Examples of production dynamics control for cost efficiency

Abstract The paper focuses on the principal issue of production control, i.e. to manage the cumulative effects of individually insignificant factors which together contribute to the difficulties to allocate resources efficiently. In the communication between all actors in the value adding chain there are delays and distortions which affect how the industrial enterprise perceives its business environment. The consequences of these delays and distortions can be substantial; end consumption is severely distorted and the factory gets caught in a vicious circle where false information feeds a capacity load situation that appears nearly chaotic. The phenomena causing the unmanagable situation are commonly known as Forrester's demand amplification effect and the Burbidge's load surge effect. It is proposed that the control methods of the enterprise and the reliability of the communicated information directl affect how successfully the enterprise is able to avoid the aforementioned situation. The discussion is founded on results from a number of operations development projects in the automotive, sweets, electronics and textile industry. The paper describes the effect of demand distortion and control surges in a number of enterprises and presents ways of solving the problems occurring. In conclusion, the significance of the results for directing development efforts in manufacturing operations is discussed.