Feb 15

How do you Improve Production Throughput Capacity?

Categories:

Continuous Improvement, Industrial Equipment, Lean, Manufacturing Execution System, OEE, Quality

by Fred Thomas

Start by working smarter, not harder. Despite the physical constraints of equipment size and the square footage at AGCO’s Fendt plant located near Munich in Germany, they were able to accelerate throughput, improving capacity utilization to an impressive 96 percent, an increase of over 60%. Does this sound too good to be true? Don’t take my word for it. Hear them explain in their own words in this short video.

Capacity utilization was increased by taking a close look at how processes were performed, with an objective of improving efficiency and reducing equipment downtime. Continuous improvement is much easier to identify and implement when your IT systems are process-based, enabling both measurement and rapid enhancement.

AGCO leveraged their next generation manufacturing execution system to support and expand their Lean program. After all, you can’t improve what you can’t measure. This system is now being used to help make strategic production decisions as well as to gain better visibility in order to make more informed decisions.

An important metric for AGCO (and many other manufacturers) is machine downtime … less is better! Their new solution has been effective in improving this metric. With better visibility to real-time information for WIP and production orders, faster decision making and response times are now possible. This process improvement then improved Overall Equipment Efficiency (OEE) – an important metric AGCO uses to measure their plant’s efficiency.

AGCO explains in their video how they used their Apriso solution to help with the daily planning and distribution of their production orders across the shop floor. Maintenance management has been simplified, with integrated user screens to immediately request assistance from their maintenance team, helping them to better address equipment issues, resulting in even greater machine uptime.

Not only did AGCO improve their machine uptime, but they were able to immediately measure the performance improvement, thereby easily justifying investment in the new system. Here is a summary of all the benefits achieved:

  • Improved OEE
  • Increased maintenance efficiency
  • Reduced scrap rates
  • Greater process consistency, from shop floor up to executive management suite
  • Higher quality
  • Improved visibility
  • Better throughput, with zero machinery investment

There aren’t many situations in life where you can achieve so much for a single investment – an investment that can be measured quickly to demonstrate a strong ROI. Good thing for the management team at AGCO. Bad thing for their competitors!

Watch the video here.

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Feb 08

What is the Best Implementation Partner Strategy for a Global MES Roll Out?

Categories:

Continuous Improvement, Globalization, Manufacturing Execution System

by Olivier Drean


Having worked with the systems integrator community serving the manufacturing industry over the past couple of decades, a common question I hear is, “How can I best work with an implementation partner?” or “Should I work with an implementation partner for global MES roll outs?” So, for this post, I thought I would offer insights to help with this important decision.

Some of the potential advantages of working with firms specializing in enterprise software implementations are speed of deployment for a faster ROI, industry knowledge to get close attention and support from the business, and solution expertise to leverage the enterprise IT strategy and deliver a high-quality solution, as well as bringing a third-party perspective to the business challenge being addressed. In theory, a good implementation partner should guide you through the process more expeditiously, thereby offering cost, resource and time savings.

So, before you consider what the right affiliation strategy might be, first consider who might be the best potential fit. If you don’t think they can reasonably accomplish these potential advantages, then maybe you need to consider a different association… or perform the implementation yourself.

Let’s assume you decide that using an implementation partner makes sense. If your business challenge is best solved with a new global or enterprise Manufacturing Execution System (MES), the next questions are “What solution should I pick, and what strategy is best to implement?” These are two very important decisions. The bottom line is how to best avoid having this project turn into a disaster, but instead, to be a glowing success that makes you and your team look brilliant for making the right decision that solves your business need.

Depending on what solution you pick, your implementation strategy will follow. Let me explain. If your software solution must be implemented on a site-by-site basis, essentially as a new deployment every time, that must then be customized to meet each of the individual requirements for every location, then you really can’t achieve any economies of scale. In other words, every site implementation is like starting over as a brand new deployment. This means that you really need to have all your “heavy guns” available and on the payroll for every site installation. This might include representatives from the software vendor, other industry associates and your own internal resources … an expensive proposition.

Alternatively, if you pick an agile solution that can share processes easily across locations, then your strategy should be totally different (a solution with embedded BPM can accomplish these objectives). As each successive implementation builds upon what has already been learned, your best course of action is to deploy the “big guns” just up front. This means getting a senior project architect and other senior staff heavily involved for site #1. The same should be true of your own company resources, including executive, management and operations involvement to get a good starting point for your business processes at that first site.

