Virtually every manufacturing company I’ve visited since I started auditing and consulting focuses on keeping the people moving instead of keeping the product moving. They can’t stand to pay an employee for standing idle, so they have them continue to make product that isn’t really needed at the moment. They somehow feel that they are losing money if the people are not constantly producing and being “efficient”. I find it ironic that these cost-focused individuals don’t recognize the greater costs of overproduction, increased inventory & WIP, lost sales, late shipments, and unhappy customers.
Making employees build things that you don’t have a need for is overproduction and one of the classic Lean wastes. It creates more problems than you may think. So many, in fact, that I can’t fit them all in one blog post! The obvious first issue is excess work-in-process (WIP) and/or finished goods. I’ve seen companies with so much WIP that the operators can hardly get to their workstations! Some have actually lost jobs in the sea of WIP. I’ve even seen companies build new buildings because they ran out of space…instead of just reducing their WIP. But it’s not just a space issue, this is bloating your inventory holding costs and negatively impacting your cash flow.
Then there is the lead time problem. The more WIP you have, the longer your lead time. As lead times grow, management sees the need for action to reduce lead times. The typical response is to start releasing jobs sooner. This, of course, just creates more WIP and further increases lead times. Longer lead times also negatively impact cash flow. Worse yet, it may also result in angry customers or even lost sales.
Another issue this may lead to is parts shortages. By starting work on a job too early, you may be “stealing” parts from a job that is due much sooner. That can then result in real stealing from one assembly to use on another assembly that has an earlier due date. How can that be good for productivity and efficiency?
So, have you ever seen a work order released just to “keep them busy” where you work? This may be a bigger operational issue than you think because it often leads to a vicious cycle that continues to worsen. As the saying goes “busy-ness is not good business”. I’ll talk about additional problems this causes in my next post.
Don’t keep them busy,
Dave