This article is part 1 of a 2 part series on creating a Plan-For-Every-Part (PFEP) for a manufacturing facility.

Part 1 introduces the concept and benefits of the PFEP.

Part 2 provides a step-by-step walk through of the PFEP.

Ever since the lean manufacturing methodology was popularized by the Toyota Production System (TPS), manufacturers around the world have implemented lean methods in their processes in an effort to reduce costs, reduce lead time, improve quality and boost productivity.

By identifying value and eliminating waste, these “leaned out” practices produce better results with fewer resources. Lean is all about process improvement with a focus on quality in contrast to mass production with a focus on quantity.

If that concept seems counter-intuitive, it’s because the mass production mentality has been ingrained in business productivity since Henry Ford began making cars. Unfortunately, the mass production mindset sabotages lean initiatives because production can never be truly lean if you’re supplying your work cells like a mass producer.

Consequences of Mass Production Supply
When inventory is delivered infrequently and in bulk, lean production suffers. Below are just a few consequences:

  • Processes are starved. An ideal process is one that is flexible and consistently available. When resources (such as skills and time) are spent managing the material overflow, your value stream of finished goods is neglected.
  • Flow experiences loss. Since a major part of lean manufacturing is a continuous flow, any congestion can upset the entire value stream.
  • Plant resources are wasted. Not only does an over abundance of inventory require workers’ energy, skills and attention, but it also wastes substantial dollars in the form of inventory storage costs, not the least of which is lost factory space.
  • Items get lost. In lean, you want to achieve seiri (no unneeded items) and seito (no cluttered messes). An uneven flow of parts sabotages those goals, as space constantly needs to be reallocated to accommodate the inconsistent ebb and flow of assorted items. Parts go missing, time and labor is wasted searching for them, and downtime often results as well.

Clearly, there is no value in carrying too much inventory, so why does it continue to occur even when manufacturers are striving for lean production? While seemingly elusive, the reason is simple. These otherwise lean manufacturers lack a comprehensive door-to-door material flow for all purchased parts.

Manufacturers achieve material flow by creating a Plan for Every Part (PFEP), setting up a purchased-parts market (logically managed and specifically placed) and forging designated paths for material handlers to follow when responding to Kanban signals.

Unfortunately, optimizing inventory management and material flow processes is commonly neglected. Often, when plant management is trying lean out operations, it tends to focus disproportionately on those processes that involve directly making products. Thus, it focuses on production labor. Yet, it is important to focus on optimizing material flow, because as Rick Harris, co-author of Making Materials Flow explains, “In the typical plant, the materials cost tends to be 50% to 80% of the operation’s total costs, versus just 7% to 17% for labor.”

Material Requirements Planning (MRP)
Some managers actually pay a great deal of attention to their inventory but still experience all of the pains described above, resulting from mass-production supply. If that sounds like you, it’s good to recall that inventory management systems are not one-size-fits-all. For example, many companies employ material requirements planning (MRP). With MRP, future product demand is predicted. Once demand is determined, the necessary parts to assemble those products are identified and inventory is accumulated and stored so it’s available when needed.

While MRP makes inventory readily available, there are also a number of drawbacks to MRP:

  • MRP is not designed to monitor data that is crucial to lean goals of reducing storage space. MRP does not track part dimensions; without that seemingly mundane and unimportant information, you can’t properly plan storage requirements, and you’ll end up storing as much air as you do materials.
  • MRP is not tailored to reality. Statistics, sales history and social trends can offer very valuable information about customer preferences and behavior. However, if research collects poor data, your MRP guesses will be poor, too.
  • MRP is not based on the current client climate. Of course, there is also the cold reality that even with the best data, past results do not guarantee future performance. When actual demand falls short of forecast manufacturers are often stuck holding unnecessary and excess materials.

Just as using MRP to manage inventory can fracture and ultimately sabotage lean initiatives, having a PFEP can shore up lean efforts. After you establish a Plan-For-Every-Part, you’ll be able to use it to make informed choices about the current state of your process.

Benefits of a Plan for Every Part
Knowing what parts you have on hand can help you determine storage space requirements. Since you’ll have all the information about the part’s function, dimensions and department location, you can develop highly functional and well-timed delivery paths. The PFEP could even be connected to Kanban cards so that pertinent information is easily attainable for all workers. A thorough PFEP is the foundation of the entire material management system.

You may be skeptical about investing resources in a program that takes time and effort to maintain – especially if you already have relevant information about your supply materials in the areas where those materials are used. However, it is vital to understand that the collection of data (as a whole) is greater than the sum of its parts. A Plan-For-Every-Part enables you to enhance the value of all plant activities while also eliminating redundant data management tasks, reducing data inaccuracies, and greatly improving planning processes that rely on inventory data.

In part 2 of this 2-part series we tackle the 4-step PFEP process for developing a lean Plan-For-Every-Part for a manufacturing facility.