Once the “heavy lifting” has been completed and applied to site #1, site #2 can draw from the lessons learned, helping to dramatically accelerate the deployment time for successive sites. Implementation partners can then carry on the site-by-site deployment plan while learning more about what best practices are possible; prior “live” locations can then be updated by your own staff as often as needed. This strategy allows you to devote your own internal staff to actually doing their own jobs while letting your industry colleagues leverage their knowledge and experience to handle the bulk of the implementation across the rest of your enterprise.

Think about how much less stress is involved when you don’t have to worry about losing resources during a global roll out of a new enterprise software solution. And, you don’t have to worry about getting every site perfect before going live – if you need to make an adjustment, simply make it. I personally know of a manufacturer that achieved a 50 percent reduction at their second site and third sites, due in part to adhering to this strategy. Future sites have experienced similar results, contributing to further cost reductions. One European automotive supplier had 11 sites go live on the same day based on this concept.

To conclude, if getting a site live is a big deal, then you probably will need to deploy a full set of resources including senior industry associates, project managers and internal resources for every deployment. When future sites can be implemented in a routine manner, it really can be your choice as to what resources to use. If you would prefer to leverage internal resources for continuous process improvement, then an implementation partner probably makes the most sense. If you have extra internal staff, than maybe it would be best to have them continue with the roll out.

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Jan 31

Manufacturing as a Strategic Advantage

Categories:

Globalization, Quality, Supply Chain

by Jim Henderson

At first blush, this concept might or might not resonate with you. The age of manufacturing as a strategic competitive advantage appears to have diminished. Activities such as the orchestration of a supply chain, product innovation, legendary service or rapid implementation of new business models are all very important strategic differentiators, so have achieved a lot of attention and focus lately. But let’s not focus on these items to the detriment of manufacturing.

I believe the largest industries in the world still view manufacturing as very strategic. And, over the coming decade, I anticipate manufacturing will have even greater strategic importance, so will be better recognized as a clear competitive advantage in the years to come.

Reversing the Trend
To start, I wouldn’t contest the idea that manufacturing in the US has been declining in strategic importance over the past several decades. Countries such as Germany, however, have taken an alternative perspective, and, perhaps as a result, their economy has performed better.

One thing is for certain: manufacturing and supply chain complexity has only increased over the past few years. At the same time, customer expectations have never been higher. This “dual edged” sword cuts both ways for an organization if they can’t effectively manage their operations. The question is whether or not these trends are significant enough to warrant changes in behavior and perspective, to consider manufacturing as strategic.

The answer might lie within some of the mega trends in demographics, economics and intellectual property. The bulk of global consumer purchases are now shifting towards emerging BRIC nations; this shift is driving a change in product requirements. A manufacturing transformation of building to an order of one through a demand driven value network has further complicated these societal changes.

Demand is Globalizing
It is no secret that over the coming decade we will see an emergence of a large consumer (middle) class in China, India, Brazil and more. But what does this mean in concrete and easily understandable terms? If we look at some of the industries that heavily rely on manufacturing, it means:

  • The growth rate of new automobile sales in China, India, and Brazil will likely be over 50% year over year (that is a lot of growth)
  • There will be over 3 billion new consumers of cosmetics world-wide over the next decade (think about all the product variations)
  • As a specific company example, China has the potential to become the largest market for Apple, where iPhones retail for $800 US

Design and Innovation is no Longer a US Monopoly
In this case, it might still be a secret – the US no longer holds a monopoly on design and innovation. China, India and many other countries have invested heavily in science, technology and engineering. These markets now have the internal resources to persuade investment from global firms in not just manufacturing but also research and development. Many large, global companies have invested billions in China to develop local products for local manufacturing and consumption.

The Impact on Manufacturing
To succeed in the new economy and compete in industries like aerospace, automotive, electronics, or consumer goods, it will be necessary for companies to develop, manufacture and deliver products to a highly diverse global customer base. This will require an incredible ramp up of manufacturing capacity in technically complex industries on a global scale.

Manufacturing a jet engine in Malaysia is not the same as building toys or fabricating textiles. Quality cannot be sacrificed as manufacturing globalizes in these industries. The bottom line is that the systems enabling manufacturing in these new factories must work from day one. Executing upon these strategic actions coupled with successful new product introductions on a global scale will separate tomorrow’s winners from the losers. Those that do it best will be our new industry leaders of tomorrow, which after all, is the point of finding a good strategic advantage and following it.

