A famous step toward perfection in a lean production system is a lot size of one. However, few people realize what enormous effort and rigor Toyota applies to achieve this goal. During my visit to a Toyota plant and the APMS conference in Tokyo in 2015, I saw quite a few stunning examples of this quest. Let me show you … Continue reading Toyota’s and Denso’s Relentless Quest for Lot Size One
On the shop floor it is common wisdom to find the bottleneck based on the inventory. If the buffer is full, the bottleneck is downstream. If the buffer is empty, the bottleneck is upstream. Is this true? My student Carolin Romeser and I spent quite some time verifying this, and found some interesting results. In general it is true, but … the devil is in the details. Continue reading Can you tell your Bottleneck from your Inventory?
Just in Time (JIT) is the delivery of parts just when you need them. In my last post I explained what JIT is all about. In this post (and the next one) I will go into much more detail on different measures you can take toward JIT. But be warned, most of them are not easy, either in implementing or in convincing cost accounting about it beforehand. Continue reading How to Make “Just in Time” Work – Part 1
Just in Time (or JIT) is a powerful method to reduce costs and increase efficiency. However, it is also very difficult to achieve. Most times when a Western company tells me it does JIT, it turns out that this is merely wishful thinking. Let me tell you what JIT really is. I will also talk a bit about the history of JIT. Finally, I will show you a few negative examples of wishful thinking common in modern industry. In my next posts I will go into more details on how to make it work. Continue reading What Is “Just in Time”?
The sales & marketing department often aims to create more and more product variants to target even the smallest niche in the market. Yet, it is common wisdom that more variants also mean more inventory.
However, the relation is not quite as clear cut. In my last post I wrote about the Relation between Inventory, Customer Takt, and Replenishment Time. The relation is similar for variants, and it all depends on the ratio of the customer takt to the replenishment time. Continue reading How Product Variants Influence Your Inventory
Inventory is helpful for a fast delivery of goods. If you have it in stock, you can deliver to the customer right away. In that respect, more inventory is better. Yet, at the same time, inventory creates cost, some visible, some more hidden. Hence, one of the goals of lean is to reduce inventory and therefore reduce cost. During my research I stumbled on a very interesting relationship between inventory, customer takt, and replenishment time. Let me elaborate … Continue reading The Relation between Inventory, Customer Takt, and Replenishment Time
Reducing inventory is one of the goals of lean manufacturing. In my last post I described why we need inventory in the first place, and why too much inventory is bad for you. Now let’s look at how we can achieve a good inventory level. First, an important statement: Inventory is not a lever that you can pull. It is more the result of other good lean improvements. In fact, merely pulling this lever and reducing inventory will actually make things worse. To gain the true benefits of lower inventory, other measures have to be taken. In this post I would like to describe what happens if you simply reduce inventory, and how to do it to achieve a lower inventory without causing mayhem in the process. Continue reading How to Reduce Your Inventory
Inventory is expensive. Depending on your environment, inventory will cost you between 30% and 65% of its value. Toyota is known for (among other things) small inventories. Whereas Western companies often have weeks’ or even months’ worth of inventory, Toyota’s inventory is measured in hours.
It is no surprise that inventory reduction is high on the list for many companies. In fact, the term “lean” by itself implies lower inventories. But why do we have inventory in the first place? And why is (too much) inventory considered evil in lean manufacturing? In this post I would like to tell you the reasons why we have inventory in the first place, and why too much is bad. In my next post I will explain what happens if you simply reduce inventory, and discuss in more detail better approaches on how to reduce inventory. Continue reading Why Do We Have Inventory?