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1.       Thinking a Strong Market Will Buy the Company Time

When sales are strong It is easy to postpone difficult tasks such as improving business processes. Yet even in healthy markets there are rewards for the companies that can improve competitiveness by reducing cycle times, operating expenses and poor delivery performance. In weak markets, lack of competitiveness can be painful. Avoid putting your company in a vulnerable position by taking steps now to benchmark performance against competitors and close gaps.

2.       Thinking a Company Can Solve Big Problems by improving Only One Area

A company’s competitive performance is a result of the effort of the total organization. Each employee should have the satisfaction of knowing his or her contribution is important and valuable. Unfortunately many Improvement efforts focus on only one part of the business. ‘When that area improves, but no overall benefit becomes apparent, employees don’t take additional improvements seriously because nothing really changes. Avoid this problem by defining problems in system-wide terms, communicate outcomes and actions to all employees so that everyone gains in understanding about how the business works and what actions result in improvements that count.

3.       Focusing on High Yields at the Expense of Customer Satisfaction

The quest for the highest possible yields drives the decision to allow long production runs, or big batch sizes, to maximize an outdated idea of “efficiency” There are three problems with this approach. First, it is company-focused, not customer ­focused, thus misses an opportunity to increase customer satisfaction. Second, It lacks flexibility, so increases In sales stretch out lead times, thus reducing customer satisfaction further. And third, It gets in the way of increasing profits. Avoid these problems by transforming your manufacturing operation from an “efficiency culture” to a “customer culture.” This is accomplished by establishing a build-to-order operation characterized by fast cycle times.

4.       Making Bulk Buys for False Economies

Purchasing in bulk and measuring purchasing department performance in terms of “purchase price variance” wastes money and forces you to miss opportunities for growth and profit. Bulk buys tie up precious capita! in slow-moving Inventories that must be stored, maintained, insured, have taxes paid on them, etc. Solution: start seeing vendors once every week or two instead of every eight to twelve weeks. Buy only what you need and have It delivered more frequently. If your purchase levels are the same you may not even have to pay a premium, but if you do, you will still come out ahead. One manufacturer opened a new production line in the space used to store bulk purchases, turning a cost center into a profit center

5.       Confusing “Earned-Hour” Efficiency with Business Effectiveness

It is a mistake to make production decisions by focusing on misleading Internal performance metrics, such as earned hours. In fact there is no direct relationship between this performance measurement and customer satisfaction. A better focus is scheduling production in a First-In. First-Out (FIFO) sequence for customer satisfaction. Shipping complete orders fast builds business, Internal efficiencies that add no value from the customer’s perspective are a waste of time and resources.

6.       Making Decisions Based on the Convenience of the Assembly Department

Many assembly operations avoid changeovers. They want to assemble a month’s worth of one product before switching to the next. This approach will never result in cost-effective customer satisfaction. Avoid this problem by institutionalizing flexibility in your assembly operation. Like production, orders should be processed In a FIFO fashion. That’s what customers want and that’s how to make money and grow the business.

7.       Making Decisions Based on the Convenience of the Finishing Department 

In many manufacturing operations the finishing department has come to share the assembly department’s philosophy. They too like to finish all of one type of item before moving to the next. They think they are being efficient. Like the other departments, finishing must learn how to schedule work in FIFO sequence to satisfy the greatest number of customers more rapidly than the competition. 

8.       Line vs. item Thinking 

Thinking of products as pads of a line compounds the problem of favoring large batches. It encourages businesses to build and carry a complete line in finished goods inventory.  Because customers often buy parts of complete lines rather then the whole line at once, these finished goods inventories are raided to supply items, so the complete lines don’t remain complete for very long in any event. Avoid this problem by escaping entirely from the trap of “line” thinking by shifting to a build-to-order system

9.       Reluctance to Slaughter Sacred Cows Such as Standard-Cost Thinking 

Standard-cost thinking still drives much of the decision making in industry from efficiency calculations, to performance measurements, to costing and pricing formulas. The problem with standard cost thinking is that it distorts the decision making process by encouraging managers to look at the wrong things in the wrong way With a standard-cost perspective it is easy to overlook customer satisfaction and better profit strategies that have proven themselves in other manufacturing companies. Make hamburger of this sacred cow by installing a new system that aligns employee behavior with things that matter to customers so you can boost profits.

