Weather, the Supply Chain and the Accuracy of Your Crystal Ball

Well-structured businesses like to predict everything: supply, demand, distribution, costs, revenues, schedules, staff needs, market changes, the works. The more powerful the company’s crystal ball is – and the better they are at responding to these forecasts – the more business benefits they can reap from forming an accurate view of the future: lower inventory costs (acquisition, storage, obsolescence), consistency in matching production to demand and delivery of the highest quality products across the entire manufacturing landscape.

These forecasts are extremely complicated. Mastering that complexity with the help of technology is a multi-billion dollar industry, with disciplines that span dozens of fields.

But if there’s one thing tough to predict it’s this:

Lately, the supply chain connecting the US to Mexico has been a disaster. The Mexican railroad has been disrupted due to hurricanes; rains have flooded the border crossing at Laredo Texas. The weather can take your delicately laid plans and float them down a river, literally.

The weather is so complex that the world’s leading intellectual minds can’t find ways to create reliable weather predictions more than a few days in advance. Most mathematical theory behind weather predictions recognizes there are factors that cannot be measured or accounted for. So if decades of mathematicians, meteorologists and technologists haven’t figured it out, it might be out of your league too.

Instead, you can prepare for unexpected disruptions in a way that allows you to minimize the potential impact to your customers while reducing your risk. The key is having real-time visibility and control of your manufacturing and supply chain operations. The sooner you have visibility to your shipment “floating down the river,” the sooner you can take control of the situation by executing alternative transportation or sourcing plans.

But even after you have secured the flow of inbound material to your plant and outbound finished goods to your customer, there are a lot of other potential problems that can remain hidden for a long time. Let’s now take a closer look at two examples of how best-in-class manufacturers can reduce their risk when managing the unexpected consequences arising from unplanned events.

Inline Quality
Not every weather condition challenge is a natural disaster. Humidity is one of our most formidable weather conditions. It can negatively impact your products through sub-standard components from your supplier or be driven from within your own operations, such as coating and painting processes. By utilizing an inline Statistical Process Control (SPC) tool embedded within your production processes, you can be alerted immediately if test results start to trend up or down or even violate pre-established control parameters, indicating potentially serious production anomalies in your manufacturing process.

These results can drive specific actions within your manufacturing execution solution; from simple problem alarming and alerting to diversion of the product to Quality Inspection labs or alternative re-work operations. In fact, a study by Deloitte discovered that “microclimates” not only occurred between the front and back of an individual refrigerated trailer, but also within stacks of pallets. In one test, the bottom pallets in the middle of the trailer experienced a nearly seven degree temperature variation.

Traceability and Containment
The impact of weather on materials and components may not be readily noticeable until after end-products have been manufactured, possibly even shipped to customers. To protect their operations and reputation from harm, best-in-class manufacturers will typically deploy strong traceability systems in their plants. The best-in-class will utilize interlocking traceability, providing the ability to identify part / component / assembly relationships AND any number of associated process-related variables such as torque setting, operator id, pressure and temperature measures, etc.

Comprehensive traceability at this level of detail is a critical element in the identification of operational issues. Increasingly, best-in-class manufacturers will combine interlocking traceability with advanced defect containment processes to identify, isolate and hold in place all suspected defective material or components within the plant, supply chain and distribution chain. When applied across a complete global manufacturing network, the results can be quite dramatic. For example, an automotive manufacturer recently had a situation whereby approximately 70,000 parts were found to be defective across the entire supply chain. A similar situation occurred a few years back, which took 3 months to identify and resolve, and involved thousands of unplanned labor hours. With a comprehensive traceability and containment solution in place, a similar defective part situation of roughly the same size was resolved in less than a day with no additional labor hours needed. That’s how one best-in-class manufacturer is protecting their reputation.

As much as we might like to think we can control the world around us or have perfect visibility into the future through a crystal ball – you simply can’t control the weather, nor can you accurately predict weather conditions more than a day or two in the future. The next best thing is to have a highly responsive manufacturing operations and supply chain system that is capable of near-instant response to unexpected events, providing you with complete visibility and control of your manufacturing operations when weather or other unexpected disruptions occur.

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BPM and continuous improvement were made for each other

I was at the North American MESA conference a couple of weeks ago, and it was clear to me that Business Process Management (BPM) was on the verge of getting its due. Like the market it serves, MESA is embracing the inherent power of BPM for manufacturing. This is a good thing. However, what I haven’t seen much is folks explicitly tying BPM to continuous improvement. And, BPM just screams “continuous improvement”.

