Here is a link to a really good book on lean accounting:
http://www.amazon.com/Real-Numbers-Management-Accounting-Organization/dp/0972809902
One of the major take-aways for me is that in a low inventory business, you are not required by the Generally Accepted Accounting Practices (GAAP) to add labor cost to inventory valuation. It is this practice that is generally regarded by lean practitioners as a bad thing, because it encourages you to build inventory you can't sell as it makes the business appear profitable (at least in the short run). The book is written by two CFO's, so the ideas are quite credible.
Thursday, July 26, 2012
Wednesday, July 25, 2012
Advantages of Push-Pull Boundary
Push, or build to stock
- Advantage: lower lead time
- Disadvantage: higher inventory
Pull, or build to order:
- Advantage: lower inventory
- Disadvantage: higher lead time
Having a push-pull boundary is a hybrid approach. Operations prior to the boundary are pushing and operations after it are pulling.
- Advantage: Can trade lower lead times for lower inventory by moving boundary closer to last operation. Or vice versa.
Note that each component part in a product can have a different push-pull boundary.
- Manufacturing parts with expensive raw materials and/or high labor costs should be pulling more than pushing, to reduce cash tied up in inventory
- Manufacturing parts with long lead raw materials should be pushing more than pulling, so supplier's lead time doesn't affect your lead time to your customers.
- Advantage: lower lead time
- Disadvantage: higher inventory
Pull, or build to order:
- Advantage: lower inventory
- Disadvantage: higher lead time
Having a push-pull boundary is a hybrid approach. Operations prior to the boundary are pushing and operations after it are pulling.
- Advantage: Can trade lower lead times for lower inventory by moving boundary closer to last operation. Or vice versa.
Note that each component part in a product can have a different push-pull boundary.
- Manufacturing parts with expensive raw materials and/or high labor costs should be pulling more than pushing, to reduce cash tied up in inventory
- Manufacturing parts with long lead raw materials should be pushing more than pulling, so supplier's lead time doesn't affect your lead time to your customers.
Tuesday, July 10, 2012
New Landing Page for Manufacturing Simulation site
I re-did the landing page at www.manufacturingsimulation.org to include a screen shot of the software. It is also less verbose. Please check it out and let me know what you think.
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