1. Thou shalt have a daily schedule - a valid daily schedule.
2. Thou shalt maintain accurate data, at all times.
3. Thou shalt have an effective sales and operations planning process.
4. Thou shalt measure performance to fix the problem, not to affix blame.
5. Thou shalt use due dates that are actual need dates.

Too many companies get caught in the "project of the week" syndrome. Have you ever wondered where they are really headed? Do you know any of them? Is your company one of them?

You can recognize them easily. When asked, their people will tell you that the company goes from one project or fad to the next, seldom completing the previous one first. The people themselves, feeling like pawns in a random game where the rules keep changing, are rapidly losing their loyalty to the organization. They see and hear no clear focus except management's demands to improve delivery time and meet the customer's ever changing demands - yet, no one provides a clear-cut strategy on how to make that happen. They experience chronic parts shortages and excess inventory.

This is not a "people" problem; it is a fundamental weakness in the company's ability to balance supply and demand and have matched sets of parts available precisely when and where people need them.

What has happened?

These companies have forgotten the "10 Commandments" of manufacturing. These "commandments" are not management fads. They are also not short-term or quick fixes. They are fundamentals on which all successful and profitable businesses are built.

And they are non-debatable.

Head football coach Joe Tiller does not debate whether blocking and tackling are important to football. Blocking and tackling are fundamentals of his sport. He instead spends his time developing strategies to accomplish blocking and tackling well. The following principles are the "blocking and tackling" of manufacturing, our sport.

In this article, I will provide the first five commandments. Before I get into the list, allow me to say that I am not against strategic planning, or great customer service, or trying to satisfy every profitable desire your customer has, or whatever goals your company mission includes. I am not against lean and demand flow, or technology, or reducing the non-value-added components. Yes, you need a strategic plan and a long-term vision, and you need to communicate well and develop a great team of people. No argument there. However, you cannot do those things unless you have some essential basic ingredients in place.

1   Thou shalt have a daily schedule - a valid daily schedule.

If your shop hopes to deliver on time and at a profit, it needs a valid daily schedule. What does "valid" mean? It simply means that the people who are doing the value adding in your business (on the shop floor) can focus on that task without having to stop what they are doing, either to chase down the right material or to change tasks. The material is available in the right quantity, at the right quality, and at the right time. No more, no less. And it means that the capacity, machines, tools, and people are also readily available to carry out the process.

Can each department start at the top of its schedule each morning and run it as planned, top-down, every day, no exception? A quick way to find out is to ask, "Do the manufacturing supervisors invest their day supervising and improving the value-adding process - or have they become our expert material and capacity expeditors?"
If your answer leans more to the expeditor side, then it is time to improve your schedule's validity.

2   Thou shalt maintain accurate data, at all times.

A company president once told me, "We have lots of data, but no good information on which to make decisions." Having excellent data to make routine decisions is not an option in your business today - it is mandatory. For your company to create a valid plan out of any type of computer-based planning and scheduling system, the data that drives it must be flawless. Anything less causes you to do double-checking, extra validation, and will certainly result in your making less than optimal decisions to cover for the unknowns.

Your company's engineering database and bills of material and routings must be at 100 percent integrity, accuracy, and reliability at all times. This information serves as the foundation of your product and process definition. Any missteps contribute directly to invalid purchases, incorrect builds, and possibly, depending on how tightly your inventory transaction system is tied in, to inaccurate inventory. The most basic of all your company data is your inventory information. Your inventory data must be at least 98 percent valid every day, every week, and every month. I am not talking about only after the physical inventory. It must be excellent ALL the time.

Too often today, companies hang all their hopes and dreams of improving data integrity on the implementation of new software, as if doing so will automatically solve the problem. It will not. After implementation, poor data integrity will prevent them from meeting the objectives the new software is supposed to help achieve. Belatedly, the company then shifts its focus to fixing the data issues that it could and should have addressed in the first place.

Fixing data problems opens many new doors. As Pat Remfert, manager of manufacturing at the General Electric-Osmonics Division, said, "Achieving a goal of 98 percent record accuracy now allows us to address many other opportunities that, without first having data we could trust, would not be possible. We are able to meet the daily shop schedule, be on time to our customers, and accomplish it all with far less inventory than ever before. Plus, our shop people have much more confidence in their ability to do their jobs because missing inventory is not a question anymore."

