ABSTRACT
This chapter is all about pressure. Pressure to increase shareholder value, pressure to increase sales, pressure to reduce costs, pressure to increase salaries, pressure to introduce new products, indeed a whole host of pressures that all combine to make the life of the average manager difficult. It is also about some of the harsh realities of manufacturing today. Long gone are the days when you could set up the plant to make a product and leave it for days at a time. Today, when manufacturing plants must be highly flexible, capable of making a range of products, where swift changeovers are not just nice to have but a necessary condition for success, the ability to manage whatever capacity the plant has, with little or no waste, is now paramount. Today products do not have the same lifetime as they once had. In the mobile phone industry, for example, we started working with one company in 1994 when it was still possible to release a product and wait almost a year or more before the next came out. Today that timescale has been reduced to a matter of months, and the complexity of the product has increased almost exponentially since then. The range of features that must be part of every mobile phone today are beyond the belief of the designers of mobile phones eight years ago. The ‘cost of manufacture’ must now be measured in the ‘small dollar’ numbers rather than the tens of dollars of the recent past. Of course it might be observed that the traditional method of calculating the ‘cost of manufacture’ is still based on cost accounting allocation principles, something which I, and many others, have been trying to change for many years. Either way, the challenge is still to reduce the real price paid for manufacturing each and every product. As we shall see later, reducing cost is only part of the game; the real focus should be on sales. This is a central issue within this book, and also within the Theory of Constraints body of knowledge upon which this book is based.
