Synchronous Profitable Operations
Production series: PC – 01
Volume 1, Issue 3
Synchronous Profitable Operations (SPO): the ideal production method for suppliers
Top managers often ask themselves: How can the expected financial and operational performance be simultaneously achieved?
They know that they must produce and sell only products that are: (1) needed by customers and (2) sufficiently profitable throughout their life cycle.
The purpose of SPO is to achieve no more and no less than what is necessary for customers, employees, shareholders, the state, etc. by reaching the successive targets of TAKT PROFIT (the pace of profit demand) and implicitly TAKT TIME targets (the pace of customer demand).
SPO is for companies looking for their own production system.
WHAT is SPO?
- Synchronized, equalized and profitable production method that maximizes the effects of digitization and Supply Chain Management (SCM).
- The SPO production method summarizes as follows: (1) Fow, (2) Pull and (3) Synchronization to TAKT PROFIT.
Critical issues
- Is your company’s JIT (Just-In-Time) production effective and profitable enough?
- Are your suppliers’ JIT systems no longer meeting your need for continuous improvement in purchasing costs?
The SPO production method complements the weaknesses of the JIT production system.
- Are you fully satisfied with the effects of digitization and Supply Chain Management (SCM)?
The SPO production method maximizes the effects of digitization and SCM.
SPO: Concept Exegens
The SPO production method has 2 basic concepts:
- production oriented strictly to customer needs is inefficient;
- to meet the expectations of production divisions, daily production and production sequences must be stable; production outputs must be profitably equalized and synchronized to meet market volumes.
The SPO production method has 3 basic principles:
- productivity is determined mainly in the planning stage and therefore it is best to plan its improvement strategically and operationally;
- inventory and cost control is best determined in the production planning phase;
- production management must drive improvements in production processes – Strategic
KAIZEN
projects for TAKT PROFIT.
Special topics of interest:
- Establishing robust links between cost improvement strategy and operations/products;
- Recognizing the need for synchronous, equalized and profitable operations;
- The need to establish consistent relationships between TAKT PROFIT and operations/products;
- Pursuing continuous growth of TAKT PROFIT through feasible Strategic KAIZEN projects.
The 7 gains of the SPO manufacturing method
The central gain: simultaneous strategic and operational focus on times, quality and costs
The concept of “Just-In-Time” or “synchronization” and its practice is very important, but we believe that it is very difficult for all manufacturing companies to achieve complete “synchronization” and especially profitable enough on an ongoing basis.
For end manufacturers (companies such as automobile manufacturers that process and assemble “finished products” and supply them to their customers), JIT is a highly effective method.
However, for suppliers (companies that supply parts and materials to end manufacturers), JIT is not always adequate and profitable enough.
Suppliers need a manufacturing method that includes the concepts of “synchronization” and “profitability” to achieve annual and multi-year target profitability.
So: Can a company be sufficiently in sync with customer demands and at the same time insufficiently profitable in the medium and long term? With the SPO production method, the answer is YES and 7 base gains are achieved.
”The mission of Strategic Kaizen is to achieve the ideal state of operations: synchronous profitable operations”. Alin Posteucă, 2023, Taylor & Francis – Routledge, New York, US
Features of SPO
The 3 elements of the SPO production method
(1) Synchronized and profitable planning
“Synchronized and Profitable Planning” consists of the production plan standards and procedures that achieve the “7 Gains”.
(2) Strategic and operational improvement of production flow
The highest level of production flow will be created and the consistent improvement of manufacturing processes will be achieved.
- Objectives:
– Shortening lead time
– Reduction of Work In Process to zero
– Elimination of capacity/profitability constraints
– Obtaining One Piece Flow
– simultaneous synchronization of TAKT PROFIT and TAKT TIME - Main methods used:
– Speed-Based Profit Targets
– Profit Demand Mapping
– Redesigning work methods
– Elimination of capacity and profitability bottleneck processes
– KAIZENshiro Costing/Budgeting
– Strategic KAIZEN
(3) KAIZEN Strategic Methodology for SPO
Strategic KAIZEN methodology is for accurate, feasible and rapid production improvement and correct operation of SPO production method.
Implementation
Ease of introducing the SPO production method
The SPO production method is implemented in addition to the existing production method (such as JIT, MRP, etc.). It does not require removing the existing system and does not start from scratch. It will be necessary to introduce the concepts of timing and profitability based on the feasible improvement of cost with non-productivity and the implementation of solutions of strategic and systematic productivity improvements without investment – Strategic KAIZEN projects for TAKT PROFIT targets.
Example of SPO implementation results after 3 years (index):
The cooperation of people in Strategic Kaizen projects and the full mobilization of top managers around KAIZENshiro Budget and Takt Profit is the key to the successful implementation of the Exegens program to accelerate the production strategy in order to continuously control and reduce costs.
About Dr. Alin Posteucă
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