Driving up efficiency

There are growing numbers of manufacturers who rightly pride themselves on the success of their on-demand pull principles, certainly at the shopfloor level, if not out into their supply chains. For them, it appears that neither product variety nor order variability can upset the systems. For others, however, every day is a battle to maintain the difficult balance between minimising costly inventory while also offering competitive lead times - without spending a fortune on machines or people. Some manufacturers will attribute their achievements to lean thinking or similar production process improvement methodologies. Others will point to more targeted Six Sigma, or indeed combinations, also involving lean, which have together enabled the factory floor to turn smoothly on a sixpence when the need arises. But the truth is that, in today's increasingly complex and fast-paced industrial world, sustained success rarely stems from factory floor improvements alone. Doing make- and/or configure-to-order manufacturing well also has to include the supply chain - or, more accurately, your supply network. And that, in turn, implies an absolute requirement for good IT. Not only to cement in the internal and external process improvements while maintaining the required dynamism. Nor even just to provide supervisors and managers with all-important information visibility - helping business managers to 'see', for example, production progress, inventory availability and capacity utilisation, both in real time and into the future. But also for automated broadcast communications, covering changing requirements, acknowledgements and the rest, as far into the supply chain as makes sense. Without this supply chain aspect, increasingly provided via relatively low-cost web EDI systems and/or services, it's going to be tough preventing a return to whole departments of expediters with phones glued to their ears. So, what does the IT needed for good demand-driven manufacturing look like? On the above supply chain side, minimum requirements will include mechanisms for delivering configurable reports, alerts and drill-downs - again, to provide that visibility - but also facilities for problem resolution with a strong focus on automation and ideally also exception management. Beyond that, though, we're clearly back to advanced planning and scheduling (APS), on top of, or integrated into, a modern ERP system to facilitate rapid re-optimisation of feasible production. However, it doesn't stop there. Successful demand-driven manufacturers - certainly those managing significant variety - famously swear by product configurators that speed order-taking through to production by systemising sales engineering. Others will include their MES (manufacturing execution systems) that provide two-way links between business systems and the shopfoor at a range of levels. Others, again, can and do claim that integrating shopfloor data capture is one of the magic bullets, because of the very sharp visibility this brings into what has historically been a black hole called the factory. But, given that most manufacturers aren't awash with spare cash to lavish on all this - and that, anyway, there is so much variety in the way manufacturing and supply chain operations have to work - let's look at some real experience from manufacturers who see themselves as beating the hurdles of demand-driven manufacturing. Boots Contract Manufacturing, for example, says its implementation of the CDC Factory MES has helped drive productivity improvements and cost savings throughout its manufacturing plant. Steve Parr, factory general manager, describes the new software as its manufacturing operations management (MOM) system, and adds that the system went live at the Nottingham plant in less than six weeks. "We chose CDC Factory after a thorough evaluation of several products, which, we believe, revealed that CDC Factory was the only packaged MOM solution," says Parr. He explains that the system was brought in as part of the company's operational excellence programme, adding that best estimates are for a 6% efficiency improvement across its factory lines by concentrating on operating metrics, such as OEE. Meanwhile, packaging manufacturer Benson Group has extended use of its ERP solution and APS software to its Crewe-based plant, Medica Packaging, specifically to transform agility in its operations. "Epicor's APS has helped us to achieve a four-fold increase in output at our Bardon site, to £40 million," says Phil Towersey, IT manager at Benson Group. "We are now able to deal with changes effectively and plans are communicated to the shopfloor accurately, and in a timely manner. Our manufacturing is very nimble and able to deal with change requests at 3pm on a Tuesday and reschedule jobs rapidly through Epicor to meet a Wednesday deadline. This would have been impossible with our previous solutions." Then again, electric trucks manufacturer Modec, at its Coventry assembly plant, cites its Exel Efacs ERP as central to its right vehicle, right customer, right time operations, across the entire supply chain. Business systems manager Stuart Morris makes the point that ERP is central to getting data accuracy and consistency at every stage of the business - from accurately specifying and recording orders through the Efacs product configurator, to purchasing the right components in the right quantities in the right time frames, and maintaining visibility of which orders are where in the production process. For him, even production modelling was carried out in Efacs, to verify the shopfloor's capabilities, and he describes the system as covering "all the joined up information within the company", which means that whenever one element is changed, the whole system can be updated. Indeed, Morris credits the overarching system with enabling a lead time reduction of five days for each vehicle. And that, he