Did you know that most companies can achieve 98-percent-plus inventory accuracy in less than 120 days, when they approach it correctly? They merely need a carefully created system of analysis and planning. (As a side note, there is very little empirical evidence to show that a routine physical inventory does anything other than put additional errors into the inventory.)

3   Thou shalt have an effective sales and operations planning process.

Every company, including yours, balances supply and demand every day, every week, and every month. However, their efficiency at doing so is a question of who does it, and how regularly they do so.

An effective sales and operations planning process is a critical tool for keeping supply and demand in balance that your senior management team must have in its toolbox. This balancing process must take place 1) at an aggregate level (usually on a monthly basis looking out over at least a 12-month horizon) and, 2) at a more detailed-mix level (usually on a weekly basis, looking out at least through the longest product lead time).

Company after company has found that sales and operations planning is the root of improved customer service, lower inventories, stabilized production, and enhanced teamwork among sales, operations, finance, and product development departments. Sales and operations planning, or S&OP, as it is called, is not a new software program. It is a management process that allows you to improve your business results. But as an added benefit, you will be able to get greater mileage out of your existing software.

According to Mark Watts, international and Western regional sales manager for the Schutt Sports Group, his company could not live without the benefits of their sales and operations planning process. "Our on-time customer delivery has exceeded 99 percent the last six months," he says. "For the first time in years, we have customers calling us to compliment, not to complain. In fact, on several occasions, a customer has called to change their order, and we had to tell them that it had already shipped. They were thinking we were the company of old, where they had plenty of time to make changes to their order."

4   Thou shalt measure performance to fix the problem, not to affix blame.

The right performance metrics will encourage teamwork and cooperation and will drive the right behavior. Most manufacturing companies primarily use financial performance to measure their success, and have developed systems and statements to measure this performance on a regular monthly, quarterly, and annual basis, using terms such as sales, gross margin, income, ROI, productivity, and even efficiency. These financial performance measurements have been developed and documented by the accounting profession and are well accepted by management and stockholders.

However, manufacturing companies have not done nearly as well at developing effective operating systems and operating performance measurements. Too often, the operating managers don't find out how they are doing until they see the month-end financial statements. In today's lean, quick-turnaround, have-it-for-me-yesterday world, you need effective daily, weekly, and monthly operating performance measurements to enable you to manage business operations and meet business and financial objectives.

These measurements should help you solve problems, not blame a particular department, group, or person. I learned this lesson very early in my manufacturing career when, in one of my jobs, I was responsible for collecting supplier delivery performance data and presenting it to suppliers in individual review meetings. My data showed that one supplier's performance was less than acceptable. Not too far into my first meeting with its company representatives, they asked if I wanted
to see their analysis of my company's customer performance. I said, "Sure." They proceeded to show me how often we had placed orders in less-than-agreed-upon timeframes, and how many times we had subsequently changed orders after they had been placed. Blaming the supplier exclusively for the problem would have closed my mind to the other factors involved, merely creating another obstacle to finding a solution. A proactive problem-solving approach leaves you open to see the big picture and address all factors objectively without inserting blame or making an issue of the problems. The issue is the solution, not the problem.

5   Thou shalt use due dates that are actual need dates.

This is most simple to say and to explain, but often the most difficult to do. In short, the date is the date is the date is the date. No fudging, no hedging, and no adding a "just-in-case" factor to the date the customer gives you.

"Incorrect due dates used to be the most convenient excuse for our missing the printed schedule," says Norman Halpin, business excellence project leader at Schutt Manufacturing Co. "Now we use only valid need dates to drive our shop schedule. This allows us to get to the root cause of all performance misses and to fix the real problems. It is helping to turn our company's and people's attitudes around."

If you want your company information system to be credible, then it must be "due-date driven" with valid dates. Your information system must be the formal system that everyone works to. If you ever find yourselves using dates outside the system (i.e., reverting to "back of the envelope" dates or the "hot-list" dates), then not only do you lose your system credibility, you also lose your accountability for performing to the schedule.

None of these commandments is optional. You cannot look at them as you would go down a buffet line, picking and choosing the ones you like or the ones that might appear easiest to attain. Instead, you must view their achievement as a balanced meal. If your company and your people are to become all they are capable of becoming, you must strive to achieve all of them. They are not unreachable goals; they just take time, effort, and planning - all of which pay off in cost savings and improved customer service.

Part II will follow in the fall 2003 issue. For more information or a full copy of the article from which these commandments have been extracted, you may contact Ribar directly (see contact information at right).