Jul 29 2014

A Lean Approach to Management

Leverage manufacturing intelligence to gain insights on how to improve the management process.

 

lean_approach_managementManufacturing enterprises have invested heavily in Lean practices for many years, wringing the inefficiencies out of every operation in the production process. Supply chains have been tightened, inventories reduced or virtually eliminated with just-in-time processing, and production operations at every stage streamlined and optimized.

But there is one area in the Lean revolution that often is not considered—not because it doesn’t matter, but because it has been so difficult to deliver a solution. That neglected area? The management decision-making process.

Consider a global manufacturer that has practiced continuous improvement for a decade. Products roll off the assembly line with precision. The Quality team is on top of production worldwide, so yields are consistently high. Warehouses operate at top efficiency. And then one day, a supplier problem develops. A key component, let’s say, begins trending out of spec.

What does the company do? That depends on the managers who have responsibility. How quickly can they identify the problem? What actions do they take? How soon can they correct the problem, and how accurately?

Applying a Lean Approach to Management

All of these things depend on information getting to that decision-maker in a timely way. And this is where Lean systems can fall down. Global manufacturers have complex supply chains and multiple plants that often capture data in different ways and report in different formats. That data has to be gathered, transformed, cleaned, stored and analyzed, and then delivered to each person in the enterprise who needs it, in a form appropriate for their role.

The plant manager may spot a problem quickly, based on local data. But what if it’s a regional problem that is only apparent when looking at aggregated data? Then it will take longer, perhaps a good deal longer. There are companies that are happy if they get aggregated global manufacturing reports on a weekly basis. But a lot can happen in a week. Faulty products can ship. Quality can get bogged down with testing. Warehouses can accumulate parts waiting for a management decision.

A New Use Case for Enterprise Manufacturing Intelligence

This is why some enterprises are now implementing a new generation of manufacturing intelligence systems that provide global management reporting and analysis in close to real-time. This approach requires more than a graphical front-end that simply “dresses up” disparate or incomplete data. It requires real-time information gathering from all the plant floors, the ability to clean and aggregate the data from multiple sources, and the means to deliver that data up the corporate chain “as it happens”—all the way to the corner office if needed.

Such a system is not trivial to implement, and IT may grumble about yet another information project that will stretch its already thin resources. But there are solutions on the market that are relatively easy to deploy, and the investment is small compared to the efforts already expended on global Lean initiatives.

Besides, without a manufacturing intelligence system, Lean organizations are only Lean when nothing unexpected happens. And, as every manufacturing enterprise knows, that is almost never the case! One unexpected event can undo months of savings and efficiencies.

For enterprises that are serious about continuous improvement, it would seem that manufacturing intelligence for managers is a necessary step. For my next post, I’ll explore this idea further—to continuously improving management performance itself.

Permanent link to this article: http://www.apriso.com/blog/2014/07/a-lean-approach-to-management/

Jul 24 2014

In Case you Didn’t Notice … Corporate Accountability just Moved into a Fishbowl

corporate_governance_fishbowlWe have always lived in a world where shareholders (and the SEC) demand financial transparency, where global supply chains and business operations require visibility, and where manufacturing strives to make quality and productivity the priority. These are excellent pillars upon which manufacturers can build an agile, competitive company. But, as we’ve all witnessed, we don’t live in a perfect world. There are cracks in the corporate foundation for some organizations. That fissure is in the form of accountability—or, rather, the lack thereof.

The Sarbanes-Oxley Act of 2002 (SOX) introduced major changes to the regulation of financial practices and corporate governance, with an objective to improve visibility and accountability. SOX is widely credited for strengthening at least two major areas of investor protection:

  1. CEO and CFO responsibility and accountability for all financial disclosures and related controls; and
  2. Increased professionalism and engagement on the part of corporate audit committees.

Yet some continue to question its overall value, citing, as an example, its failure to prevent the situations that led to the financial crisis of 2008. Several other examples come to mind of companies that have not had “full disclosure” across their operations.