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Jan 27

Extracting Value with Global Trace and Genealogy

Categories:

Continuous Improvement, Manufacturing Intelligence, Product Traceability & Genealogy, Quality

by John Fishell

A new cost of doing business is coming due for global manufacturers, and it’s coming faster than many enterprises are ready to deal with.

It’s the cost of global trace and genealogy (T&G), which means the ability to trace the complete history of every part, assembly and process throughout the supply chain and out the door to the customer. I’m hearing this subject brought up more and more frequently from our customers, across every industry.

In automotive, Tier 1 and Tier 2 suppliers want global product traceability so they can better see into their supply chains. When the tsunami struck Japan in 2011, and the Taiwan floods struck a couple of months later, the industry was caught unprepared to make the sudden adjustments needed to the flow of parts and supplies. Now, many leading auto companies are investing in product genealogy solutions, both organizational and technological. In addition OEM’s are starting to make this a mandatory requirement of their suppliers to protect from future such disruptions.

The pet food industry has had several contamination recalls in recent years. In some cases, manufacturers had to take a much bigger hit than would have been necessary if they been able to produce accurate global T&G data.

Of course industries like pharma and medical devices have long been focused on trace and genealogy for regulatory compliance reasons, as well as for safety. But the challenges keep growing as the interconnected web of suppliers and sub-suppliers keeps growing. Companies that thought they had mastered product genealogy, suddenly found themselves racing just to keep pace with the growing complexities of global manufacturing.

We shouldn’t be surprised by all of this. When we talk about global trace and genealogy, what we’re really talking about is tracking everything – every last production detail that could possibly matter. And not just in one plant, but in and across every plant, and every suppliers’ plants, and even to their suppliers.

What’s more, this complexity is growing exponentially, with each new plant that opens. This is increasingly a concern as companies increase their investment in BRIC countries and off shoring.

Meanwhile, the impact that a product failure can have – on the enterprise and on the world – is also growing exponentially. One mistake can reverberate around the globe, while failure to contain that mistake could do irreparable damage to a brand. That should put global trace and genealogy near the top of any corporate to-do list.

Interestingly, the recent turn of events is actually good news for manufacturers. Implementing a robust global T&G solution can help you to unlock greater value from your operations while enabling greater results from continuous process improvement. If you can track all production and supply chain operations, you’re well on your way to having the best infrastructure for higher quality, lower costs and a superior brand. So, perhaps we should be talking about global trace and genealogy as an investment, not a cost.

In any case, we can safely say this: Offshore manufacturing has many inherent business advantages, but reliable product genealogy is probably not one of them. Companies opening plants around the world to reduce operating costs need to make sure they have trace and genealogy under control, or they may end up paying a very high price later on.

In my next post, I’ll take a look at a few misconceptions about what manufacturers actually need from their global trace and genealogy solution.

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Jan 18

Lean Success, Part 2: It’s not Lean if You Can’t Measure It

Categories:

Continuous Improvement, Lean, Quality

by Jordan Berkley

I came across a startling statistic recently, from a survey of manufacturing executives. Fully 14% said they did not know how much their Lean initiatives had saved. Think about that for a moment. Manufacturers have invested significant amounts of time, resources and cash in Lean initiatives, yet one in seven can’t say how much they’ve saved – or even if they’ve saved. (The study was by AlixPartners and is available here.)

This brings me to Part 2 in my series of blogs on Lean manufacturing success. In my last post, I proposed that Lean success depends on three factors:

  1. When the approach is complete
  2. When the results are measurable
  3. When continuous process improvement is enforceable

In this post, I will discuss the second factor: Lean must be measurable.

So how is it possible that so many executives are in the dark about the performance of their Lean projects? After all, you can’t improve what you can’t measure. Measuring the right things, the Key Performance Indicators that drive behavior is essential to successful continuous improvement initiatives. As important, and too often overlooked, these metrics need to be defined, measured and reported the same way so they mean the same thing, at each plant in the enterprise. This concept is paramount to achieving long-lasting Lean success.

I can think of two reasons why visibility is hard to achieve. One is the difficulty in deciding what needs to be measured. In Microsoft’s white paper “The Value of Manufacturing Visibility,” the authors state that “most manufacturers are challenged in knowing which few numbers really need to be captured.” The paper suggests several key metrics to track, including capacity and availability, labor efficiency per unit of production, quality, inventory turns and value-add time. MESA’s Metrics that Matter Guidebook is another valuable resource for determining the right KPIs for your organization. And, of course, your organization has its own set of metrics, though often I’ve seen organizations with too many KPIs. Initial effort devoted to defining what the right metrics are as well as the right number will be rewarded down the line.

