Lean, But Not Too Lean Goldilocks-ing Your Discrete Manufacturing Strategy

Nov 29, 2010 12:00:00 AM

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In his previous guest post, Bob Aronson, Industry Director – Microsoft Dynamics Manufacturing, compared discrete manufacturing growth to ‘pent-up puppy demand.’ In his latest post below, he warns manufacturers against going lean until all the necessary resources are invested to ensure this decision is made strategically, rather than haphazardly:

Goldilocks knew the final bed was ‘just right.’ It wasn’t until she was startled awake that she realized it was the property of an unforgiving family of bears.

Is the lean manufacturing strategy you envision just right, or will you soon be startled awake by an unforgiving industry?

In a article to Manufacturing Business Technology, Lean Manufacturing is Not Enough, author Mike Collins writes, “top line growth requires a different kind of plan that should be developed in parallel with any process improvement projects. If not, manufacturing companies arrive at the end of the lean journey with plenty of new capacity and no new sales.”

In other words, it takes more ‘go lean’ than simply to say ‘we’re going lean!’

Collins rightly states in his article that all new strategies cost money, and the simple fact that time and resources must be spent to develop a new strategy, makes the notion of overnight lean operations a faulty one.

Should manufacturing companies strive for leaner operations?  Of course.  But before fully committing, you first need to spend the necessary resources it will take to develop a lean strategy based on your company’s current situation and objective.

In his article, Collins offers fundamental questions that all manufacturing companies must ask themselves prior to revamping strategies.  In my mind, some of the most effective questions for companies considering going lean are:

  • What are your company’s current sales and profit forecasts?

  • Why do you currently lose orders?

  • Who are your best and worst customers?

  • How much sales growth do you want?

  • How are you financing that growth?

  • Are your costs and pricing accurate?

You’ll notice a pattern in the questions above.

The first three get to the heart of where you currently are as a company.  Once you answer the first three questions, you’ll be amazed at how accurately and quickly the second three questions – those that shape your objective – can be answered.

To offer a rather simplistic analogy, imagine your company manufactures parts for home appliances, including washing machines and dryers.  A quick overview of the numbers shows that washing machine parts always sell at a higher volume than dryer parts.

But a closer look at the numbers is revealing.  Washing machine parts typically sell to ‘come-and-go customers,’ and while the quantity sold may be high, the customers only return to make additional purchase 30-40% of the time.

Dryer parts, on the other hand, sell to return customers who pair their order with parts for a whole range of appliances – including ovens, stoves – and even washing machines.   If the dryer parts aren’t available, these customers simply buy from someone else – taking their entire high margin orders with them.

This information is critical to know before you make the potentially fatal error of forcing lean operations by cutting back on production of dryer parts in favor of washing machine parts.

Once you honestly evaluate your current situation (determining where high value sales are from, identifying ideal customers) you can develop a strategy that is ‘just lean enough’ – or – a plan that will not risk any negative impact on the production of your highest value products.

Make no mistake – going lean by streamlining operations, smoothing out processes and turning to automation – is almost always the right way to go.  But only by spending the resources necessary to evaluate your current operations, can lean become a strategic – and ultimately, successful, decision.

Just as Goldilocks learned, the bed you choose is the bed you must sleep in.

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If you are a manufacturing company that is considering a lean strategy, contact To-Increase for a complimentary lean consultation from and industry expert.

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About Author
Luciano Cunha

Luciano Cunha

Chief Executive Officer (CEO) For Luciano, being responsible for To-Increase’s global sales and marketing means unleashing the company’s insight, innovation, and creativity to tell our story and help customers achieve their goals. On the road much of the time, he travels the world to meet with customers, understand their challenges and ambitions, and find the most effective ways to help them advance. Luciano develops and mentors our marketing and sales team, and creates strategies to help the To-Increase worldwide partner channel thrive and grow.
Making Customer Needs the Main Business Driver Luciano and his team have daily conversations with the To-Increase research and development organization to bring customers’ requirements and concerns into the road maps and design of our solutions. Luciano brings his insight to the marketing group to make sure the company’s communications resonate with customers and speak directly to their experience.
“I’m awed by customers’ innovative spirit in taking business management technology past its limits and by their generosity in letting us participate and empower them. I hope to transform our organization to become even more customer-centric than we are today. That means making more resources available to spend productive time with both our customers and partners, so we can ensure that we place into customer businesses effective solutions that fit the evolutionary stage of their operation and the way their people and processes work.”
Empowering a Global Channel
Because To-Increase only sells through partners, readying the channel to be successful in helping customers is a business-critical effort. Luciano aims to meet partners where their interests are. Partners who consider the relationship with To-Increase strategic can rely on our industry specialists to work with them as they plan their growth and serve customers. If partners prefer a less collaborative relationship, they still receive the rich To-Increase expertise and resources to ensure they win the business, perform a successful deployment, and retain a satisfied customer. In working with partners and their customers, Luciano brings to bear his experience of many years of creating successful, customer-focused business development and marketing strategies in many of the world’s countries and regions.
Enabling Customer Success in Challenging Business Environments
Looking into the near future, Luciano expects that customers will continue to expect To-Increase to help them make business sense of unfolding trends and technologies. For example, the internet of things (IoT) will thoroughly revolutionize manufacturing, engineering, and supply chains. Big data will be meaningful and valuable when decision-makers can use technology solutions to transform it into actionable business intelligence that supports key roles and business processes. Mobility will help companies become digital enterprises and move business processes forward from any location, at any time. Team To-Increase harnesses innovation to help customers translate the promise of these technologies into business results.
Before his current role, Luciano for several years was one of To-Increase’s global industry directors, responsible for our industry solutions. His experience also spans more than 17 years in IT and manufacturing management roles. These positions took him into various areas at IBM Brazil, serving as product manager for several software development companies, and included working in senior management at a manufacturing organization in the U.S.
Luciano is married with two young children. Away from work, he enjoys participating in a soccer class together with his son and daughter as well as taking relaxing walks in natural environments with his family.

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