VELOCITY - DEE JACOB [138]
“Yes, that is very similar to what we do at the plant,” said Murphy. “But the struggle is to not allow the second and third conditions to occur. Once a job is in production, we don’t want work-in-process to wait because something isn’t available. And the specifications and materials are already prioritized as they are released onto the plant floor. To interfere with that is usually what we call expediting, and that is something we prefer to avoid.”
“The prioritizing,” Wayne added, “is done in the planning and scheduling phase. And that’s where, if Garth or one of the salespeople alerts us to some special need, we can juggle the schedule to please the customer. Or if we’re low or out of stock on some material – assuming we know about it – we can rearrange the sequence so that we produce an order for which we have all the materials.”
“By the way,” Murphy said to Wayne, “I have progress to report on that last matter.”
“All right, but it sounds like this Relay Runner concept,” said Amy, “is something we might want to incorporate as a policy injection. Let’s insert that into the logic tree and try to evaluate what effect that is going to have.”
By now, the original turnaround tree constructed in Amy Cieolara’s dining room on a whiteboard with sticky notes and markers had been computerized. They closed the curtains in the Oakton conference room and put it on screen, and Amy added a new block:
Injection: We use Relay Runner single-tasking work ethic at F&D and wherever applicable.
With that in place …
Production design reviews get top priority from everyone throughout F&D.
Therefore …
F&D completes design clearances faster.
This small addition to the logic tree then linked to two higher conditions that were already on the tree:
It links directly to …
Design clearances flow smoothly to Oakton at predictable time intervals.
And eventually links to …
Our customers feel confident dealing with Hi-T.
“Good,” said Amy. “Now, what else? Murph, did you have something?”
“I do. Jayro Pepps and I have been working with some of our suppliers and also with Wayne’s administrative staff downtown. We’re trying to eliminate some of the problems with the traditional min-max reordering process.”
“What’s wrong with tradition?” asked Elaine.
“A couple of things. With min-max, you can end up carrying too much inventory for extended periods of time, and on the other extreme you can get caught being out-of-stock or have an insufficient supply of something without a prayer of being able to replenish ahead of a peak demand situation. It’s kind of a double whammy.”
“So you’re trying to change that to what?” asked Amy.
“We’re testing a demand-pull restocking concept based on a fixed time interval. See, min-max has a fixed minimum order size, but a variable time interval. With a fixed time to reorder – like every day we place an order, or every week, or whatever – the order size will vary, based on the amount actually consumed within the reorder interval.”
“And why is that better? What would be the benefit?” asked Amy.
“For two reasons, both pretty important,” said Murphy. “First, by studying the overall demand patterns, and determining the time it takes to reliably replenish a stock of a certain item, we can have high confidence in the reliability of that replenishment process. With demand pull restocking and DBR we can protect customer commitments.”
“Would you be so confident that we – sales, that is – could offer guarantees to customers?” asked Garth.
“Yes. If we put this in place and verify it over some length of time, then you could at least guarantee shipping dates,” said Murphy.
“We could get our foot in the door with at least a few of the accounts we’ve lost with a promise like that,” said