Let’s assume you have clearly defined what will be measured. A big question still remains … how will you measure it? Even within a single plant, producing metrics correctly and in a timely fashion can be a challenge, especially if some processes are paper-based. For example, a production line might have automated execution, but downstream assembly is still using paper. Or, you might have several automated data collection systems making data integration difficult and costly.

Having identified what and how to measure, the next step is to actually perform the measurement, which can sometimes take too long, reducing their “actionable” value. The challenges grow exponentially when you want to measure the flow of materials and production processes across multiple plants.

While these challenges are great, they are far from insurmountable. World class companies that have been most successful have built common processes and metrics on a common global platform, which has greatly simplified data aggregation, visibility and accuracy. I have seen a medical device company reduce inventories by 25-35% across 16 plants. A consumer goods manufacturer cut WIP inventory by 50% and reduced cycle time by 50%.

The bottom line is that manufacturers can certainly meet – or even exceed – their Lean goals. A critical step is that you must know what should be measured and you must have a system in place to accurately, consistently measure these activities in order to ascertain if performance improvement has really occurred. Consistent visibility and measurement of key activities can drive performance or anticipate issues, across all facilities and operations.

In my next post, I will look at the third factor in successful Lean projects, enforcement.

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Jan 11

From the Detroit Auto Show: What’s Next for the Industry in 2012?

Categories:

Automotive, Globalization, Manufacturing Execution System, Supply Chain

by Fred Thomas

It’s a new year, and once again thousands of journalists, industry pros and curious consumers have been descending on Detroit for the North American International Auto Show, to see what’s coming next in the automotive world.

This show has been an annual fixture of the industry for more than a century. It’s a good sign that the industry, and this region in particular, are healthy enough that the show continues to attract so much excitement and attention. But if you look more closely, you can see seismic changes underway in the industry. I’m not talking about the latest compacts and alternate fuel types, or the newest concept cars. I’m talking about something taking place on the other side of the world: the New Delhi Auto Show, running at about the same time in India.

Still a 2nd tier event, the New Delhi show is starting to gain international prominence. So much so, that Jaguar – Range Rover actually skipped Detroit this year, in order to focus on the show in India. That’s pretty remarkable, yet not so surprising when you think about it. Just as China before it, India is awakening as an industrial power – and a major market for automobiles. A decade ago, the really major auto shows were in Detroit, Geneva, Paris, Tokyo and Frankfurt. Today we have to add Shanghai, New Delhi and Los Angeles to the list. This transformation is about more than conventions and glitzy shows. This is about how cars are made. The shows are simply following the markets. In today’s global marketplace, it makes sense more than ever to manufacture locally as much as possible. So the auto makers are opening plants in India and elsewhere, and their top suppliers are following suit.

You don’t need a crystal ball to see where this is going. Not all Tier 2 and 3 suppliers can afford to open everywhere, and neither can their vendors, so extended supply chains are being pulled and stretched in more directions than ever before. Of course, the wider the area that a supply chain must cover, the more fragile the entire chain becomes, and it only takes one weak link to break the whole thing, local or not, as we all learned from the natural disasters that struck in 2011.

So here are my predictions for 2012. The industry will be hit by another supply and sourcing problem because, well, something is bound to go wrong somewhere. As a result, more automotive manufacturers and their suppliers will finally decide to modernize and standardize their manufacturing execution systems to deal with the realities and unpredictability of a global industry. After all, if it makes sense to build cars on a common platform, doesn’t it make just as much sense to use a common IT platform to manage the whole process?

In fact, I would argue that the logic is even more compelling in the case of a platform for manufacturing operations management. Why? Because you can bet next year’s car model that India won’t be the last major new market to arise, and the supply chain challenges are only going to intensify. That’s one prediction you can drive to the bank.

By the way, congratulations to Range Rover for winning North America Truck of the Year with the new Range Rover Evoque at the NAIAS show in Detroit this past Monday. If you’d like to see it, you’ll have to go to the Motor Show in New Dehli. You can’t see it at the show in Detroit.

See you at next year’s auto show…somewhere in the world.

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Jan 04

Myth or Reality: Does EMI + BI = OI?

