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.