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During the past 10-years, many gains in manufacturing performance were recorded. Productivity increased, inventories were reduced, cycle times were shortened, and on-time shipments were improved. The most significant shortcoming was the failure to eliminate the end-of-the-quarter syndrome or the hockey stick syndrome as it most often called. Why are so many manufacturing companies still struggling with the hockey stick syndrome? I am convinced it is because they are so focused on sophisticated computer solutions that they are unable to step back and seek out a practical solution to the problem.
The problem is self evident, very little production in the first half of the quarter with most of the production happening in the last month of the quarter. How much overtime do you guess was required to achieve the last month’s production? What do you think workers are doing during the first month of the quarter? How many things do you think went wrong during the last month of the quarter? What about quality?
At one company that produced over 50% of their products in the last four weeks of the quarter, we designed an EOTQ cost model to track the unplanned costs related to the hockey stick syndrome. This was not a complicated cost model. We tracked only overtime, scrap, rework, warranty and lost time. In the first quarter of implementation we shipped $14.4 million, take a guess at what our cost module told us. We had lost $1.8 million dollars all directly attributable to the hockey stick syndrome. How much focus do you think this company place on solving their hockey stick syndrome problem?
Companies that continue to live with the hockey stick syndrome will never achieve their full growth and profit potentials. How do you smooth schedules and achieve linear production? The challenge is in how to keep daily pressure on the critical path of scheduled tasks and milestones. We need to have the visibility of all critical schedules from day one of the quarter and create day-to-day team awareness and commitment to their timely achievement. Our manufacturing team must become sensitive and proactive in the execution of early production planning details and they must learn to apply their creativity and energy in a linear style. To be sure, up front planning and execution can yield amazing manufacturing results and lead to profitability beyond expectations.
Today many production managers are still trying to solve their linear production problem by pursuing a sophisticated computer software solution. Most companies are now using MRPII/ERP manufacturing systems to control their production environments. These systems do not provide a focus on up front tasks and milestones that are crucial to linear production. Consequently, they have not presented a solution to the hockey stick syndrome.
People responded favorably to daily challenge accountability. One manufacturer designed its entire individual and team recognition and rewards program around their daily production linearity program. It generated more positive results than the combined results of all previous continuous improvement projects.
Non-linear production is a high cost driver. Manufacturers will never be able to survive in the 21st century unless they initiate a program to continuously improve their production linearity performance. And unlike most computer system projects, implementation costs are minimum and the rewards are huge.
In answer to a client’s question, “How do we optimize our annual results?” A business associate responded, “to optimize annual results, you need 12 great months, to optimize monthly results, you need 52 great weeks and to optimize each week, you need 5 great days.” Remember, the first day of the year is as important as the last day of the year.
If your company is experiencing the “end-of-the-quarter” syndrome, you can discover how to eliminate it by visiting: http://best-manufacturing-practices.com
Bill Gaw is president of Business Basics, LLC, the publisher of six change initiative e-tutorials. He is a seasoned manufacturing executive with four successful business turnarounds to his credit.
Bill's works can be previewed at: http://bbasicsllc.com
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