WIP Work in Process Inventory: "Sigakari" Destructive Effects
of my customers have this same problem without even realizing all the
negative impact it has on their bottom-line.
critical change of mindset and culture will show us that Inventory is NOT
when the inventory includes Work in Process, it is impressive the amount of
money invested into:
Labor and Energy
is a poor investment, since the main purpose of any manufacturer is to put
products out of the plant in a timely manner, storing semi-products,
sub-assemblies, etc, comes back to hurt the performance of the business.
have personally witnessed the frustration of not being able to produce
something because the material we need has already been cut, bent, welded,
etc, and is part of a semi-product that we do not need.
is preferable to have people not producing for some time than producing
something we do not immediately need.
does WIP happen?
culprit of WIP is the “Just in Case” culture that makes us push product
before it is needed. When I had the opportunity to help one of the largest
shipyards in America, we discovered more than once, that a completed
subassembly made too far in advance, would not be used because the design
had changed for future units. In most cases the costly material and labor
were a total waste, since specifications from the government (the customer)
established not to patch pipe-work. In not few other cases, the bulk volume
was quite big and the subassemblies had to be stored in the yard, therefore
subject to rusting and other physical damages, adding to this the fact that
the transportation requirements were substantially increased with the
consequent cost and risk.
the WIP Problem…
the Toyota Production System did about this so common trend and problem was
called: “Pull System.” Pull System is a common-sense procedure that
imitates the functionality of Modern Supermarkets. Contrary to the old
“Grocery-Store” mentality, where large amounts of products would be
stocked in big warehouses, where they in many cases would get spoiled,
rotten, damaged, eaten by rodents, rained on, catch fire, etc, the
Supermarket does not store large amounts of products. The Pull System
creates a faster turn in inventories. Inventory turns are a healthy
ingredient in the company’s financial health.
“in house” first, this efficient product-flow tool was implemented
between work-stations. The key of the pull system is to not produce or
provide (or push into) the next work-station more semi-products or
sub-assemblies before it needs them.
The magic of the Pull System
“Pull System” worked so well in the “Internal Customer” dealings at
Toyota, that they decided to extend the culture to their vendors and
Original Equipment Manufacturers (OEMs). In order to establish this
functional Pull System, a “partnership with the vendors/suppliers” needs
to be established. This new trend is fortunately getting more popular all
the time bringing up the efficiency of the whole enterprise.
The Negotiation is a "Win Win"
negotiated with their suppliers and promised loyalty in exchange for
service. They committed to buy all the materials from them as long as they
agreed to bring the supplies to the assembly plant only in the quantity
required, at the time they are needed, and delivered right in the spot where
they will be used (POUS=Point of Use Storage). This service helps
manufacturers avoid the need for a warehouse and the consequent need to
transport materials afterwards. Actually there is No Warehouse. Some parts
and materials are delivered only for the needs of the next hour or even for
fewer than 60 minutes.
"We (believe we) are not important"
of my customers have said: “…well, but we are not that important to our
suppliers.” Let me tell you that Toyota achieved this level of support
from suppliers/vendors many decades before they turned into the powerful
customer they are today.
Negotiation is the Key
Any efforts to achieve this kind of negotiation are
worth it.Negotiation is a
technique that always works if we develop the appropriate skill. It is
always a Win-Win Situation!
have in many cases been able to establish these negotiations even for
Maintenance parts and the results have been very positive for both: customer