Categories:

Business Process Management, Manufacturing Intelligence

by Tadeusz Dyduch

Operational Intelligence (OI) is a relatively new term that describes the capture and analysis of manufacturing operations data.

Some would suggest Operational Intelligence (OI) is simply derived from two applications: Business Intelligence (BI), to support the high-level decision-making that spans beyond manufacturing data sources, and Enterprise Manufacturing Intelligence (EMI), to provide the real-time floor-level data for the factory people. The question I would like to discuss is: “Is this a myth or a reality?”

On the surface, this statement appears to make sense. After all, EMI vendors will tell you that EMI has the ability to visualize plant data in real-time, directly from Automation equipment or Manufacturing Execution Systems (MES). These systems focus on accessing various data sources in the plant and rendering their data into dashboards that can be analyzed in near real-time.

On the other hand, BI vendors will tell you that Operations Intelligence is really a subset of Business Intelligence (this was discussed in a previous blog entry). Offline tools can drill down and report across various functional domains, which is then aggregated as Business Intelligence. Vendors offering this capability focus on statistical analysis, comparison, trending and even predictive analysis. While manufacturing data is often included, it tends to be aggregated up to the ERP level, so not visible in real-time.

It might seem that combining EMI and BI provides a complete solution. Let’s now put this approach to the test.

The Data Consistency Test
Consistent master data management and data contextualization is always going to be difficult with multiple applications. While it’s true that MES does provide certain EMI functionalities, such as aggregation, contextualization, visualization and propagation (to ERP), in reality, functional redundancies in your MES and EMI systems can lead to data integration and consolidation challenges. To make matters worse, what about data from the warehouse and other functional sources beyond the production line? How will that data be captured and integrated?

Moving beyond a specific plant, there is often the challenge of integrating multiple MES applications and instances, implemented in various locations at different times. This labyrinth of IT systems can make data aggregation and master data management at the enterprise level a serious challenge.

Therefore, your OI solution must achieve data consistency across each of these scenarios, suggesting OI should be viewed as operating somewhere within unified and widely deployed Manufacturing Operations Management systems. Standard-fare EMI is not up to the task.

The Process Management Test
Among other components, OI provides Business Process Management to perform model-driven execution of business processes. Some MES systems provide EMI and BPM-like tools, but most are limited to certain manufacturing processes, tending to marginalize warehouse and logistic operations. Some ERP systems offer Intelligence bundled with BPM tools, however these are often limited to modeling back office workflows or providing systems orchestration at best, staying far from actual plant-floor operations.

The Truth Test
Multiple, disparate applications inevitably deliver different versions of the “truth,” with factory staff only seeing their data (in EMI) and corporate executives only seeing their data (in BI), leading to an inevitable disconnect. Since EMI only provides insight into manufacturing processes, BI will typically be used to analyze logistics and other “shop-floor” processes, leading to analytical schizophrenia.

Conclusion
In theory, you can combine EMI + BI to achieve a basic OI solution. But, it would be difficult, and the potential for data inconsistency is big, as are the challenges to achieve and sustain seamless integration. To overcome these challenges, manufacturers should consider thinking more holistically, viewing OI as part of a broadly implemented BPM-based platform for manufacturing operations management. Attributes of this type of approach includes:

  • A common master data management architecture, shared by manufacturing operations across all locations and functions, to solve the challenge of isolated silos and complex integration
  • Data captured and measured consistently, as it is embedded within the manufacturing operations platform, at all the core MI functions
  • Consistent and flexible process modeling and execution including data collection and measurement covering processes in and outside the MES or automation layer, such as warehouse, quality or maintenance operations
  • Visibility from different perspective (levels), but based on the same data, so not decoupled from manufacturing operation’s granularity
  • Seamless, consistent access to both operational and financial data, from manufacturing’s perspective

Each of these capabilities are essential for an Operational Intelligence (OI) solution, but cannot be met by simply combining Enterprise Manufacturing Intelligence (EMI) and Business intelligence applications. A broader approach with a wider perspective can better deliver the necessary performance and operational excellence that enterprise manufacturers now require. The myth that EMI + BI = OI has been busted!

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Dec 15

The Dilemma of Too Much Success with a New Product Introduction

Categories:

Globalization, Quality, Supply Chain

by Chris Brecher

Last month I wrote about the possibility of having a runaway product launch that totally exceeded your expectations. One of the examples I referenced was the recently launched Apple iPhone 4S that sold 1 million units on the first day of pre-orders, for a product that was reviewed by the analysts and media as a “ho hum” incremental improvement over the already strong selling predecessor model.