10.    Investing to Correct Capacity Constraints that Don’t Exist

The standard-cost mindset will cause managers to perceive capacity constraints where none exist. This is because, in the process of pursuing efficiencies, they decrease customer satisfaction due to long lead times and high levels of work-in. progress inventory. Rather than change the system to satisfy customers with existing resources, they invest in expensive new resources, but utilize them in the old way, i.e., to be efficient. This traps the organization further in downward cash-flow and customer satisfaction spirals, while further increasing operating expense. Advanced manufacturing techniques are the best way out of this problem, because they significantly improve customer satisfaction with existing resources, without adding the cost of new equipment to overhead and burden.

11.    Inability to Turn Increased Capacity into Better Customer Deliveries 

Companies that invest in capital equipment to increase capaci­ty often widen instead of close the customer-satisfaction and profit gaps. This is because although they think they are invest­ing in this equipment to serve customers better, the truth of the matter is that they will run the equipment to satisfy internal “pay-back” formulas. historically, these formulas have little to do with customer-satisfaction or competitive factors. Avoid this trap by learning how to justify capital equipment investments based on customer-satisfaction and competitive criteria.

12.    Lack of Alignment Between Measurement System and Desired Outcomes. 

The goal is to make money. This is accomplished by demonstrating the ability to satisfy a growing number of customers faster and with better value than competitors. .Outdated measurement systems such as those based on efficiency, labor variances, etc., are not the measurements that drive continuous improvements and raise profit levels. The solution is to install new measurements based on throughput, inventory, cycle time, product mix, quality, on-time delivery and other metrics that customers can see and value.

13.    Over-Reliance on Forecasts 

Few managers can predict the future. And the further they look into the future, the less accurate are their predictions about it. That’s why forecasting is a poor method for organizing a factory for work. A better approach Is to establish a build-to-order environment. This type of environment makes many managers uneasy because, when they see what is involved, they are alarmed to discover how different it is from the current way they are doing things. Nonetheless, a build-to-order environment eliminates chaos from the shop floor, reduces expediting, waste, unnecessary costs and more, while improving asset management, customer satisfaction and profit.

14.    Failure to Improve Manufacturing-Marketing Teamwork  

The efficiency mindset and culture of communicating by forecasts has resulted in poor team work between manufacturing and marketing in many manufacturing companies. Instead of working together to grow sales, they often find themselves working around each other’s perceived shortcomings. The problem is the existing culture, not usually the personalities involved. Again, establishing a build-to-order manufacturing environment gives these two important departments a common approach for generating profits.

 15.    Avoidance of Improvement initiatives Due to Fear of Failure

So many Improvement initiatives have failed that managers worry about the risk of change and become paralyzed. Most failures occur for two reasons. Either managers failed to pre­pare their organizations for change and met overwhelming resistance when they tried to launch the program; or, fearing resistance, they watered down the improvement formula to make it more palatable and the new ideas didn’t work because they had been watered down so much. The solution is easy. Prepare employees for change. Launch an improvement effort the right way, then stick with it till the job is done.

16.    Improper Delegation of Responsibility  

Managers sometimes delegate projects to subordinates, making them responsible for outcomes, but not giving them the authority to make changes or suspend outdated policies and procedures. This is a prescription for failure. Managers who do not have the time or inclination to be involved in the process, must empower agents of change with an authority that matches their responsibility, so they can identify arid remove barriers to successful change.

17.    Reluctance to Get Outside Help 

It’s a plain fact: You can’t change your company by reading books or asking people who have been caretakers of the old system to dismantle it and invent a new one. It simply doesn’t work. What does work is bringing in outside expertise. Outsiders can guide the change process so your people can learn a better way to do their job. The MN Group has worked with scores of organizations to improve company-wide perfor­mance. We’ve helped them. We can help you, ton.

 18.    Avoidance of Improvement Initiatives Due to Lack of Awareness About Options   

There is an alternative to chaos, poor customer satisfaction and low profits. That option is a manufacturing system characterized by predictable, synchronous flow of material, low Inventory, fast cycle times and high profit. But exercising that option requires a willingness to change. Make sure you are aware of the options that exist to improve your business performance.