Focused Factory Example

How Customer, Volume & Geographic Focus Coincided

A Focus on Process

A manufacturing firm served markets from three factories in the East, Southwest and Midwest. Initially they had only one factory that made every product. The firm built two new factories; products multiplied from 200 to 1500 items. The factories became increasingly difficult to manage, costs went up, quality declined and deliveries faltered.

Strategos assisted this firm in convening a strategic team to develop plans and make decisions on future Manufacturing Strategy. This team included plant managers, schedulers, marketing and corporate executives.

The group started with training that introduced the concepts of focused factories. A second round of training included the MIT Beer Game to show the dynamic and psychological effects of multi-tier distribution systems. At the end of the training sessions the group brainstormed possible applications of their new knowledge.

The subsequent session convened several weeks later. We first identified criteria for a final decision, i.e., what do we want the new strategy to do or accomplish. Many participants had joined this team originally with an implicit assumption that our purpose was freight cost reduction. The team soon developed a surprisingly long list of potential goals that went far beyond simple cost reduction. These benefits included:

Each participant had the “Ah-Ha” of a paradigm shift. With this new understanding, their individual goals, objectives and “hidden agendas” moved from provincial concerns to a higher plane.

Then the team brainstormed options. They excluded nothing. Plans included division among the plants by customer, distribution channel, volume and geographic area. They then weighed each option against each decision factor. This forced critical and focused thinking over a wide range of options, issues and outcomes. The team brought sales data and performed a simple, straightforward, real-time analysis during the sessions.

We then narrowed the options. The final selection separated plants by product volume. This was a radical approach that had seemed infeasible prior to these deliberations. This option moreover, corresponded closely with separation by distribution channel or by customer. The figure below illustrates. 

Perhaps the most remarkable result was the wide acceptance and enthusiasm for the selected option. The issues addressed by this team had been contentious and divisive throughout the organization for many years. Now there was consensus, enthusiasm and cooperation. This team had high confidence in their decision because they had explored a wide range of options and knew their fundamental logic was sound.

Summary

Original Unfocused Configuration

(Each plant made everything)

Volume/Geographic Focus

Products & Volumes (All Plants)

 Experience Curve

■ ■ ■ ■ ■ ■ ■

The Strategos Guide To Value Stream and Process Mapping goes  beyond symbols and arrows. In over 163 pages it tells the reader not only how to do it but what to do with it.

Lean Briefing is only sent to those who subscribe or those who download from the Strategos website.

Books & Videos

Guide to Cycle Counting

Warehouse Planning Guide

Human Side of Lean Video

Contact Webmaster

©_Permissions

SEP 2007     ©_Permissions