2. SIX SIGMA
Six Sigma is a quality program that, when all is
said and done, improves your customer’s
experience, lowers your costs, and builds
better leaders. –JackWelch
3. In this segment we will examine the sixth point of
Six Sigma, Over Production.
Over Production has been defined by many as the worst of
the 7 wastes of lean manufacturing. What are some causes of
Over Production?
4. In many cases, Over Production will create Rework.
Have you set down and calculated how much rework
cost in raw materials, labor and overhead.
I challenge you to calculate the cost of
rework with your Management Staff and
yourAccountant (internal or external).
Your eyes will be opened.
5. Over Production can cause storage issues. There
may not enough space to hold the extra product.
The product is now stored in a unusual place. People
forget the extra product is here.
This creates storage issues. Storage issues will create
movement issues. Movement issues will create potential
safety issues and potential safety violations.
6. You look in the checking
account. Funds are very low.
Why?
The amount of payables are
building.
Now you have your financial resources
tied up in inventory.
7. You may decide to have a fire sale to relieve the
over inventory situation. Product sold at a
reduced price so the product can move quickly.
This places the “cheap” factor in the market place
about your product. You may recover raw
material costs, but your profit is minimal.
8. If this Over Production is not resolved quickly, you have a
chance for stale product.
Stale product has very little up side, if any. Your financial
resources: Raw Material and Direct Labor Costs, lost.
Storage costs and Movement costs and resources, lost.
9. Before asking the question, How can I avoid Over
Production, answer this question:What type of
Production System do you have; Push or Pull?
What is the difference, you ask?
10. In a Push Production System, you will produce to
stock. You will rely on sales staff to sale the
inventory stock. You can also call this system, MTS –
MadeTo Stock.
11. In a Pull Production System, you will produce to order.
You can also call this system, MTO – MadeTo Order.
Your production system will be Batch and Queue.
12. How can you avoid Over Production? A Pull based
Production System, MTO, should avoid most Over
Production.
If you insist on a Push Production System, MTS,
make sure your data analyst knows all aspects of
your data to ensure accurate forecasting.
13. We have completed the
Over Production
section of Six Sigma.
The next presentation we will examine Defects.
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