The
Newsletter of Lean Manufacturing & Factory Science
20
May
2004
www.strategosinc.com
Capacity,
Inventory and Delivery
How
High Utilization Degrades Delivery Performance
Capacity
utilization and inventory are connected in a peculiar way that is not
readily apparent. In addition, Little's
Law further relates capacity utilization to delivery
performance. In most situations, high utilization
causes a significant deterioration in a factory's ability to deliver
quickly and reliably.
Unaware
of this phenomenon, many firms emphasize
high utilization through their allocation of capital and Return-On-Investment
policies. In some cases, such policies actually increase the necessary
capital investment, rather than conserve it. In other cases, sales and
growth are inhibited.
This
has important implications for strategic thinkers. It affects finance,
manufacturing and marketing strategies. Scheduling
strategy, as a part of Lean Manufacturing, is much more than just Kanban.
It involves the role MRP/ERP, backlog and how manufacturing can
contribute to marketing strategy.
Our
new page, Capacity,
Inventory and Delivery,
explains. In the coming weeks, we will extend these ideas and discuss the
role of variability, Make-To-Order versus Make-To-Stock, backlog and how
to think strategically about these issues.
All
of this is available in our online/onsite
seminar as well. This unique seminar deals with scheduling
from a strategic perspective and helps managers think about
scheduling as it relates to the other strategic areas of finance and
marketing.
Strategos-International
On
another topic, I am proud to announce an affiliation with outstanding
consultants in China, Europe, Australia and North America. as Strategos-International.
Each of these firms brings a unique perspective and skill set. You can
expect to see contributions from them in future Lean Briefings.
All
The Best,
Quarterman
Lee
Please
feel free to forward this Lean Briefing to colleagues or use it in
your publication. We only ask that you do so in its entirety. |
