Rational Manufacturing, by Prasad Velaga
As everyone knows, Lean identifies and eliminates the things that add no value to the customer. What is this value (to the customer) in terms of our traditional metrics of price, delivery and quality, particularly when different customers give different weights to the metrics? For example, one customer may allow a long lead time with an emphasis on price subject to some minimum quality requirements. Another customer may say,"price is no problem but I want the product immediately." Should we not change the measurement of value based on customer preferences mainly for job shops with diverse customers? In my view, the value to the customer is the weighted sum of the three metrics, which is a composite measurement.
Ultimately, the elimination of the so called "waste" must clearly result in the improvement of at least one of the three metrics without adversely affecting the rest. How can we take advantage of the variation in the value to the customer? Human aspects (like work culture), practices, logistics, quality programs,product innovation, process technology and the management all have impact on the value delivered to the customer. For any organization, the individual impacts of these elements on the value to the customer vary with situation, that is, the marginal gains from the improvement of the elements vary with company situation. Imagine an n-variable mathematical function that maps all these elements to their net outcome. The derivative of this function with respect to any variable changes with the point (situation) and the derivatives are not the same for all variables at any point. Therefore, we need to know which variables we must change at any point (in any given situation) for significant increase in the value of the function. Some of these like better practices, worker involvement, 5S, etc can be improved without much expenditure as part of the culture transformation while some involve certain cost. The effort, time and cost that can be put on these elements are limited at any time.
It is possible in some cases that a well-managed company fails to see big improvements in the value (composite measurement) to the customers by religiously implementing TPS. In my view, we need to progress from lean manufactuirng to rational manufacturing that focusses at any time on the most effective elements of improvement in additon to the universally beneficial drive for better work culture.
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