Demand-driven manufacturing requires serious IT redevelopment

The vast majority of UK companies are already making-to-order (MTO), either in production or assembly or both – but fully half say they expect the proportion of demand-driven operations growing either gradually or significantly. That’s among top line findings from a survey by Benchmark Research for this journal across 106 manufacturers in a industries from automotive to aerospace and defence, discrete and contract manufacturing, food and beverage, chemicals and processing sites. Reasons cited include global competition getting fiercer, cost and margin pressures showing no sign of abating and customers’ expectations of virtually instant gratification. Manufactuers say that taking MTO further has serious implications for their IT in sales, estimating and quoting, application engineering, design engineering, purchasing, production planning and scheduling, factory operations and supply chain material movements and management – indeed the whole businesses. Key requirements identified for running MTO manufacturing well were: accurate, timely and detailed factory information, a factory geared for responsiveness and easy rescheduling to change, excellent supply chain communications and a fast and efficient engineering design function. Tracking goods and materials through the supply chain aren’t seen as so critical, but remains either very or quite important according to the vast majority. And a fast and accurate system for generating quotations is also seen as very or quite important, albeit by less of the respondents – in line with those running engineer-to-order. Current supply chain communications, materials tracking IT and estimating and quoting systems come in for most criticism – and engineering design departments’ systems not far behind. Only SFDC (shopfloor data capture) and the responsiveness factories are achieving – almost certainly through their lean and similar initiatives – score better, with 53% and 69% respectively saying they’re quite to extremely happy with their systems and processes. Benchmark ran comparison analysis of technologies employed against respondents’ satisfaction with their stated key requirements for MTO. Those happy with their knowledge about what exactly is happening in their factories are more likely to use barcode-based SFDC (44% vs 26% for those not happy) and also finite capacity scheduling (FCS) tools (32% vs 13%). Companies that believe their factories are able to respond to changing circumstances are also confirmed as more likely to use FCS than the average (27% vs 13%). But they’re also more likely to be displaying electronic information on schedules and works orders at work cells and lines (30% vs 13%). They’re also generally exhibit technophile tendencies, being more likely also to have implemented VMI (vendor managed inventory) arrangements (48% vs 31%), and to use online procurement (27% vs 13%) and collaborative engineering design tools (35% vs 19%). Looking at supply chain systems, the winners are much more likely to have implemented APS (advanced planning and scheduling) systems (26% vs 8%) as well as barcode SFDC (49% vs 27%), electronic works orders (44% vs 17%) and electronic information displays on the shopfloor (39% vs 15%). They’re also more likely to have VMI agreements (50% vs 38%) and online procurement systems (32% vs 16%). As for those happy with supply chain tracking, the correlations are less clear. Benchmark finds only that they’re more likely to use MRP for long range planning only (31% vs 14%), but they too are far more likely to have APS (23% vs 8%) – indicating advanced in their manufacturing management thinking. That’s the common theme – they’re also more likely to use online procurement (28% vs 18%), have robust demand forecasting systems (30% vs 20%) and integrated product configurators (30% vs 20%). When it comes to those able to generate fast and accurate quotations, the analysis doesn’t only show they’re most likely to use integrated estimating systems (59% vs 36%) and product configurators (29% vs 18%), but also to have developed strong integration between their ERP and SFDC systems (38% vs 13%). They also have more electronic work cell display implementations (32% vs 13%) and use more online procurement (31% vs 10%) – the latter again showing no more than sophistication. Finally, on the fast and efficient engineering design side, they’re twice as likely to engage in collaborative engineering (42% vs 22%) and slightly more likely to use 3D modelling (75% vs 61%). Interestingly, they’re also more than twice as likely to use simulation software for factory process re-design (18% vs 7%), and they favour product configurators (31% vs 21%) and sales estimating and quoting systems (59% vs 44%). 64% of business leaders say MTO is how they handle some or all of their standard product manufacture, and just over half (51%) indicate they configure variants of standard products to order. A surprisingly high 49% say they’re also geared up for engineer-to-order. Nearly one third (31%) of manufacturers running some MTO are already entirely demand-driven, 40% mostly MTO and a further 14% about half to-order and half to-stock.