Tuesday, November 22, 2005

More proof that PhD stands for "Piled High and Deep"

Kevin and Anne over at bH had a real run criticizing The Chronicle with thier "In the wake of Katrina" editorials. I've found another self serving and idiotic use of that same phrase in an editorial to espouse another pet idea, this time from InMFG magazine. The article is entitled "Survival of the Leanest" on page 52 of the November 2005 edition. The article touts "Lean Manufacturing" as the end-all be-all of supply chain management. It starts out by talking about how Katrina sent shock waves through the supply chain and the goes off to say the answer to those shock waves is lean manufacturing, but no where does it make the simple explanation of WHY. Well, I'll tell you why it doesn't make that conection. It does not do so because THERE IS NO CONNECTION! Katrina didn't send shock waves through the supply chain because there was a glut of product (unless you count mud and water), it sent shockwaves through the chain because there was a dearth of product. Keeping inventories low only EXACERBATES that problem.

The article is written by David F. Ross PhD CFPIM which just happens to be the education group manager of a company called Intentia Americas. Care to guess what they do? They are supply chain management consultants. They don't HAVE to make thier ideas work, all they have to do is convince some moron in management to pay them big bucks to spout this kind of drivel.

Inventory exists to act as a buffer to supply chain disruptions. Keeping a large amount of inventory brings on it's on costs, there are taxes to be paid on that inventory, there are stranded costs that cannot be realized until the inventory is used, and then there are costs associated with warehousing the inventory. I'm not saying the Lean Manufacturing is a bad idea, but it can be taken too far as well. If you don't keep enough inventory, you will shut down production while you wait for more inventory to be shipped. If due to a catastrophe, you cannot get inventory for some weeks, you're just SOL. Especially if you've gone the "Single Source" route that so many supply chain managers espouse as well. If your single source cannot deliver, you're sucking air.

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