad old days” is still embraced like a comfortable security blanket in some companies.

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Recently I was asked, "Why is implementing lean manufacturing such a big deal? The book I just read suggests I only need to worry about managing the value stream. Why is it so hard to do?"

While the effort required to be successful in an enterprise resources planning (ERP) system implementation is fairly well documented and understood, implementing lean and world-class manufacturing is far less clear. To help those who have a strong background using ERP systems, let's draw some analogies common to both types of implementations. (more…)

Enterprise Sales & Operations Panning: Synchronizing Demand,  Supply,  and  Resources for Peak Performance

By George E Palmatier with Colleen Crum

J.Ross Publishing

In their book Enterprise Sales and Operations Planning: Synchronizing Demand, Supply, and Resources for Peak Performance, George Palmatier and Colleen Crum invite the reader into the inner workings of Universal Products Company, a division of Global Products and Services, Inc. The reader gets to spy on a company, discover how it operates and learn abouot senior staff, and see how a company can be turned around. The story is not all rosy. A number of major internal problems surface early on and the book follows the hero, Mark Ryan, as he meets key individuals and faces major issues in his effort to fix those problems.

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System complexity, an inherent element of most modern production and inventory control systems, creates a plethora of direct and indirect costs. To attack complexity, the manager must attack its effects and then identify and address root causes.

Complexity shows up in excess inventory, increased lead times, and falling quality levels (yields). Lets be clear, though, about one thing. There is nothing wrong with complexity if that’s what the customer – especially the critical customer – wants and is willing to pay for. But complexity is wrong if it results from our attempts to satisfy customer demand at all costs or from our tendency to view and attack problems in isolation without drawing on past solutions.

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A young 2nd Lieutenant was in the intelligence center of the Army. The building in which the intelligence center was housed also contained a number of other military units in the intelligence business. The lieutenant’s commander, then a lieutenant colonel, had appointed the young lieutenant a supply officer. A short time later, when the lieutenant colonel was promoted to full colonel, his first official act was to summon the supply officer. He said, “Lieutenant, as you know, my new rank demands a new chair for my desk.” It is true that the chairs of lieutenant colonels and colonels are the same, but the tops are different. The top of a colonel’s chair is four inches wider than that of a light colonel and it has a full leather upholstery instead of PVC.

The lieutenant, saluting smartly said, “Congratulations on your promotion, sir. I anticipated that this might happen and had already put in an order for your chair through channels. But quite a few lieutenant colonels were promoted with you and it looks like three to six months before you get your chair.”

The newly minted colonel was rightly unhappy; he knew that his fellow comrades would not consider him a real colonel until he had all the necessary possessions of his title. The young lieutenant asked, “Sir, are the usual supply rules active?” The colonel, smiling, asserted that they were. The lieutenant departed.

Every piece of furniture in the military has a stock keeping number, usually on a strip of plastic that is glued to the piece of inventory. Every supply officer has a little machine that produces these pieces of plastic. Further, things are moved from place to place in the military in 3 stages:

1. Move the item from the room it is in to the hallway outside the room where it was.
2. Move the item from the hallway outside the room where it was, to the hallway outside the room where it was going.
3. Move the item from the hallway outside the room where it is going, into the room where it belongs.

This process may appear absurd, but it generates 3 simple work orders instead of one complex one. And, you know where the item is located at every stage because of the work order instructions. The lieutenant was now ready for some reconnaissance.

The lieutenant first checked the inventory records of every unit in the building. He was searching for any colonel who was being reassigned, and possessed a colonel’s chair, and whose unit was being reassigned to other quarters in the building. He found two. He further noted the number of days needed to accomplish the 3 steps and found the process would run into different weeks. This meant that the chair would be out in the hall either in front of where it was, or in front of where it was going, for a few days.

On the appointed day, the lieutenant assembled a four-man detail – including himself – wearing fatigues. He had the men pick up the newly minted colonel’s chair and marched it through the hallway to where the desired chair was sitting, along with considerable other furniture. This building was heavily guarded with armed guards approximately every 50 meters, who watched every one who passed with great interest. But remember the following rule of the military: “if something looks right, you don’t see it!” An officer with a work detail carrying a chair (all wearing their security badges around their necks) looks right, so they are invisible.

The lieutenant ordered his men to put the chair down next to the desired one, put them at ease, and informed them that “the smoking lamp is lit”. All of this was happening within view of two guards, armed with M4s. It so happened that a (well-planned-for) changing of the guard took place while the detail was sitting on the chairs. The lieutenant meanwhile had deftly exchanged the plastic number on the desired chair with the number of his colonel’s chair. He then ordered his men back to attention, told them to pick the desired chair, and marched his work detail back to his colonel’s office with the spoils of war.

It is rumored that the 2nd lieutenant was promoted to 1st lieutenant early, for outstanding performance of his duties. And it is rumored that the incoming colonel, in the other unit, was greatly upset to discover that the chair for his new assignment was, no one knew why, not appropriate to his rank. But the that was a problem for his supply officer, wasn’t it?

The kanban system from Japan speeds up production by pulling inventory through the work center instead of pushing up to the next workstation where it sits in a queue. In Japan, kanban systems often use display cards as the visual signal to tell a workstation to begin operations. The idea is to keep the lot sizes as small as possible to optimize use of space and labor. Many plants have adopted the system and modified it to use some appropriate signal rather than a card. An empty space can do for a signal to begin production. In Energizer's version of kanban, for example, components are placed in special containers. An empty container signals the need for more parts.

The illustration below shows a kanban system that pulls inventory all the way through the supply chain, from raw materials to finished goods.