Beyond lean: production and inventory policy for the old economy
Yoho, Keenan D.
Rappold, James A.
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Lean manufacturing has fundamentally changed the way business leaders think about the production of manufactured goods and services. Over the past three decades, firms have dedicated considerable resources to reducing production setup times, shrinking inventories, and organizing work into cellular flows. Discrete parts manufacturing has benefited from production planning schemes that smooth production and levelload the plant to reduce idle time and overtime. But in the process industries, where production occurs 24 hours a day, seven days a week, what does it mean to level-load the production facility? In those industries, capacity stabilization is defined as creating production cycles that are predictable, and level-loading consists of stabilizing manufacturing lead times. In this article, we describe the differences between what we call inventory-centric versus capacity-centric modes of production and inventory control, and we present data collected from a large chemical plant operation that illustrates a mismatch between inventory policy and capacity characteristics. We also describe policies appropriate for old economy firms in the face of increasing consolidation and pressures to reduce costs and increase responsiveness.
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