Why production matters

On LinkedIn Lean Business Process group, Ralph Bartelmann asked the following:

Is it really the matter to squeeze the last cent out of production ? In many environments production costs represent a minor part of the over all product cost. Following Pareto reasoning it seems more reasonable to work on other parts of the value stream like supplier developpement, product design etc. What is your opinion and experience ? What are the real challenges ?

Following is my answer:

It’s not about what production costs  but about what it does for the business. Improving production is about making is faster, better, safer, less tedious,… and cheaper.  It needs to be faster to make you more responsive, better so that production does not introduce defects that harm your reputation, safer and less tedious so that you can retain your work force and grow its skills.

If you improve on all these fronts, guess what? Your costs go down, and not only in production but in other parts of the value stream too, because they are not independent of production. For example, there is no point in trying to develop just-in-sequence suppliers unless you practice leveled-sequencing (a.k.a. Heijunka)  in your assembly line.

A manufacturing company ignoring production is an army ignoring combat on the grounds that more money is spent moving soldiers and keeping them supplied.