In this post, I thought it might be interesting to take a bit of a “deeper dive” into what some sensible steps are that you can take today to better prepare for an unexpected (but much hoped for) surge in demand for a new product.

To start, the need to operate as a “digital factory” is paramount. Paper-based systems won’t help you when change is rippling from your orders, through your suppliers and production schedules. Changes will occur frequently with new products, as you fine tune the offering for various end markets. These changes must occur on the fly, quickly and accurately for you to produce on-quality products efficiently.

Collaboration with Design and Manufacturing
The ability for engineering and manufacturing to effectively collaborate is made most apparent in the New Product Introduction (NPI) process. Delivering work instructions to operators, machine set-ups, quality specifications, engineering change orders and more to the shop floor must happen quickly and seamlessly to hit escalating production targets. Next, you need to deliver this information to multiple plants, which may include component suppliers, as well as your own plants that have varying equipment, tools and skills. Addressing these complexities ahead of time in a systemized way is a critical component to a successful launch. You must also keep in mind there will be continuous process improvements (Kaizen events in the Lean world), which will require further collaboration between manufacturing and engineering. Therefore, you need a process in place that includes how to communicate which processes are performing to target and which are not.

Supply Chain Visibility, Flexibility, and Collaboration
Many, if not most large OEMs today outsource some of their manufacturing processes. In industries such as consumer electronics, this could be as much as 100% of manufacturing. In many cases the design and quality testing processes are also outsourced. This means that much of the value an OEM brings to the supply chain, outside of the obvious value in being a brand owner, is the ability to effectively orchestrate the various components of a complex supply chain.

Orchestrating a supply chain that is rapidly changing because of a demand spike in a new product can be very challenging. To address these challenges, top manufacturers look to achieve real-time visibility into quality and inventory flow across their supply network. They also look to increase flexibility by using a portfolio approach to choosing suppliers. It is risky to allow any single supplier to take on too much work. Finally, the industry leaders invest in collaboration to ensure various tiers in the supply chain are coordinated across multiple disciplines like quality, engineering, manufacturing and distribution.

Closed Loop Quality Management
The final piece of the New Product Introduction puzzle, which is often overlooked until it is too late, is quality. Quality should be infused in every part of the manufacturing process, from design to simulation, manufacturing, distribution and even servicing the product. Product failure modes should be established at the outset. Statistical Process Control may be applied to key metrics in the production process to ensure a quality product is delivered. Feedback mechanisms for quality issues from customers and service partners should be established prior to the new product launch – each of which are capable of handling extreme spikes in usage – in order to implement a rapid response if an unexpected quality issue occurs as your product hits the market. Nothing will scuttle a new product launch like a quality issue going “viral”.

In closing, I hope these suggestions generate thoughtful insight into what can be done today to prepare for a sudden surge of orders. In the global, web-based economy in which we manufacturers operate, new product success can surprise even the best forecasters … it would be a shame to be fortunate enough to launch a high-demand product, only to fail on the execution.

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Dec 13

Lean Success, Part 1: If It’s not Complete, It’s not Lean Enough

Categories:

Continuous Improvement, Lean, Quality

by Jordan Berkley

Is the journey to Lean manufacturing really worth the cost of admission? That’s the provocative question asked by the business process consultants, AlixPartners, in a new survey of manufacturing executives.

Considering how much time, organizational effort and cost manufacturers have invested in Lean, the results of the survey surprised me. The issue is not whether Lean has failed – more than 90% of the executives surveyed said their efforts were somewhat or very effective. The question is whether Lean has delivered on expectations. Almost 60% of the executives said they were realizing “less than half of their expected savings.” What’s more, among those enterprises that had projected 5% savings, less than a third had managed to reach that goal.

Why is there such a gap between expectations and reality?

One answer may be “inaccurate opportunity analysis,” in consultant jargon. But I think the survey points to something deeper. The fact is that some Lean projects are more successful than others. Why is this? What makes for a successful Lean initiative? Having worked with many manufacturing enterprises, I believe Lean delivers on value when three criteria are met:

  1. When the approach is complete
  2. When results are measurable
  3. When continuous process improvement is enforceable

I’m going to drill down into these three points over my next few blogs.