suggests, also makes it much easier to manage the supplier network and to reduce the amount of unquantifiable time on custom processes that can impact the smooth scheduling of the shopfloor. Returning to the fact that many manufacturers currently find themselves somewhat strapped for cash, however, there are ways of moving from where they are today - which is almost certainly managing on spreadsheets - to where they could operate more efficiently. Business-to-business e-commerce software and services specialist GXS makes the point that there are now several options available to integrate trading partners in an automated network that do not require significant investments in back-office systems, or integration software. Karl Salnoske, executive vice president of service delivery and CIO at GXS, points to "powerful and easy-to-use web forms technologies and new capabilities within Microsoft Excel 2007 and 2010" that provide a means for manufacturers of all sizes and locations to participate in e-commerce automation. "Automating more B2B processes saves money, shortens the order-to-cash cycle and enables higher customer satisfaction," he advises. "Businesses with robust B2B integration capabilities are now in prime position to finally automate relationships with all business partners, regardless of size or technical prowess, worldwide." Equally, if your existing ERP system is just not capable of supporting the processes or automation you realise you need, why not take a look at the increasing numbers of ERP software developers that are offering low-cost upgrade incentives? Infor, for example, says that some 200 mid-market manufacturers have now signed up for its so-called Flex programme, launched last year to encourage users to upgrade or exchange existing Infor systems to software that can take advantage of Infor Open SOA (service-orientated architecture). "Customers have made it clear that they expect more from their software vendor than solutions that do not grow with their business, and must be ripped out and replaced through a prolonged, expensive and risky implementation," comments Dennis Michalis, corporate senior vice president at Infor. "The success of the Infor Flex programme highlights our approach to software upgrades that provide transparency up-front, mitigating the risk of an implementation that runs over on time or budget," he adds. Infor's Open SOA technology has been around for a while, but the likelihood is that only the very techie get it. However, by offering incentives to upgrade, manufacturers get Open SOA anyway. Then Infor can weave its magic in terms of integrating Infor and non-Infor systems and data sources - and users can then see the advantages for themselves. Mitsubishi Electric Power Products, in the US, is one. A user of SyteLine ERP since 1997, it used the Flex programme to upgrade from v6.0 to v8.0, and took the opportunity to implement Infor EAM (enterprise asset management), Infor PM 10 and Infor Expense Management - integrating them into ERP SyteLine through Infor Open SOA. "Software systems that collect data are useful, but to drive our business operations to the next level we needed to upgrade to a system that provides users with access to information that enables them to make informed, real-time decisions," explains Joseph Marcoz, IT director at Mitsubishi Electric Power Products. "Implementing a new ERP system across our eight divisions is a daunting task, but Infor Flex is simplifying the process by providing a fixed cost and implementation period, as well as a methodology that will minimise our downtime and enable us to quickly be up and running on a system that meets our needs now and into the future," he adds. All well and good, but here are some words of advice from Tony Hardy, head of Daylight Supply Chain Services, (the supply chain arm of Chesapeake, one of the largest packaging companies in the world), who has been involved in supply chain IT projects several times. "The idea of 'demand-driven' has commercial implications that, to me, infer that manufactures and suppliers wish to provide a heightened level of service, and that they believe the way to do that is to get the right products in the right place at the right time for the next part of the supply chain," he says. "But, since manufacturers all have different set-ups and lead times, with dependencies on raw material availability and production capacity, they're all going to need different gearing to make that work. That's why, for the most part, you can't do anything about any of this until you've got transparency of what's happening." And that's where IT comes in. "It's crucial. If you want to make a tripartite supply chain work smoothly, the manufacturer needs to pass on demand - what he thinks he needs, after the BoM explosion - and cascade that out to suppliers. But from that point on, he should empower the suppliers to deliver, without purchase orders, letting them adopt the manufacturing strategies that are best for them while ensuring that they commit to perfect order status." Part of that is about not automatically partnering with the cheapest suppliers. It's also about the 80/20 rule of low-cost and probably long-distance suppliers alongside local, more expensive manufacturers to balance change, events and opportunities. But most important, argues Hardy, is the supply chain IT itself, which should work through a proxy system, spreading demand where it's needed and simultaneously providing a holistic approach to supply chain automation and information delivery. "In any supply chain that relies on pull manufacturing, there are benefits and sacrifices, and they need to be quantified. Any supply chain today has to be able to survive without stock, which means critical mass production techniques and a totally empowered supply chain. Given that much of the factory level IT has already been done, this has to be the focus for today's IT investments."