Duvall & Associates, Inc.
BUSINESS ADVISOR NEWSLETTER
 

 Efficiency is vital, but companies must plan for the unexpected

- by Alan Duvall 

Published in Dayton Daily News  August 12, 2007 

“Where were you when I needed you?”  Grass Roots

Recently, an earthquake in Kashiwazaki, Japan temporarily shuttered Riken Corp’s factory, which supplied tiny $1.50 piston rings to Japan’s major automobile manufacturers.  Riken’s closure generated a chain-reaction week-long stoppage of an estimated 70% of Japan’s auto production facilities. 

Welcome to the world of “Just in Time” – a production philosophy pioneered by the Japanese wherein factory inventories are maintained at sensitively low levels to reduce costs and improve productivity.  The system functions particularly well in Japan due to historically familiar relationships manufacturers forge with suppliers. 

Unfortunately, Japan resides on a massive fault line and disasters like Kashiwazaki and Kobe (from years past) spot-light a vital weakness in the timing theory. 

The turn of the 20^th Century witnessed the dynamic introduction of the Henry Ford production-line system to the world of manufacturing.  Innovative for its time, the efficiencies thus created vaulted Ford to the pinnacle of the auto mountain. 

But as time progressed, the Ford system withered in usefulness, hindered by its reliance on uniform, static products.  The system simply choked on line changes and small batch orders.

Enter Japan’s “Lean Manufacturing” concepts, best championed by the storied success of Toyota Motor Company.  Lean Manufacturing incorporates managers and workers alike to eliminate non-value work, overburden and unevenness as represented by the seven deadly wastes of production, namely: overproduction, transportation, waiting, inventory, motion, over-processing and defects. 

These principles are universal and not simply limited to manufacturers.  Public and service sectors can likewise benefit from such self-analysis.  Engage all employees to analyze internal procedures carving out layers of waste and improving response time.

But leave room for contingencies – such as a major supplier ceasing operations.  Rigid oak trees do topple in storms. 

“No time left for you – on my way to better things.”  Guess Who 

Alan Duvall is a certified public accountant in Dayton.  Contact him at Alan@Duvallcpa.com.  Previous articles archived at www.duvallcpa.com.