Let’s start with the first requirement: Lean implementations must be complete. What I mean is that manufacturers must have organizational and technological platforms that span the full spectrum of operations, across all locations, or else inefficiencies will always crop up. For example, say you’re implementing a pull strategy with synchronized production, warehouse and suppliers. For that to work right, you need an operations platform with a footprint at least that wide, or else how will you synchronize all the moving parts? In fact, it should cover other dimensions impacting production, such as quality, compliance and maintenance. Any gap in the system inevitably results in inefficiencies.

But it’s even more complicated than that because in the real world things go wrong. Your planning systems can schedule a perfectly efficient day at the factory, but then there’s an equipment breakdown, a missed delivery, or a last-minute change in a customer order. In the real world of manufacturing, that kind of occurrence is the rule more than the exception. So, a Lean manufacturing system has to be complete, in the sense that it can handle unpredictability with optimum efficiency, on a daily basis.

There’s yet another dimension to be considered in a “complete” approach, and that’s the global aspect. This may be the most important dimension of all. Lean initiatives that are implemented on a plant-by-plant basis will never be as effective as those implemented on a common global platform of processes and technology. When all plants are using the same planning and execution system, best practices can be more readily discovered and shared across the enterprise.

In this way, a global platform becomes a powerful Lean multiplier, capable of leveraging every savings across 10, 20 or more plants worldwide. I’d be willing to bet that 100% of executives would consider that a worthwhile investment!

In my next blog, I’ll look at the role of measurability in Lean success.

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Dec 08

Think Global, Act Local

Categories:

Globalization, Manufacturing Operations

by Tom Hennessey

It is no secret that manufacturing has gone global. The US is still the world’s largest manufacturer, but if you want to find growth, you have to look abroad. Countries like China, Brazil, Australia, India, Malaysia, Singapore, and more are building out new facilities at a break neck pace. This growth is also no longer relegated to low-tech labor intensive industries like Textiles. It now includes some of the most advanced and demanding industries in the world, like: Automotive, Aerospace, Industrial Equipment and Consumer Electronics.

Operations are Global – But are Management Systems and Software?
Much of the growth discussed above is driven by US and Western European corporations. Blue Chip firms like GE, GM, Boeing, Rolls Royce Aerospace, Volvo CE, Caterpillar and more are leading the charge. These firms have spent decades building their competitive advantage through excellence in manufacturing operations. These companies have built a culture, highly specialized continuous improvement processes, and supporting software, all of which are major drivers of their success. One of the challenges these companies face today is figuring out how to best take what they have built in North America or Western Europe and bring it to all parts of the globe.

ERP is not the Answer
To support the move to becoming a global player, many companies have also moved to a single instance global ERP system. This strategy has proven beneficial in many contexts; especially around reducing costs through shared services in Finance and HR. However, this success has not been extended down to the shop floor.

Many companies find that ERP systems lack the needed ease of use, flexibility and configurability to extend best practices to the shop floor. Often, when ERP is deployed on the shop floor, companies only end up with visibility into raw material inventory coming into the plant and finished goods leaving the plant. There is no visibility or consistency within the four walls of the plant, so companies can lose the competitive advantage in operations that made them so successful in the first place.

A Global Platform for Manufacturing Operations
By deploying a global Manufacturing Operations Management or MOM platform, manufacturers can better standardize their manufacturing data model to build core operations processes that can then be easily configured and deployed to multiple sites. A global MOM platform also allows companies consistent visibility and reporting into granular operations across multiple facilities. Finally, a Global MOM Platform can also better interoperate with ERP by providing a consistent interface across locations, thereby ensuring greater consistency with other global systems and data.

The 80/20 Rule
It applies in math, it applies in life and it also applies in software implementation. A Global MOM Platform allows organizations to build the core of their business process in the system, but then configure the process for the intricacies of each particular site. This includes differences from plant to plant in layout, equipment and even culture. A great rule of thumb for this localization of manufacturing business process is the 80/20 rule.

On average, about 80 percent of business processes can be standardized or global and 20 percent can be localized. To help ensure that this rule of thumb is deployed successfully, a Center of Excellence (COE) structure has been used by many leading companies with great success to build the “global” 80 percent in the system. Train the trainer can then be used at local sites to complete the remaining 20 percent, helping users to understand the system and make it work in the local environment. Such an approach often cuts implementation time and costs by more than 50 percent.

Have you had experience with a COE? I would be interested to hear if your experiences match my observations.

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