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Strategy Fundamentals

As illustrated in Figure 1 below, a fundamental strategy problem is determining how to balance competing logistical and resource demands to meet market challenges. Six Sigma and Lean Manufacturing provide powerful tools for improving performance but neither Six Sigma nor Lean provide a comprehensive, scientific approach for designing and controlling manufacturing and supply chain operations logistics.

Creating an operations strategy for your manufacturing or supply chain operations is the process of designing, implementing and controlling the best operations logistics design that meets your company's financial and marketing goals. Operations logistics refers to the combination of capacity(machines and people), inventory, and time (response) that you manage to achieve your company's goals. It's all about designing performance and providing predictive control for your company's future.

The Factory Physics approach, based on the award-winning book, "Factory Physics," provides a comprehensive, practical and scientific understanding of operations strategy through operations logistics design, implementation and control. At Factory Physics Inc., we have worked with hundreds of executives to apply this powerful approach to operations strategy to achieve best possible performance and provide clear direction for existing initiatives and resources. After all, saying, "We're going to implement Six Sigma" or "Reduce waste," does not mean you have an operations strategy.

Figure 1: Competing logistical requirements

Reducing costs often means getting high utilization from expensive equipment. At the same time, increasing sales means being able to respond as quickly as possible which means low utilization of equipment and people - for example, consider the utilization levels of a fire truck. Low inventory levels mean less cash tied up on the shelves but customers want product options and more products means more inventory. Short cycle times contribute to cost reduction and revenue increases but, if your cycle times are too short, you can lose throughput (revenue). There is no one size that fits all. The strategy for Dell, Inc. will be very different from that of US Pipe.

In his book "Execution: The Discipline of Getting Things Done," Larry Bossidy, former CEO of Honeywell, says, "Realism is the heart of execution, but many organizations are full of people who are trying to avoid or shade reality." Without a good understanding of the practical science governing your environment, you leave a large portion of your success to chance and the accompanying tendencies to shade or avoid reality. Typically, companies go from focusing on one objective, e.g. improve customer service, one year to another competing objective, e.g. reduce inventory, the next year. We call this a Whack-a-Mole strategy though some companies call it continuous improvement. In dealing with reality, it is imperative that you determine and implement an optimal, realistic portfolio of:

  • Inventory
  • Capacity
  • Time (lead time and cycle time)
  • Variability

to get the solution that works best for you and your company.

In addition to the natural complexity of business environments discussed above, for over 100 years some development in productivity, quality or technology (information technology in particular) has been promoted at one time or another as "the answer." As illustrated in Figure 2, without the practical science of Factory Physics principles and applications, the gears of productivity, quality and technology spin independently with no or poor coordination. After all, it is our experience that your primary goal as a manager or executive is not to have the leanest facility, or the least variability or the latest scientific theory. You are trying to achieve the best performance possible to meet the performance objectives set by your boss or stockholders. Factory Physics Inc.'s experts work alongside your company's executives and your Six Sigma or Lean experts to apply Factory Physics principles and applications and determine the best strategic options for your business. We work with management and employees to cut through the confusion and noise of competing initiatives and develop the best combination of applications that your company needs to execute your manufacturing strategy. With millions of dollars of savings and increased revenue provided to our clients, the results speak for themselves. Contact Factory Physics Inc. to explore the benefits of the Factory Physics approach for you and your company.

Figure 2: The Factory Physics approach enables your employees to design, implement, and control best possible performance for your business.