8/12/2019 Aska - Mhd50_52

1/3

m a n a g i n g d e m a n d f l o w5 0

MHD Supply Chain Solutions March / April 200550

Within manufacturing processes the focus is

traditionally on direct labour cost. For this

reason we see a number of companies that

move their production to Asian countries,

expecting further reductions in labour cost.

The savings that can be achieved through relocating the

production sites to these areas are getting marginal and

will be smaller and smaller as the developing countries

develop themselves. That is why focus should be moved

from labour cost to where there is really something to

save, such as material consumption, fixed and variable

costs involved in the overhead of a company. Companiesaround the world have seen very impressive results such

as reduced production flow time and reduced working

capital when this technology has been implemented.

Adding value, reducing cost and eliminating waste are

the founding principles of lean manufacturing. The

principal focus of agile manufacturing is flexibility.

Demand Flow Technology encompasses both lean and

agile manufacturing principles and goes further to

become a demand-driven strategy for the enterprise.

What is DFT?Demand Flow Technology is a scalable, mathematically-

based business strategy, specifically designed to allow

manufacturers to respond faster and more efficiently to

the needs of their customers and the marketplace.

DFT is a simple strategy designed to keep the

methodology of manufacturing goods and servicing the

customer as simple as possible. Attention is directed at

using mathematically-based tools to simulate and

design production processes that are balanced and flex-

ible. Material replenishment systems are designed to

provide flexibility, reduce overhead and provide early

visibility of shortages.

Employees are given tools to facilitate fast response

and quality assurance. In fact for all aspects of thebusiness, from Sales and Marketing, Finance,

Engineering and Employee Relations to IT and

Information Systems, there are tools and proven busi-

ness models provided that facilitate the most respon-

DEMAND FLOW TECHNOLOGY:An absolute business discipline

by Ashok Kay*

Forget all about labour cost and focus on where there is really

something to save. This is the essence of Demand Flow Technology.

Demand Flow Technology (DFT) is a complete business strategy that

allows manufacturers and distributors to adjust product volume and

mix every day in the direction of actual sales. It is a demand driven

strategy that is used by B2B or B2C operations.

sive, flexible and lowest cost method of meeting cus-

tomer demand requirements.

DFT provides a method of addressing issues such as

how to balance batch processes and link them into

downstream processes without unnecessary inventory

investment, how to flatten bill of material structures

without sacrificing planning and design capability, how

to cost your products and report your performance

without departments and labour based absorption, how

to pull material (both purchased and manufactured)

without work orders, routings and schedules, and how

to utilise Kanban while still maintaining inventoryintegrity, revision control and lot traceability.

Understanding the difference betweenDemand Flow Technology, Lean andother theoriesThe commonly used business process tools fall more

into the realm of philosophical and less tangible recom-

mendations rather than proven technological tools and

techniques. The following sections will address the key

features of the popular tools and techniques that are

used by manufacturers and how these are incorporated

into DFT and complemented to form a comprehensive

and definitive business strategy.

Figure 1: Demand Flow Technology is a comprehen-

sive strategic umbrella that is completely synergistic

with any incremental improvement efforts currently

underway and underpins the business processes and

technology to deliver and exceed customer demand.

Change ManagementThis is designed to provide the basis to educate profes-

sional change management agents, people who can lead

projects to success within the company. Project man-

agement, people leadership, and change management

techniques are required to support the projects that acompany undertakes. As such the change management

activities are very supportive programs for DFT. For

example, a benchmarking exercise begins the process

for a need for a change and re-engineering and socio-

Ashok Kay

8/12/2019 Aska - Mhd50_52

2/3

m a n a g i n g d e m a n d f l o w

MHD Supply Chain Solutions March / April 2005 51

TheAssociationfor Australianlogisticsprofessionals

Dinner

meetings

Site

visits

Seminars

Brea

kfast

meetings

Secretariat

assistance

Networ

kin

g

opportunities

technical empowerments provide good team building

exercises that are required within the operations.

5S/Visual FactoryThese are two different but complementary

management programs. 5S aims to bring order

cleanliness and discipline to the working envi-

ronment. The 5 S are from the Japanese Seiri

(Sort), Seiton (Set in order), Seiso (Scrub),

Seiketsu (Shine), and Shitsuke (Sustain). The

Visual Factory program builds upon the orderly

facility to make the measurements and controls as

visual as possible to people. The typical visual tools are

Kanban, Flow line control boards, Wait/work boards, and

Employee involvement boards.

Supply Chain Management (SCM)SCM focuses attention to the improvement of all aspects of the supply chain surrounding

and within a factory, which will maximise the companys service to their customers whileminimising cost. This is an extensive effort over multiple years for most companies but

the results justify the effort expended. It is important to create a stable responsive man-

ufacturing environment within the company first before moving outside to address either

distribution to the customers or supply from the vendors. This program is an excellent

follow-on program to a DFT activity.

Lean Manufacturing (Toyota Production System TPS)This program is often used as an overall strategy naming convention since the term

lean is related to cost reduction, efficiency, and productivity. The Lean title from this

technique was introduced in the USA to encompass the Toyota Production System (TPS)

methodology created in Japan by Toyota Motor Company. This technology is very similar

to Demand Flow Technology in its mathematical approach and benefit objectives.

Flow Based Costing or Activity Based CostingFlow Based costing provides methods and calculations to cost the products the company

builds in a flow manufacturing environment. The flow based costing approach is simply in

many ways the collection of cost data and the creation of different absorption rates and

cost drivers to suit different costing elements. DFT promotes activity based costing done

according to the process Takt time. Takt is a German word for music measure and is

used in DFT to denote the heartbeat of the operations as determined by the customer.

