WHAT IS SYNCHRONOUS MANAGEMENT?
Every manufacturing executive in America today is well aware of the problem. Our economy faces increasingly intense worldwide competitive pressures. Hundreds of companies - and entire industries - are faced with extinction.
And it started with manufacturing. Who has not said, "If only we could deliver higher quality products sooner, on-time, and at lower costs, we could beat the competition."? Those who have not given up continue to invest money in a whole host of "remedies" - cheaper off-shore labor, automated factories, the latest management styles, and a variety of sophisticated manufacturing techniques (ERP, TPS, LEAN, SIX SIGMA, etc). And yet, our expectations are almost never met; the daily fire-fighting continues and we still fall further and further behind. Something is missing.
Synchronous Management believes that the promise of many of these techniques can be met, but only when they are based on the common-sense goal of every business - to make money! A manufacturing firm is not in business simply to satisfy customers, improve quality, deliver goods faster, or to achieve technological superiority. While these objectives may certainly contribute to improving profitability, they must be coordinated with the strategic objective of making money - as measured by simultaneous increases in net profit, return on investment, and cash flow. For example, when manufacturing cycle times exceed customer required delivery times, finished goods inventory may have to be increased to provide an acceptable level of customer service. Unfortunately, the increased investment in finished goods decreases not only return on investment, but net profit as well, through increased inventory carrying cost, scrap and rework, and product improvement costs.
This is but one of the dilemmas of manufacturing management. We are faced with inaccurate forecasts, unreliable raw material suppliers, work in process growing with a mind of its own, unpredictable quality, broken promises to our customers, and performance measures that show continuous improvement as the firm loses more and more money!
The Synchronous Management solution to the manufacturing dilemma incorporates both a strategic and a tactical view of the business. The strategic objectives of Synchronous Management directly support the goal of making money, by simultaneously increasing the rate of sales, or throughput (Ti), decreasing cycle times and inventory (Ir), and decreasing the spending required to convert inventory into throughput, or operating expense (OEr). This TiIrOEr based strategy is a global outlook on the firm and the relationships among specific management decisions, actions and investment decisions and bottom-line profitability. In contrast, many companies today focus upon cost reduction, investment payback calculations, and other such decision making guidelines without an ability to link them to the bottom line. The Synchronous Management methodology provides that link, thereby allowing management to plan and synchronize its actions to result in the maximum improvement to the TiIrOEr performance measures.
The tactical goal of a TiIrOEr based strategy is to increase material flow velocity through the business. The decrease in the amount of time required to convert inventory into throughput results in a number of obvious benefits, including amortization of fixed costs over greater shipments and improved customer service with less inventory. By considering the strategic connection between inventory and product quality, cost, and delivery, our unique product/process flow analysis is employed to determine the restrictions, or constraints, to increased material flow, and specific techniques are used to attack and remove these constraints.
A firm can struggle with a number of constraints to accelerated material flow. Unreliable suppliers cause the firm to choose between raw material safety stocks and poor performance because of vendor instability. Employee attitudes and skills can inhibit the flexibility required to overcome temporary bottlenecks. Unreliable forecasts and short customer delivery requirements can result in the production of goods other than those which will actually be required. Computerized information systems can delay decisions required to maintain efficient flow. Technological competitiveness often results in the buildup of excess and obsolete inventory, particularly when such performance measures as purchase price variance and manufacturing efficiencies are employed. In short, uncertainty in supply and uncertainty in demand have caused manufacturing management to be a very difficult and often frustrating occupation!
Once the specific constraints to material flow are identified through the value stream mapping, Synchronous Management addresses these constraints with specific tactical actions. Value Stream Mapping provides value-adding associates with visibility of the waste of poor flow throughout the entire manufacturing process. Partnership Purchasing improves vendor relations and delivery reliability, and typically reduces material costs by 5-15% and purchased inventories by 50-70%. Changeover Reduction can reduce changeover times by 70-90% in three months, resulting in a corresponding decrease in work in process inventories. Pull Signals Production schedules individual work centers - without computerized shop floor control and dispatch lists - and provides instant visibility of material flow problems. Team Quality can reduce defect rates by as much as 90% in three to six months. Breakthrough Kaizen provides the delivery mechanism for many of these technique, aiding value-adding employees in improving visibility and productivity in their workplaces. These and other strategically directed activities are combined through Employee Involvement to produce the maximum short term and long term favorable impact upon TiIrOEr .
In summary, the strategic nature of Synchronous Management is to identify the logistical, behavioral, and policy constraints to material flow and the TiIrOEr based profit improvement strategy for the manufacturing firm. A variety of tactical actions are then implemented to remove these constraints, and to enable the firm to identify and address additional constraints as performance is continually improved.
The success of Enterprise Resource Planning, the Toyota Production System, Lean Manufacturing, and related techniques are well documented, but the failures and less than optimal results are less documented and certainly less publicized. Success will demand a fresh look at the manufacturing problem, based on the linkage of such tactical actions to the company's strategic goals. That linkage is finally here - now.
We call it Synchronous Management!