I would propose that the ultimate solution really can’t come from legislation or rules passed by companies or governments. It has to come from within. But, unfortunately, not everyone has such clear morals, especially when role models continue to reveal their less than stellar judgments. Perhaps a more realistic and less benign perspective might instead be that people will continue to try and take shortcuts for as long as they think they can “get away” with it – a risk vs. reward perspective.

Business as usual in 2014 is very different than it was in 2000. Today there are many new technologies and social media platforms that make it easy for employees to share information. One wonders, however, even with all of the communication avenues available in the exchange of information, are people utilizing them? If it is not ingrained within the culture and people are not empowered to question management decisions—probably not.

Sometimes out of tragedy comes change for the better. One of the large car manufacturers is currently dealing with their own crisis. They are now on a mission to fix the cracks in corporate communication. They are not alone. Every large manufacturing organization faces similar, daunting challenges. People want to do the right thing, but, a series of poor decisions can often cascade into a really big problem – one that lacks a clear, easy solution. What is needed is to set a new industry standard for safety, quality and excellence.

If done right, this way of thinking could offer a pioneering transformation in the manufacturing industry in which transparency permeates the very manner in which people work. It is an approach that moves everyone in the organization from a defensive to an offensive mindset. The widespread acceptance and usage of social media might just be the catalyst that can make this transformation occur.

This concept is outlined in the book The Pursuit of Social Business Excellence by Vala Afshar & Brad Martin. And, it’s not easy to accomplish, as it requires an internal culture change, the authors explain: “How can an organization go from a defensive to an offensive, proactive, preemptive mindset if it is fearful that engineering will be upset if they proactively bring up the question of product quality?”

It’s a mindset that must be reinforced by the leaders of the organization. “Discipline, transparency, and adherence to service level agreements drive the culture of accountability,” the authors note.

While the book mainly focuses on the use of social media to reinforce the relationship with the external customer, it all starts within the organization. It requires an internal cultural re-definition that outlines how people should act. At its core is a cross-functional, inter-departmental cooperation and empowered employees who feel safe sharing constructive feedback—even to the CEO– without feeling that there will be negative repercussions.

“This requires a practiced ethos of working together, where everyone rows the same boat in the same direction,” the authors said.

Regardless your organization, as a leader of a global manufacturing organization, you need to get everyone driving down the same road to quality—quality in the products your manufacture and quality in the daily dialogue. Time will tell. If done right, we will see a new trend emerge over the next few years whereby corporate accountability becomes completely transparent, and we as consumers don’t get any more surprises.

Permanent link to this article: http://www.apriso.com/blog/2014/07/in-case-you-didnt-notice-corporate-accountability-just-moved-into-a-fishbowl/

Jul 17 2014

When it Comes to Packaging, Paperless Manufacturing is an Art. Literally.

packaging_as_art_manufacturingYou’re in the store, shopping for a household item. You scan the shelves quickly, see the brand you’re looking for, and grab it. Or perhaps you don’t have a specific brand in mind, and you’re attracted by the package design. Either way, you’ve just shown how important the package can be to a product’s success.

To enterprises that sell their goods on consumer store shelves, or even online, packaging is a vital part of the sales process and is integral to the brand itself. For some products and customers, the package is the product! That’s why companies spend so much time reviewing, refining, and managing their packaging art and copy. (In some cases, the packaging can actually become a highly desired piece of art, such as the image at right!)

But, manufacturers may be spending a lot more time than they need to, and not getting the results they want. That’s because packaging, for a global producer, is so highly complicated and collaborative. It crosses boundaries into different regions, cultures, languages, and laws. That package you see in the U.S. will be in a different language in other countries, with different labeling requirements. There will likely be subtle cultural differences too.

Yet somehow, global companies need to achieve consistent look and feel wherever possible. And when a product package needs to be varied for a specific region, the variation must be managed and implemented in a strategic way to protect and grow the brand.

Getting everyone properly involved in development and review, and then translating their decisions onto the actual packaging art as part of the manufacturing process, is a slow and often painful process.

