Have It Your Way!

by Dave Garwood

One of the biggest reasons companies must become agile is that the new age is post-mass production.

Ah, buzzwords. At a recent seminar, people were talking about "agile manufacturing," getting their companies ready to dance through the next ten years of ever more competitive business. Strangely, at least to me, they were talking almost exclusively about new computers and new software that would turn their companies from tentative stumblers to agile ballroom dancers.

Had they asked me what I thought, I would have sung an old jingle from a well-known hamburger palace:

"Hold the pickle, hold the lettuce
Special orders don't upset us
All we ask is that you let us
Have it your way."

One of the biggest reasons companies must become agile is that the new age is post-mass production. Everybody wants it his way. Whether you're making suits or huge power-generating turbines, the "standard" has become the one item in the catalog that no one buys. What we once thought of as the "special," the customized order, has, in fact, become the new "standard." The companies that have become "agile," able to compete with these new rules, have learned how to cost-effectively make the customized produced demanded by the market place.

Probably the clearest example of the new agile companies are the manufacturers of personal computers. If you were to pick up a computer magazine from the beginning of the PC revolution and look at the ads, you'd see "standards" for sale -- an IBM PC, or maybe a Compaq offering a few different features. Pick up a computer magazine now. There are dozens, hundreds, of companies, and while they have standard configurations, check out the big print at the bottom of the ad: "Call us and tell us your computing needs, and we'll configure a machine especially for you."

Now, is the secret to agility, to customized products, a computer issue? Can we buy a software package that lets us reduce our lot size from 1000 to one, then be merrily on our way? Not if you plan on being around longer than the recent glut of roasted chicken franchises.

Let's go back, for a second, to our burger jingle. Take two competing hamburger franchises, one where the customer can have it any way he wants it; the other that "makes to stock," that is, offers only with or without cheese off the shelf.

Do you think the kitchens of those two restaurants would look the same? Of course not. While they might have the same equipment -- grills, ovens, warmers, long, sharp knives -- that equipment is going to be arranged completely differently. How about knowing when to replenish the pickles? The placement of the tomatoes and condiments? The way the clerks inform the cooks about what you just ordered? In fact, everything changes.

If you were thinking of starting your own burger franchise to custom-make hamburgers, would your first thoughts be about what type of computer you were going to use to maintain your shopping lists? Don't think so! Your first thoughts, if you seriously wanted to compete with the big burger boys, would be the operational issues, from the way the burger was ordered to how you planned to cook it to how it finally ends up on the customer's tray.

As we move to more customized products, we first have to address the operational issues involved. When moving to a customized product environment, there are several key points to consider:

• You obviously have many more products to make for the same volume of business.
• As a result of that, you end up with shorter runs.
• Shorter runs mean your manufacturing processes have to change.
• Bill of material structure has to change, because it isn't feasible to have a bill of material for each end item.
• The need for a bill of material configurator becomes critical.
• Order entry process must change to accommodate the customized product. Finding a catalog or SKU number from a catalog becomes less feasible as the number of end items increases.
• You can no longer forecast and develop a master schedule for the finished product anticipating the customer's order. Instead, you start forecasting product families for capacity planning purposes and using planning bills for material planning purposes.
• The costing system changes, because you can no longer calculate cost and assign it to a catalog number. Cost must be "configured" at order entry time.
• The engineering documentation has to be geared to the new processes. That means creating individual, specific drawings, specs or routings for every item can't be done.
• Overall, the whole supply-demand process is radically changed. You have much less work to do before you get the order, and much more work after you get the order.

The impact is significant on every functional area -- not just manufacturing. The first step in manufacturing "agility" is an agility in thinking about all our business processes. Every department will have to do their jobs differently. Computers come later!