Production Planing - Ze'ev Ronen - Business Excellence

Assuming the company sells 20 products, the items are listed from the products generating the highest profit at the top of the list to the products generating the lowest profit at the bottom of the list. According to the Pareto principle, there is a good chance that the first four products on the list produce around 80% of the company’s revenues. If we focus on improving the profitability of these four products, we will achieve substantial improvement of the company’s profitability in an effective way.

Let us assume that we wish to improve the company’s profitability. The company sells 20 products. We then insert those items into a table - the product generating the highest profit will appear at the top row of the list, and the product generating the lowest profit will be the last item on the list. According to the Pareto principle, there is a good chance that the first four products on the list produce around 80% of the company’s revenues.

Aviv was the owner and CEO of a company, and led marketing and business development. Most sales and growth were in overseas markets, and Aviv personally managed activity in key countries. He spent a lot of time on marketing trips and knew all the overseas clients and distributors.

In this part I mean to focus with more detail on each method, and see the differences between the levels of familiarity with the method and its use, and the success it generated. As you'll see, there are methods which are widely used but fail to generate success, while contrastingly there are methods which are rarely used, but the majority of managers who've used them report success.

The CEO is in charge as far the law, the share-holders or the board of directors are concerned (meaning he's the one accountable). So he must ensure the company reaches its goals and targets, first and foremost profit and resiliency. Of course the CEO's instinct is, then, to be involved in everything, and try and personally lead all processes in the company.

Recommended frequency for discussion of indicators: I recommend all indicators' results be discussed by management once a month. At least once a week, they should be discussed in dedicated improvement teams with the relevant manager (operations, sales, finance, marketing, etc.) or their representative. Some indicators should be shortly analyzed daily, as needed.

This is the last chapter from my new book: Manage! Best Value Practices for Effective Management. the full book is can be purchesed on Amazon. The purpose of this book is to provide a fresh look on how you can improve business results by making your company matter to your employees.

When I was young, I managed the kibbutz field crops section. Meir (not his real name) was one of the main workers, a serious professional. He knew all the tasks and could do any of them equally well. But he didn't want to perform just any task. He chose what he wanted to do and what he didn't, as well as how he performed it.

One CEO once told me he often gives advance commitment for unrealistic delivery times he has no possibility of reaching. But if he doesn't commit to brief delivery times, he won't get the order.

In the past, when I managed a company that manufactured and supplied office furniture to institutions, I began my term by visiting the delivery area to find out how deliveries are handled. To my surprise, I discovered that there was no follow up on packing lists and that the drivers didn't always turn them in.

If we have product trees, where the materials composing the final product are detailed, it is easy to work in the IT system to link the materials requiring movement from the warehouse for production and packing of the product sold or entering the warehouse before sale.

The product was highly profitable, but still, it seemed we might be able to shorten the process and make it more efficient. So, the course participants suggested a few significant improvements and elimination of some of the stages.

 The CEO of that company led the business and marketing development and wanted to ensure that they would never lack product to supply orders, and therefore their warehouses were full of product that turned out to be defective.

At a major public company's plant, output was never measured. Production planning was performed on the basis of machine work hours for each product, and there was no control undertaken on this either. As the objective is to produce some kind of product, or to provide a service, we need to measure output and not the hours during which we have manufactured or planned production.

If we address the 20% of principal products manufactured (see example later on), we can attain a significant improvement in results (eg. profits). In this way, we can concentrate our efforts and resources and be decisive and efficient.

Sometimes it seems to me that CEO's are afraid to confront management members who are not maintaining objectives. Instead of demanding a plan of action to attain the objective, the CEO herself explains to herself why they haven't attained their sales, production or other objectives.

If a motor burns out because it is old, and it is ten years old, and if our objective is to prevent breakdowns, then we must replace all the motors approaching or exceeding this age. In order to attain the root cause for a breakdown, we can use what is known as the "fishbone" technique, or the 5 Whys.

More than a few companies have begun to implement the 5S method on a high scale, even attaining excellent results, and after a certain amount of time, the excitement fades, we stop maintaining and promoting the improvement and the achievements disappear.

Many companies wish to improve their performance and seek strategic advice as well as marketing or organizational development strategies, and when they receive advice, opposition emerges throughout the organization and ultimately this advice remains untouched in a book.