Uncommon Sense: Your Schedule and the Market
Companies exist because they offer something to the market that the market perceives as having value. Simply put, your company exists to exchange goods and services for revenue. How much the market is willing to exchange for these goods and services is directly related to their price. Price is the single element that allows the purchaser to quantify the quality, cost and schedule of your goods or services.
Because markets are globally competitive, the price is often outside of your control. If quality, cost and schedule are not controlled, competition in the market will direct consumers elsewhere. Therefore, it is the principal role of management to constantly focus on improving these elements.
It is interesting that so much has been written on the benefits of improving quality and controlling cost, while so little has been written about controlling and improving scheduling. Why is that? The answer is simple but profound: It is harder to do than it sounds.
Quality can be measured, touched and felt. Cost is simply the outflow of funds. Schedule is on-time performance, delivering what customers want, when they want it. The difficulty seems to be that cost and schedule are in conflict. Inventories improve schedule but, at the same time, increase cost if they are out of alignment with market demands. If inventories are in alignment with market demand, then schedules are improved and inventory costs are optimized.
Inventory alignment is the most misunderstood entity in many companies, and the most common cause of uncontrolled cost. Misalignment of inventory will lead to quality issues and even more cost, but it is also a key indicator of opportunities in the schedule.
Over the years, manufacturing gurus and lean consultants have focused on labor cost, quality and continuous improvement of the manufacturing process. The key question is: Why don’t more managers apply what they’ve learned about reducing cost and improving quality to reducing the schedule?
Traditional supply chain management has not done that because it is focused upstream. Outsourcing cannot do it because all it really does is send batch requirements to external sources. MRPII cannot do it either, because it is a static entity and has difficulty dealing with market dynamics from both the demand and supply sides.
Although it is contrary to many of the current postulates, managers must focus on internalizing as many of the external market features as they can to control the schedule. These market features manifest themselves on both sides of the supply chain, and the more they can be brought under internal management and control, the more schedule, cost and quality can be improved.
The importance of schedule cannot be overemphasized in view of the dynamics of modern global economic forces. Companies that recognize that schedule is a comparative, distinguishing feature that can be used to competitive advantage in the marketplace will reap benefits in market share and profit. Managers who excel at the difficult task of continually improving schedule will emerge as true leaders.
New tools must be developed to meet this challenge and new visions brought into play. Management must put aside static historic schedule assumptions for companies to fully benefit from the advances they have made in improving quality and reducing cost. The issue of the schedule cannot be avoided for much longer. Executive management will have to provide the leadership and tools to make schedule and maintain market share. Otherwise, their companies will lose their positions to companies that adopt the vision that schedule is a distinguishing feature in the global marketplace.