The astronaut in the picture is where he or she is (and successfully back from there) because of thorough application of many branches of science. Science is the process of making an observation or a hypothesis about the behavior of nature and then relentlessly testing that observation to see if it holds up as a predictive law. Science is also the knowledge gained through that process.
Manufacturing and Supply Chain managers should understand the behavior of operations in a practical, scientific framework rather than relying on folklore or, at the other end of the spectrum, having to understand overly complex mathematical formulations.
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- Gross Margin
- Operating Cash Flow
- Inventory Turns (FG, RM or WIP)
- Days of Inventory (FG, RM or WIP)
- On-time Delivery
- Return on Assets
- Employee Productivity
This brings us to Toyota and those who practice the Toyota Production System (TPS) and its wildly popular derivative, Lean Manufacturing. Taiichi Ohno, the father of the Toyota Production System, was once asked why his system worked so well. His reply? “I don’t know. I have asked some economists the same question but they have never given me a good answer. I just kept trying different things. Those that worked, I kept. Those that didn’t, I discarded.”1
In the same conversation, Ohno goes on to say “I had this idea of a fast, even-flowing river in which there are no dams that slowed the flow or rapids that sped it up…It was to be a river system where ideally the only materials flowing were those for cars that customers were now buying. There would be no unneeded parts, yet we would always have the parts that were needed.”
So where’s the science in the TPS? Certainly Taiichi Ohno tested observations—it took him nearly 40 years to develop what we now know as the Toyota Production System. However, he and Lean Manufacturing practitioners generally fall down on providing a set of structured, predictive laws that are widely applicable for any business. Toyota’s planning and control practices do not work well everywhere else. The success of the TPS can not be attributed to development of a predictive science that is generally applicable across many different industries.
This non-scientific approach is both a compliment and a challenge for Lean Manufacturing practitioners or any operations managers. It’s a compliment because good common sense and simple practices have gone a long way. For instance, the 5S clean-up and organizing approach that is widely adopted from TPS is a paragon of good common sense applied with simple practices. Work places that are clean and well organized typically work much better than disorganized, unsafe and cluttered environments. The challenge is that common sense and simple practices can take a company only so far. Trying to optimize inventory and capacity in an environment with hundreds or thousands of product options and constant demand fluctuations is not simple. It’s not something that a manager can master by just walking the floor, putting things in order and creating value stream maps. This is one major reason why so many companies fail at applying Lean Manufacturing and struggle with operations management. Once past the 5S and value stream mapping to implement better organization, efforts fall apart due to managing complexity with over-simplifications such as “reduce waste” or “one piece flow.” I had one manager describe his impression of Lean Manufacturing as “5S, Value Stream Mapping and out.”
Without knowledge of operations science, companies do things like make the “goal” to be establishing one piece flow under the mistaken assumption that achieving one piece flow will provide best customer service and financial performance. The goal is NOT flow or one-piece flow or minimum variability or 100% customer service. The goal is best possible profitability and cash flow over the long term. Without a practical scientific approach to operations, managers can, and often do, drive their careers right over a cliff.
There is a practical science describing the relationships between demand, capacity, inventory, response time and variability. It is described in detail in Factory Physics for Managers or, if you prefer a textbook, Factory Physics. Even better, conceptually the science is quite simple in its observations about nature and the nature of operations. The basic science is as follows:
- Maximum profitability and service occurs when demand and transformation (also called supply) are perfectly synchronized: all demand is met instantly at minimum cost—a perfect world.
- Because there is variability, demand and transformation can never be perfectly synchronized.
- Buffers are required when synchronizing demand and transformation in the presence of variability
- There are only three buffers: inventory, time and capacity
- There are a few key mathematical models that describe the relationships between the buffers and variability. Knowledge of these models (Little’s Law, the VUT equation, Variance of Replenishment Time Demand) is not difficult to acquire and provides powerful insights to guide Lean Manufacturing and operations management efforts. The relationships hold in ALL industries and at all levels of complexity.
So while there are few, if any, predictive scientific principals in Lean Manufacturing, its strength is that it has synthesized 40 years of common sense practices for successfully managing operations. If you have plenty of time for trial and error learning and a leader like Taiichi Ohno, you too may be successful at applying TPS practices in your industry. A better way is to use the common sense of practical operations science to guide your efforts, accelerate your Lean Manufacturing progress and quickly implement improvements that fit the unique requirements and challenges that you face.
1 Reza M. Pirasteh and Robert E. Fox, Profitability With No Boundaries: Optimizing TOC, Lean, Six Sigma Results. (Milwaukee: American Society of Quality, Quality Press, 2011), 97.
If you want to make improvements now, give us a call at 979.846.7828. We can train your people in practical operations science to ensure improvements last. We have worked with leading companies the world over to create and implement breakthrough operations strategies. We accelerate results using your existing efforts, such as Lean or Six Sigma, and your existing information technology. Call us if you want better results quickly or send me an email to espound@factoryphysics.com
Ed Pound is Chief Operations Officer of Factory Physics Inc. Ed has worked with major international companies such as Intel, 3M, Baxter Healthcare and Whirlpool providing education and consulting in the practical operations science of Factory Physics concepts. Ed’s work has helped companies realize millions of dollars in improvements and make operations, supply chain management and product development easier. Ed is lead author, along with Dr. Mark Spearman and Jeff Bell, of McGraw-Hill’s lead business title Factory Physics for Managers.