KaizenKaizen has been used within manufacturing companies for some considerable time. The

Japanese word for continuous improvement, this program looks to identify areas that jus-

tify improvement and provides a Kaizen Blits approach to an area or complete line. The

Kaizen approach provides steps in a continuous improvement journey that a company

undertakes. Kaizen is compatible with DFT as a follow on program that takes advantage of

the knowledge of those areas identified for improvement during the DFT implementation.

Value Stream MappingValue stream mapping is an analysis methodology to identify areas of the companys oper-

ations that would be a candidate for improvement. It is not a series of isolated Kaizen

efforts but rather a structured analysis capability, to identify overall improvement areas.

Value stream mapping gathers and displays a far broader range of information than a typi-

cal process map yet tends to be higher level than many process maps. It can be used to iden-

tify where to focus future projects, subprojects, and/or Kaizen events. DFT uses flow mapping

at a detail level and applies production mathematics based areas for improvements.

Simultaneous Design EngineeringThis is an engineering program that provides the methodology and approach to concur-

rent or simultaneous engineering activities within the company. The program provides

Figure 1

8/12/2019 Aska - Mhd50_52

3/3

m a n a g i n g d e m a n d f l o w

MHD Supply Chain Solutions March / April 200552

Basics of

Supply ChainManagementAPICS Basics is a stand-alone course, or the

first step towards the internationally recognized

APICS CPIM (Certified in Production andInventory Management).

APICS Basics

provides these

benefits:

The knowledge

necessary to

manage the flow of

material in your

organizations

supply chain

Essential business

information aboutsupply chain

management

Increased

professional

competence and

recognition

A certificate of

achievement

The groundwork for

pursuing additional

modules in the

APICS CPIM

program

Basics of Supply Chain

Management topics:

Enterprise-wide

concepts for

satisfying customer

expectations

Determining and

managing customer

demand

Managing the

transformation of

demand into supply Managing supply

activity

For more information on

this subject contact your

local APICS chapter.

Victoria 03 9249 9515

New South Wales 02 9891 1411Queensland 07 3282 8393

South Australia 08 8243 7911

Western Australia 08 9322 1444

TRAINING CLASSES AND WORKSHOPS:JCIT will hold a series of four-day DFT business strategy workshops in Australia.

Initial workshops are held in Melbourne & Sydney on April 12-19 & April 19-22.

For further details refer to www.aska.net.au or call +61 2 9965 3737

the steps required to formalise the engineering change and process order change within

the operations. The main technology delivered by the program provides the steps neces-

sary to marry the new or changed product design process to the ability to simultaneously

incorporate these new and changed products into existing or new manufacturing flow

lines in the plant. The objective is to reduce the time taken to deliver new and changed

product to the market.

Six SigmaThis management program provides a very structured approach to improvement activity

that is designed to systematically bring high quality levels to as many management proj-

ects as the company requires. This technique focuses on statistical methods to put in

place a parts-per-million performance metric. The Six Sigma binomial distribution pro-

vides the quality goal to be pursued throughout the organisation. Certainly a business

strives for this level of quality, and can use the measurement techniques to support

progress. Companies that have the most success embed quality within the process,

beginning in manufacturing and then extending proven techniques through the support

functions. Formal training reinforces the quality checks to be used by all personnel.

Machine capability is understood by utilising well-recognised statistical methods such as

X-Bar/R charts, Pareto analyses, and histograms.

This program is very compatible with DFT in that many companies have employed SixSigma to follow DFT implementations and thus maintain the benefits of both.

Total Preventive Maintenance (TPM)This management program is a close relative to both Kaizen and 5S in that the objective

is to provide maintenance to all equipment, buildings, tooling etc. to maximise the effec-

tiveness of the people both providing the maintenance service and the people building

our products. This program would be thoroughly recommended as an extension of the

work done during a DFT implementation, particularly in a machine shop.

ConclusionDemand Flow Technology is a comprehensive business strategy that utilises many of the

exact same tools already employed by businesses. There is no need to change the strate-gic path and tactics designed to optimise response and quality and minimise cost.

The mathematical basis of DFT removes as much subjectivity as possible, letting the

numbers guide the decision-making process. Developing an understanding of DFT tools

and their appropriateness for specific applications is a must for anyone looking for a

business strategy that delivers results. DFT provides the fundamental structure within

which progress is planned, documented and tracked objectively.

These days, customers are demanding products once thought to be absolutely unique and

completely made-to-order, at the lowest possible cost. Increasingly impatient, customers

are expecting high quality and low cost products. Companies that fully embrace DFT as their

comprehensive business strategy will have the ability to meet changing customer demand

on a daily basis without significant layout rearrangement and frequent employee retraining.

Implementation of Demand Flow Technology will not only optimise and make consistent the

production response, but by definition will put in place an overall organisation that has the

tangible tools and techniques to achieve unparalleled response, quality and low cost objec-

tives wall-to-wall, plant-to-plant, and throughout the entire corporation.

All initiatives related to specific parts of a business are wrapped within the compre-

hensive strategic umbrella of DFT, and are completely synergistic with any incremental

improvement efforts that may or may not be adopted by the companies currently.

*Ashok Kay B.E.(Chem), M.Eng., MBA has over 15 years of industry experience and has worked

in process (Mining & metals and Petroleum) industries and manufacturing environments.

Ashok has worked in Australia, USA and Southeast Asia. He is the Director of Aska Consulting

(www.aska.net.au), a boutique consulting firm that has developed a strong partnership with

leading business process solutions providers including JCIT (www.jcit.com).