Enter a company called Barilla, a global leader in the pasta industry. The company sells some 1,500 brands in more than a hundred countries! To get their packaging art under control, Barilla has implemented a paperless solution that streamlines the artwork and label creation process, and provides each of its stakeholders with secure, digital access to all the elements of the package including copy, logos, and designs.

Every stakeholder is able to collaborate from idea generation to validation, working from the same master label. The final artwork can then be moved seamlessly into the packaging production systems around the world, with complete confidence that it is reviewed, accurate, and up to date in every instance.

Marco Rossi, IT Business Process Support Director at Barilla, says, “No more working on outdated samples and making decisions that have to eventually be rescinded, which drove our costs up and our response time down. With this solution, we can digitally exchange ideas faster, more intuitively, and with few to no packaging recalls.”

None of this should be a surprise. Manufacturing Execution Systems are already used by many enterprises in product manufacturing to enable material synchronization, manufacturing efficiency, quality and compliance, in support of accelerating innovation and new product introductions.

If a manufacturing execution system can operate as a paperless solution to deliver these benefits for product design and production, then why not for packaging art as well? It’s the logical next step in the transition to paperless manufacturing.

You can read more about Barilla and paperless packaging art in this press release.

Permanent link to this article: http://www.apriso.com/blog/2014/07/when-it-comes-to-packaging-paperless-manufacturing-is-an-art-literally/

Jul 15 2014

The Relentless Pressure for Supply Chain Agility

agile_supply_chainAs most of you are probably well aware, Gartner publishes a Supply Chain Top 25 list every year, representing those companies that have best mastered the skill, precision and art of managing their supply chains. This list is a big deal, and is revealed each year at a special conference held in the spring, usually at a nice resort in Scottsdale, Arizona.

According to Gartner, in order to make this list, a manufacturer must typically have achieved:

  • Harmonized foundational processes, data structures and solutions across their global supply chain while driving next-level, tailored performance through advanced capabilities, such as end-to-end segmentation, cost-to-serve analytics, multitier supply chain visibility and supply network optimization
  • A cross-functional team composed of sales, marketing, supply chain and IT to design a holistic new market strategy, and enable local operations supporting new geographies and products for your business groups, and
  • Set aspirational goals and connect the dots between the work people do every day in the supply chain and its contribution to the societies within which they live, building engaged supply chain talent that can lead business growth

These are no small feats! A minimum requirement to achieve this level of enterprise agility is a set of IT systems that work seamlessly across operations – crossing functional boundaries as well as the typical silos of plant-based operations.

Apple’s Remarkable Performance

In order to even earn a ranking on this list, one might view you as a “rock star.” To achieve the #1 spot consistently, on a year-over-year basis is truly magical. Apple has achieved that level of supply chain performance, with 2013 metrics combined with a vote by Gartner analysts and their peers that placed them at the top of the heap:

  • A three-year weighted ROA of 22.3%
  • An average of 82.7 inventory turns
  • A three-year weighted revenue growth of 52.5%

Trouble with Apple’s Core?

According to a recent article in the Telegraph (“Apple’s supply chain in trouble?”), challenges may now be getting much harder for Apple to retain its lead. The article stated that that the ‘iPad Pro’ – a larger version of the iPad, equipped with a 12.9-inch screen – may now be shelved (it was), and that the sapphire-screened iPhone 6 may now be in trouble due to a challenge within their production or supply chain operations (another accurate prediction).

Alas, this is not the first time Apple has had challenges to overcome – their gorilla glass story is well documented. As the story goes, Jobs flew to Corning, New York to meet with Corning CEO Wendell Weeks and explained that he wanted the iPhone’s screen to be made of glass, but that it had to be durable and he needed enough of it within six months to be produced for all the iPhones he was planning to sell. Corning delivered with a production break-through, in time to deliver the new iPhone that was unveiled in early January of 2007.

No Easy Path

Manufacturing leaders must continually re-evaluate their production processes, challenge their suppliers to do the impossible, and then adapt their business processes on an enterprise wide scale so to keep up with all this change. Couple these obstacles with a continual need for new product introduction that is stunning, innovative and ground breaking, and then you too can be an Apple.

