Supply Chain Cost Reduction

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Along with Lean and ERP, Supply Chain Management (SCM) is a hot topic in today’s world of global operations management. In the last ten years, numerous enterprises have replaced their Purchasing Manager with a Supply Chain Manager. Yet, in many of these companies, little has changed in how they conduct business with their suppliers. This article will address how to achieve real value with SCM by identifying and reducing total supply chain costs. Traditionally, cost reductions are achieved by getting suppliers to reduce their prices. To this end, we employ tactics such as competitive bidding and negotiation. But these tactics…
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Balance the Line, Save Some Time and Cut Wip– All Without the Computer

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LEAD TIME is defined as starting when the need for a product, part or service is recognized and ending when that product, part or service is available for use at the point of use. For example, manufacturing lead time would run from the time a shop order is issued until the product is available for shipment. In many manufacturing situations the bulk of this time elapses while the product is sitting around waiting for something to happen. This time is called non value added time, as opposed to value added time when the product is having work performed on it.…
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The Value of Bilingual Education in the Workplace

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I remember the look of terror on their faces on the first day of class, and now, on the last day of English classes how they were beaming, filled with pride and accomplishment, belying the journey these immigrants took from speaking little or no English with really thick foreign accents, to being able to make a public presentation in their “new and improved” English to their esteemed colleagues. Eyes welled-up as the Vocational English as Second Language (VESL) students shared their success stories at this high-tech medical device company. Twelve short weeks ago, Tran, an electrical assembler from a small…
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Thriving in a Challenging Economy

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I recently stopped by a local deli to have a little something to eat while on one of my weekend bike rides. This deli is in a very upscale neighborhood in a brand new shopping center. There are plenty of businesses nearby to support a lunch crowd and a humongous recreation center just the other side of the parking lot. I soon found out that the deli had been there a few years and that the owner was thinking about selling because business was so bad. I wasn’t surprised when the owner told me this, because he “pooh-poohed” all of…
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Upgrading Customer Service

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From all the indicators, it appears we are at the start of a recovery. Credit is opening up and people are starting to buy again. The key question at this point in the cycle is: how do potential customers decide if it’s you or your competition they are going to buy from? Customer service could be the deciding factor. Customer service is a major decision factor in every purchase. As I’ve said in many articles over the years, customer service comes from the combination of three areas: customer dialog, customer friendly processes, and employee commitment to customer service. You must…
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Who Pays for Waste

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What is waste? Waste (or Muda) is anything (activity or material) that does not produce value for the customer. There are two kinds of Muda. Type 2 Muda is waste we can see and quickly eliminate using point kaizen. Type 1 Muda is waste that is systemic, hidden in plain sight, and is very difficult to eliminate without a concerted, sustained and systemic effort. We will talk about that in the next issue. How wasteful is the average “non-lean” manufacturing company? In my practice, I have found that it is possible to double the production in the same space without…
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Workcell Empowerment

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Lean, which is adapted from the Toyota Production System (TPS), embodies much of the Toyota cultural and operational philosophies. One of the overriding philosophies of TPS is “worker empowerment”. Lean creates an environment that empowers workers, especially at the workcell, level, to act in favor of quality and productivity. This concept is in sharp contrast with the traditional western management philosophy, which believes those decisions are better left to the supervisor. To illustrate this how empowerment works, the author tells the true story of Fred (not his real name) who identified and helped stem a serious quality problem without any…
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Activity Based Management– Merging Process and Measurement

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Introduction Increasing competition, both globally and locally, make it clear that businesses know accurately and understand the source of process, product and service costs within their organization. Activity Based Costing (ABC), with its focus on deconstructing overhead pools and assigning costs to products and services in a more meaningful manner, has been a giant leap forward from traditional costing models where a high percentage of cost is arbitrarily allocated to products. However, ABC models often look at cost from a financial point of view, making sure only that all costs are assigned to some product accounting “box” without a thorough…
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