You would never know it by reading the current lean literature, but twenty five years ago lean manufacturing was perceived to be primarily an alternative approach to supply chain management, and little more. I was working in the corporate materials management group at Emerson Electric's Copeland division back then and, like a lot of materials management people, we were wrestling with the implications of Toyota's JIT system while virtually no other manufacturing or business function thought what Toyota was doing involved them in any way.
This week I added a Supply Chain track to my One Day Assessment offering which is little more than me jumping out in front of the parade pretending I am leading it. Looking back over the last year, perhaps two thirds of the one day visits I have made have ended up focusing on the supply chain. In one organization after another I have encountered supply chain managers who, rather than leading the lean effort as they did in the 1980's and into the 90's, are the anchors holding back their companies.
It is more than a little ironic that the press is in such a lather over lean and JIT when the reality is that very few manufacturers are close to JIT at all. Most are JIT when it suits them, but have no aversion to carrying loads of inventory when it doesn't.
Often the rationalization is purchase price. Manufacturers are all for lowering the water level of inventory to expose the rocks of waste and poor quality – the basic principle of lean – unless a supplier can save them a nickel on purchase price, in which case the water level has to stay high and all of the waste goes unattended.
In Toyota's case, their self-destructive Japan-centric culture is allowed to trump lean principles. You can do the math. In their contradictory public statements the other day about when and for how long their US plants would be shut down there were two points of fact in which they were consistent: One, at least 15% of their parts come from Japan, and two, whatever happens will happen in late April when the supply chain dries up. The earthquake and tsunami happened on March 11, the pipeline dries up in late April. That means six weeks of inventory in the pipeline of Japanese parts to support US production … hardly short cycle time/JIT in anyone's book.
Most often, however, the problem is supply chain management and its unwillingness to look beyond forecast driven MRP, rationalized by passionate, articulate 'you don't understand – we're different' arguments. In the past year alone I have had supply chain managers tell me that demand pull won't work in capital equipment and ag products manufacturers. It doesn't apply to the screw products, injection molding, stamping, extruding and contract manufacturing businesses. It simply won't work for a defense contractor, consumer products companies, building products or in aerospace. According to these people, in fact, automotive assembly is the only sector in which pull systems make sense. The rest of the manufacturing world simply has no choice but to continue beating up sales and marketing until they get the perfect forecast and drive it through their MRP system. And 90% on time deliveries to lead times longer than their customers want with 6 inventory turns is simply the nature of the beast in their unique business.
Most often when I go in for a one day assessment I encounter lean leaders and senior managesr who know the supply chain is dysfunctional, and know that they are being had by supply chain management whose game is to drag leadership into the intricate details of MRP to justify maintaining the status quo, like the alligator who will only fight at the bottom of the pond where its victim has no chance. My role is to represent the leaders and go mrp detail for mrp detail with these guys, battling them on their own turf in their own terms. Pretty sad to have to help management fight their own staff, but that is the harsh reality to varying degrees in far too many companies.
How far my former materials management profession has fallen since those days when local APICS meetings were the hotbed of lean thinking.