Planning Improvement Projects

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Knowing WHAT TO improve is as important as knowing WHEN TO improve and WHAT NOT to improve!

Last month, I made a trip to 2 different plant locations of a company. Both the locations produced the same
range of SKUs with almost the same volume of production per month. The difference between 2 plants was however very striking. One of them was very clean. Machines were well organized as per desired material flow. While the other one was very dirty with too much of work in progress almost everywhere. Even before I could ask the plant manager, he offered an explanation. In the cleaner plant, they have implemented lean techniques of organizing plant layouts for better material flow, 5S etc and hence plant was cleaner. He promised that the next plant would soon go through the restructuring and eventually both the plants would look similar.

The plant manager was very proud of his achievements.

I asked him about the WIP in both the plants; he said it is almost 10 days in both the plants. So your manufacturing lead time is just 10 days? No, he said, it is 4 weeks. There were two contradictions in his statement.

01. How can WIP be 10 days while manufacturing lead time be 4 weeks.

02. How can both the plants have same WIP?

I realized the problem with first one. He was giving me the month end figures. Further investigations revealed that the actual WIP builds up to a peak in the middle of the month and then flushes out by the month end. It is almost like a wave, remarked the plant manager. The reason is very simple. Every month end, the financial figures are reported and there is a pressure to maintain low inventory. So plant managers have figured a way out. They just have to chock the plant of raw material release in the last week to get the effect. For raw material (RM) inventory, they just have to prevent the supplies from entering the plant gates. Yes orders in first week will suffer, but as long as due date is measured in month’s horizon, it does not matter. I got the explanation for the inherent contradiction between 10 days WIP and manufacturing lead time of 4 weeks.

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