Originally posted by regken I'm baffled by Pentax's manufacturing. I have a question for any of you that have worked in or been connected with any type of manufacturing. What would you think if a manufacturer decided not to ship their major product for 90 days? That's 25% of your yearly production. I've always found it a little hard to sell out of an empty wagon. The only logic I can come up with is they expect to sell so many of the new bodies in the next 9 months they need the 3 months of extra production to meet the demand because of lack of production facilities. That is a very risky proposition if that is what they are doing.
I've been around a lot of manufacturers in the past and have never seen anybody take this approach before. I'd love to know what the truth is behind their reasoning.
Regards,
Ken
30+ years in electronics manufacturing here, including many years managing the operations, logistics, inventory, and so on.
I have not manufactured purely retail goods, which have different dynamics, but the bottom line amounts to the lead time in the entire pipeline plus how much capacity you have in your system.
Based upon what I have seen from Pentax in the last 2 - 3 years, and little tidbits of information like the announcement a few years back about enlarging the lens factory (8,000 square meter adition, IIRC, which is NOT a huge facility addition), I can deduce that Pentax does not have a large manufacturing capacity, and that it is basically fully utilized.
So, if your system is close to full utilization, and the new products do not almost exactly fit your "old" tooling, fixturing, procedures and employee training, by definition you cannot easily run the old products alongside the new. Even if the tooling and training were all but the same, if you are running at or near capacity, you certainly cannot "double up" and run the new products at the same time as the old. Assuming equal run rates, you would need 2x the capacity to run two products where you used to run one. However, once you were completely switched over, you would no longer need 2x capacity (unless your new gadget is wildly successful) so now what?
Now you have to consider your lead times. If your lead time from material procurement through to the delivery to the distributors or retailers is very short, then the problem is minimized and basically amounts to how long it takes you to start up the new process and get the new system running, assuming you planned everything properly and started all of the initial tooling and material procurement well before the switchover.
However, if your lead times from initial material procurement through delvery is long (lets say 4 months just as an example), then you have to try and predict EXACTLY how many units of each "old" product will be needed to cover the 4 month period because you cannot run the new product in parallel to the old. I have worked on many product release plans, and there is no way to exactly predict future demand with enough precision to make sure that no one runs out anywhere in the world while at the same time you do not get stuck with unsold inventory that you cannot move.
Many of the camera makers got seriously burned by excess inventories in the bad old last days of film cameras in the late '90's, so most of them have made efforts to implement Just in Time inventory systems which strive to minimize any extra inventories. In other words, you do not make extra units or buy extra parts that you might never sell.
In the case of a end of life product, once you take your best guess as to when Engineering will be done with the new product, and also how many old units you will sell while you tool up the new products, you are stuck with however that plays out in terms of availability of product in the pipeline.
As you might be able to guess, if Engineering is late, you will run out of the old product, and trust me, Engineering is always late.
Also, I am quite sure that having extra parts and assemblies is a big no-no these days (especially with Mother Hoya looking over your shoulder), so I expect that running out is preferred over having unsold units when the new product hits the shelves. After all, unless they are at fire-sale prices, who will want a K10 when the K20 is available? In fact, even announcing a new product will likely cause people to stop buying the old product, so you have to account for that as well.
At the end of the day, even were things to be planned perfectly, there would be a gap in availability to make sure that all of the old product was cleared well before the new product was even announced and to minimize the amount of unsold inventory in the pipeline.
Ray