Continuous flow manufacturing meets demands of a quickened marketplace.

Continuous Flow Manufacturing (CFM) builds on the familiar "pull" distribution strategies of reduced inventories and throughput time to meet the demands of a quickened marketplace in a cost-effective way, says Rap McBurney, Southeast region general manager of Tompkins Associates Inc, Raleigh, NC, an engineering-based consulting firm.

"Distribution excellence is achieved using the process of Continuous Flow Distribution, which is the streamlined pull of products in response to customer requirements while minimizing the total cost of distribution," he notes. "CFM is the integration of that theme within the manufacturing process. The use of this model requires a cultural shift from 'my department' to 'my company' as the focus. This global approach to manufacturing requires that all departments participate in the decision process to determine total costs of distribution."

Specifically, says Mr McBurney, CFM is achieved this way:

* Based upon customer requirements, an overall manufacturing network must be configured;

* Manufacturing requirements are identified, and strategic master plans are developed and implemented for each operation;

* Information and management systems for the manufacturing process and operations are assessed, defined, purchased, and implemented. The information systems will drive the manufacturing continuous flow process and will interface with all of the organization's business systems; and

* Once the manufacturing network, manufacturing requirements, and information and management systems are in place, a process of continuous improvement is installed.

"One of the latest buzz phrases is 'supply' chain management,'" he says. "Everyone appears interested as if this new phenomenon has entered the world of manufacturing and distribution very recently. If we analyze what the experts are calling supply chain management, we find that they are really talking logistics - but logistics driven by the requirements of the decade. That's all."

The thrust of supply chain management is an understanding of the entire chain, which includes purchasing, manufacturing, distribution, information services, customer service, sales, marketing, R&D, maintenance, and more, driven by the needs, desires, or requirements of the customer. If the process were more fully understood, it would be called demand chain management because the process should be one of supplying what the customer demands, rather than what is forced down the chain.

"In that spirit," Mr McBurney adds, "the manufacturing managers must be brought into the supply chain management strategy to fully understand that the role of manufacturing is to be part of the distribution process, not a vendor to it."

Channel optimization 

Traditionally, production was a matter of making more items while containing costs, and of pushing each department to optimize [TABULAR DATA OMITTED] its performance - better known as channel optimization. "This approach was, and still is, very effective at reducing individual department costs," Mr McBurney points out. "However, the impact on other departments in the organization can be quite negative."

For instance, he says, one can compare individual department costs in a fictional company challenged to optimize production. "The company has a demand for 750 widgets," he says. "The economical lot size is 1000 units, but the demand is for 750 units. The manufacturing manager can improve his cost/unit by producing only 250 additional widgets, though the costs in warehousing and maintenance will soar. The costs of manufacturing can be optimized to the detriment of the total organization."

Indeed, as the units produced climb, the manufacturing costs decline. "But the maintenance costs soar as the maintenance budget is based upon the 750 unit production and the excess 250 units cause non-budgeted expenses, expediting of spare parts, unplanned wear on the machinery, overtime for upkeep, and so on," explains Mr McBurney.

"The warehouse, expecting 750 units, must now consume valuable warehouse space, or acquire additional off-site space and bear the additional costs of transport, storage, and inventory carrying costs on the excess 250 units. Additionally, the company now has a 1.33 year supply of the product that must be counted at each inventory cycle."

The decision to manufacture 1000 widgets also affects sales negatively, according to Mr McBurney. "Expecting $8925 of inventory. (750x$11.90), it now has $15,000 (1000x$15) - that is, $6075 (and 68%) of excess inventory. Sales will suffer because there are finite funds available to put into inventory, and while we now have a 1.33 year supply of this product, there is $6075 of other products that we planned to have in inventory that will not be produced."

Which brings one back to CFM. "While this scenario may seem extreme," Mr McBurney says, "the fact is that the process is repeated every day in many manufacturing operations. Manufacturing management must be brought into the decision cycle so that a total understanding of continuous flow distribution and manufacturing can be understood."

Mr McBurney points out that there are several differences between CFM and traditional batch manufacturing. CFM, he says, opts for real-time, quick-response tracking and control instead of batch tracking. Also, he says, the flow through manufacturing-focused departments requires tracking only when entering or leaving a department. "And with significantly reduced raw materials inventories and the emphasis on customer service, vendor communications must be real-time," he notes. "This significantly broadens the scope of manufacturing information systems as compared with traditional manufacturing, in which vendor communications are often neglected, delayed, or issued after the fact."

Any upgraded material tracking and control system must be a simple, real-time system using automatic identification and electronic data interchange, he says. "In CFM, responses are required in minutes or seconds, "Mr McBurney says.