There are three bits of information you need for your continuous improvement projects: where you are now, where you want to go, and how you will know when you’ve arrived.

So, what is it about BPM that makes it such a natural fit for your Six Sigma or Kaizen improvement efforts? BPM brings with it transparency, agility and compliance. Let’s talk about those three things and how they relate to continuous improvement:

A key objective of the Measure stage of a Six Sigma project is to baseline your process (aka: your “as is” state). Without a baseline, the black belt or green belt leading the charge is going to fall flat on his face. Because, there’s no way to measure any gain or improvement without knowing your starting point (and without any measurable gain, say goodbye to your bonus or credit towards your Master BB).

BPM provides transparency to your value added processes because it provides an explicit, executable model of your process. Throw away your flowcharts (they’re just taking up space on your shelf anyway) –your process model is always up-to-date because it’s actually driving and directing operations execution on your shop floor.

So, now you know where you are. In the Define stage, you identified the critical factors you’re going to address –critical to quality (CTQ), critical to cost (CTC) or critical to schedule (CTS) and translated that to deliverables (aka the “future” state). The key now is to engage your cross-functional team in a timely and effective way.

BPM enables your team to move fast because there’s no need to wait on IT to translate your requirements into specs , code, build, test, etc. BPM supports a cross functional team by supporting separation of roles, visual process modeling and enabling cross functional collaboration. With prototyping, you’re getting feedback fast to ensure alignment to goals and high customer satisfaction.

BPM is inherently compliant because you are automating the steps of your process which direct and enforce your standard operating procedures. Since steps and actions are logged, it’s easy to embed process metrics which will feed your performance dashboards (andon boards, scorecards, operator screens, alerts, etc). In addition, with built-in documentation (sometimes known as “blue printing”), your new “as is” state or baseline is already documented for your next six sigma project or Kaizen event.

If you’re a Six Sigma or Lean practitioner (or practicing other forms of continuous improvement), isn’t this the kind of environment you want to be working in?

Jordan can be found on Google+

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Fireworks and Explosive Technology

Over the July 4th weekend eWeek posted an article I wrote on what we can learn from the fireworks industry, because they provide an incredible example of scalability, flexibility and manufacturing planning due to the yearly cycle.

What we didn’t cover is the particularly devastating consequences of safety failures in that industry. BP’s oil spill and the failed safety valve has taken the spotlight as a warning to poor safety, but the fireworks industry has some particularly explosive examples more directly relevant to manufacturing. Don’t let the showmanship fool you, these accidents are both deadly and expensive.

Seest, Kolding in Denmark in November 2004

Uffculme, Devon, UK, 1998

A Dutch Fireworks factory, presumably the Enschede disaster

St.Andrew’s Fireworks Factory Luqa, Malta

These four were caught on video, but even just this year there’s been an accident in China this January that killed nine,  one in Vadipatti on June 16th in India that killed four, and one in Barangay Biniang in mid-June this year.

Accidents happen when people deviate from best-practice processes, therefore safety is all about process. The more consistent the processes are, the less likely something terrible is to happen. Certainly there are many factors contributing to these – in one case regulations about the placement of stored explosives were not followed – but in all cases, if processes were 100% consistent, this kind of thing couldn’t possibly happen.

Process consistency is at the very core of safety, efficiency, operational flexibility, regulatory adherence and even continuous improvement programs in every manufacturing industry.

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Welcome to Manufacturing Transformation

I think manufacturing is the most important industry in the world. We’re in the business of actually creating tangible objects that serve human needs and wants. It’s also often a grueling, thankless and hyper-competitive job. When your success can be measured in dollars, the cost of every rivet counts.

Most manufacturers already think they’re running on a shoe-string budget and skeleton crew, yet analyst Roddy Martin of AMR Research says US manufacturers can still cut costs in half.

Enter Manufacturing Transformation – our blog here at Apriso. Transforming manufacturing is the art and science of manufacturing to win, to grow and to innovate. Creating better products, faster and cheaper – through design, parts sourcing, process improvements, distribution and who knows what else.

Our team of insiders and experts will cover news, debates, methodologies and best practices relevant to an ambitious manufacturing audience that have their sights on winning.

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