The Lean (R)Evolution

I think this is a direct reflection of the uncertainty that most companies see as they look to the future. Rather than a temporary condition this is the “new normal” and we’ll all need to adjust our thinking to a shorter, more volatile forecasting horizon.

“Lean manufacturing—producing goods with minimal waste of time, materials, and money—was pioneered by Japanese companies such as Toyota Motor (TM) decades ago. Now a growing number of U.S. businesses are trying a more extreme form of lean. Besides making factories superefficient, they are gearing output to current demand rather than three- to six-month forecasts. “We’re seeing a precipitous rise in companies adopting a religious commitment to producing only what they know will sell,” says William A. Schwartz, managing director for business development at TBM Consulting in Durham, N.C., which shapes make-to-demand strategies for producers of chemicals, building materials, and packaged foods.

In capital-starved times, companies can ill afford to tie up cash by letting parts and finished goods lie idle in inventory. And these days, even if companies place orders, there’s no guarantee they’ll get the financing to complete the purchase. In most past recessions, notes Richard Seaman, CEO of Seaman Corp., a Wooster (Ohio) maker of heavy fabrics for industry and construction, companies could generally predict demand for the next month with an accuracy within 5%. “In the past four or five months,” he says, “there has been a sea change.” Converting to very lean manufacturing helped the company adjust to the new environment. It used to fill large orders in six weeks. Now some fabrics are out the door 48 hours after an order is placed. ” Source: Six Sigma is Out. Extreme Lean Manufacturing Is In – BusinessWeek

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