Given this deeper dive into what it takes to top the Gartner Supply Chain Top 25, it is even more remarkable that Apple once again retained the top spot in 2014. This year, their metrics included:

  • A three-year weighted ROA of 20.5%
  • An average of 69.2 inventory turns
  • A three-year weighted revenue growth of 31.2%

Clearly these figures are less than the score from last year, further indication of the continuing challenge to manage the supply chain. Yet, these figures were better than all the rest – so Apple continues to shine.

The only question now is who can de-throne the king?

 

Gordon can be found on Google+ .

Permanent link to this article: http://www.apriso.com/blog/2014/07/the-relentless-pressure-for-supply-chain-agility/

Jul 08 2014

3 Operations Habits of Highly Successful Manufacturing Companies

3operational_habits_of_highly_successful_manufacturing_companies

As activity in the global manufacturing sector continues to grow post the financial crisis of 2007-08, successful in-house operations rest on a few basic factors: keeping costs low, morale high and productivity up. The latest research shows that smart executives build a culture of communication, innovation and respect at their facilities. Learn what experts say you should be doing to help your manufacturing outfit prosper:

1. Embrace Innovation and Open Communication

Pennsylvania State University conducted a study entitled, “Review of Innovation Practices in Small Manufacturing Companies.” One of the key findings researchers Anthony Warren and Gerald Susman discovered for successful manufacturing firms was an open flow of communication between management and employees, along with interdepartmental cooperation.

PBR Pty., an automotive components manufacturer that participated in the study, is a company that excels in a highly competitive industry. Management knew that existing technology and resources may not put them in the best position to maximize profits. The company developed partnerships with other firms to handle issues that would otherwise need a dedicated development team and months of planning to accomplish in-house.

Leverage continuous process improvement and streamline as many processes as possible by establishing relationships with specialty firms. Maintenance on assembly lines is a near-daily occurrence, and it shouldn’t stall production any longer than absolutely necessary. Your parts supplier, for instance, should be able to provide parts in a matter of hours. O-ring manufacturer Apple Rubber calls this “maximizing your advantage.”

Furthermore, consider cloud-based computing solutions to facilitate data storage and security and other functions that would require IT personnel.

2. Offer Fair Wages and Benefits

Employee retention was second only to cost control as top concerns for manufacturing companies, according to a survey by MetLife. Nearly all workers said they’d be interested in more benefits as further incentive to stay on the job.

Your product will only be as good as the workers you have to produce them, and happy workers are productive and content ones. Find out the median and average wages of workers both in your region and industry. You can also find information on what benefits similar companies offer employees and how to make said options available to your employees.

A great benefits package is instantly negated if employees don’t know how to access it. The MetLife survey also found that 70 percent of employees who said HR effectively communicated benefits to them are satisfied with their packages. Contrarily, only seven percent were satisfied when communication was lacking.

3. Respect

The industrial manufacturing firm Armstrong International has not laid off one single employee in its 109-year history. David Armstrong, the company CEO, told Manufacturing.net that his company even prospered during those rough recession years of 2008 and 2009 while many other closed their doors. He credited one simple, yet often overlooked aspect of his company culture for its sustained success: respect.

Recognize individuals for their hard work and accomplishments. These accolades can then be repeated during company meetings and social activities to reinforce a culture of mutual respect. Provide workers with clean bathrooms, dining areas and adequate parking spaces. These little things boost morale and help workers develop pride in what you’re trying to accomplish.

Conclusion

In the end, the expression “the more things change, the more they stay the same” comes to mind. Despite all the technological advances and productivity improvement applications that are now prevalent, organizations are still run by people. If you want to improve your operational efficiency, then a good place to start is how you treat your people. Those with respect, trust, and a sense of belonging will pay considerable rewards to how your organization operates in the future.

Permanent link to this article: http://www.apriso.com/blog/2014/07/3-operations-habits-of-highly-successful-manufacturing-companies/

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