Home' MHD Supply Chain Solutions : MHD May-Jun 2017 Contents D
IFOT (Delivery In Full, On Time) has
been the most common area for rapid
improvement in our clients to date.
DIFOT has been elevated to well above the
industry norm while we simultaneously and
dramatically shrink the order to delivery time.
The result is that that both of these attributes
become a competitive advantage in the
marketplace. Cost reduction is also a commonly
encountered benefit as the smooth running of
the system drops the cost base at the same
time we improve DIFOT and lead time.
These approaches produce measurable
rapid results, sometimes overnight, usually
within a few days, and certainly no longer than
a few weeks. By measurable results, we mean
measurable improvements in the company’s
Companies can often achieve very high
DIFOT and short lead time by increasing
the amount of money tied up in finished
goods. This achieves great customer service
(sometimes), however, it comes at a massive
financial expense for the company with cash
tied up in stock.
The approach outlined in this article will
assist you to elevate your DIFOT to a level where
it becomes a competitive advantage for you. It
will also seriously shorten your lead time, often
with reduced stock levels and a lower cost base.
This approach is not a LEAN program,
TQM, Six Sigma, or any other of the commonly
understood manufacturing improvement
methodologies. This approach builds upon
your existing manufacturing systems and helps
accelerate the improvements. The approach is
based upon the Theory of Constraints developed
by Eli Goldratt. Our focus is to rapidly change the
performance of the business in such a way that
the customers want to buy from you because
your service is exceptional. The business wins,
along with the customers, because this great
service is provided at a lower cost base than it has
previously operated at.
This chapter is about helping your
organisation move its operational delivery
performance up to the level of ‘Black Belt’ as
tabled in Figure 1.
Let’s walk through each level so you can
assess which belt is reflective of your current
White Belt - Selfish
As a ‘delivery’ White Belt, a manufacturer is
very inwards focused. Usually the company
operations regard themselves as the centre
of the universe. In this environment, there is
often a very high premium placed on being
IN THE PREVIOUS INSTALMENT OF JASON
FURNESS AND MICHAEL MCLEAN’S RECENT
BOOK MANUFACTURING MONEY, THE AUTHORS
DESCRIBED SOME DANGERS BUSINESS OWNERS AND
MANAGERS HAVE TO BE AWARE OF ON THEIR WAY
UP TO A ‘BLACK BELT’ IN A MANUFACTURING AND
DISTRIBUTION BUSINESS, TO CREATE “A BUSINESS
THAT IS TRULY IN CHARGE OF ITS OWN FINANCIAL
DESTINY”. IN THIS SEGMENT, THEY REVEAL THE
IMPORTANCE OF DIFOT – EVERY TIME.
‘efficient’, oblivious of the impact that such
efficiencies can have on custom service levels.
Production schedules are often very inflexible,
lead times are very long to the point of being
uncompetitive. If the business relies upon
forecasts to plan the production activities there
are often many arguments about forecast
accuracy as being the cause of most production
A business can have very high stock levels,
very low stock turns, and be out of stock of
many products, all simultaneously. Money
is being wasted by lost sales, excess stock,
overtime and other crisis management activities.
DIFOT may not be a measure that is in use, if
DIFOT is being measured it is very low.
Yellow Belt - Reactive
At a Yellow Belt level, it may seem paradoxical
but the chaos and stress can actually be
higher here than at the white belt level. The
reason for this is that while the factory is still
focused heavily on efficiencies, it is still trying
to react to customer shortages and issues.
The result is that the production schedule
is planned for efficiency and then it will be
changed frequently and sometimes radically
most days, to accommodate customer needs.
The production output is still disconnected from
the actual market behaviour, so overstocks of
some items and stock outs of others are still
common. Operations and sales are still at each
other’s throats. Supervisors and managers have
to react to volatile situations. Shortages of parts
are usually still common. Time to spend on
MHD SUPPLY CHAIN SOLUTIONS — MAY / JUNE 2017
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