4 steps to mfg success

8/8/2019 4 Steps to Mfg Success

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Infor ERP

Dealing with chaos:4 steps tomanufacturing success

Inor ERP > Whitepaper


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Executive summary .................................................................................................................................................... 3The pursuit o excellence........................................................................................................................................... 4Demand disturbances ................................................................................................................................................ 6

Supply snaus ............................................................................................................................................................... 7Production perturbances ........................................................................................................................................... 8Design dilemmas .........................................................................................................................................................9Quality quandries ......................................................................................................................................................10Recognizing change and assessing the impact ...........................................................................................11Finding the proper response ..................................................................................................................................12Implementing the response ...................................................................................................................................13Summary ......................................................................................................................................................................14About Inor ...................................................................................................................................................................16

Table of contents


Inor is in no way committing to the development or delivery o any specied enhancement,upgrade, product or unctionality. See disclaimer paragraph contained herein.


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Change, Uncertainty, Variability, Chaos call it what you will, but it is certain that the dramaticshits in demand, supply, costs, availability o materials, energy, market conditions, interest rates,geopolitical issues, green initiatives, etc. that have emerged in recent years will continue, and likelyget more volatile. Thereore, it is essential that companies rst understand the impact externalchanges have on their operations, plans and competitiveness, and then proactively preparethemselves to thrive and grow in this new reality.

Many manuacturing and distribution companies have rightly ocused on Lean operations andLean thinking as key to competitiveness in todays global markets. Cost reduction, wasteelimination, shortened lead-times, improved quality and demand-driven production all contributeto the success o industry leaders across the spectrum and around the globe. One primecharacteristic o Lean operations, however, is the elimination o traditional buers that protect amanuacturer rom disruptions caused by late receipts o parts and materials, equipmentbreakdowns, quality rejects, insucient lead-times (promises within lead-time, engineeringchanges ater production has started) changing demand, and other everyday challenges. Intodays increasingly unpredictable environment, this lack o buers places additional stress on theplant and the supply chain in their struggle to satisy customer demands.

Contrary to what some might believe, a Lean enterprise is not one that does not need traditionalinormation system support. On the contrary, Lean companies still need systems to manage

customer orders and billing/collections, purchasing and supplier management, accounting andnance, engineering, and, yes, even materials and planning. In act, planning and the includedsimulation, collaboration, and communications unctions are critical tools or detecting impendingor developing change, determining the projected impact o the change (beore it aectsoperations), identiying the best strategy or responding to the change, and implementing thatstrategy not only in the plant but through the entire supply chain.

Executive summary

Inor ERP > WhitepaperInor is in no way committing to the development or delivery o any specied enhancement,upgrade, product or unctionality. See disclaimer paragraph contained herein.

In previous iterations o supply chain evolution, excellence came rom lean-inuenced or demand-driven planning. However, with chaos or chronic uncertaintyemerging as the dominant operational environment actor, this approach is no longerlikely to result in competitive diferentiation. The next generation o supply chainexcellence will depend on chaos-tolerant business processes.

Building Agile Manuacturing that Enables Transormation, Gartner, Inc. Research NoteG00151457, Dan Miklovic, 17 September 2007Consulting Group


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Manuacturers continually strive to become better improving quality, reducing costs, increasingfexibility and agility, looking or ways to improve customer service. This imperative has led to astream o developments in inormation systems (MRP, MRP II, ERP, SCM, SRM, CRM and many

more) as well as a continuing evolution in operational strategies rom just-in-time to TQM, SixSigma, Kanban, and other lean approaches.

In recent years, a great deal o that eort has been ocused on Lean initiatives, and that has beena good thing. Lean companies now dominate many vertical industries with lower costs, superiorquality, and great fexibility rom ecient processes and a culture o continuous improvement.Weve learned rom the Japanese and the automotive industry in general that demand-drivenoperations and a ocus on supply chain eciencies can pay big dividends in almost anymanuacturing environment.

Today, however, the manuacturing world is characterized by uncertainty. The dramatic swings inthe cost o oil and all related petroleum-based materials are just one example o many. Critical rawmaterials are suddenly in short supply as weather patterns disrupt ragile supply chains. Wildlyfuctuating exchange rates change the economics o imported materials and the demand orexported products. Stresses in the banking arena infuence the availability o unds and credit aswell as interest rates and stock values. Civil unrest changes the availability o materials and thenature o demand in certain areas o the world. Any disruption caused by, say, a labor dispute or awarehouse re, ripples through the supply chain causing havoc across entire industries aroundthe globe.

Lean operations, by their very nature, reduce or eliminate the usual buers that manuacturers

build into their operations to overcome expected volatility. Extra inventory (oten called saetystock), padded lead-times, generous lot sizing, and shrinkage allowances all contribute to anability to continue operations when the inevitable but unwelcome disruption occurs. A late deliveryrom a vendor? Unexpectedly high reject rates? Short counts? Machine breakdowns? No problemi there is extra inventory to continue operations until the disruption is resolved. But each o thesebuers increases inventory and inventory is an undesirable commodity in a tightly managed,ecient (Lean) environment. Lean companies strive to eliminate inventory and other wasteulpractices but in so doing can become more vulnerable to disruptions.

The pursuit of excellence




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It is not our intention here to disparage Lean in any way. To the contrary, Lean thinking and the use

o Lean techniques are now essential to competitiveness in many industries. It is important,however, or companies to understand the impact changes have on operations, plans andcompetitiveness, and proactively prepare themselves to thrive and grow in this new reality. Beaware, too, that Lean companies must still plan. In act, eective and dynamic planning is evenmore critical in a Lean environment where there is much less room or errors or surprises.

The Lean enterprise and the Lean supply chain are a veritable ballet o coordinated activitiesdesigned to minimize waste dened as anything that does not add value. Prime examples owaste are inventory, handling, and delays that are not essential to producing the product anddelivering on-time to the customer. Extending the ballet analogy a bit, i one dancer trips, it can ruinthe whole perormance.

Lean enterprises do not operate solely on mechanical methods like kanban. Even in the Leanesto plants, there is still a need or computer systems to manage customer orders and billing/collections, purchasing and supplier management, accounting and nance, engineering, and,yes, even materials and planning. Parts o traditional ERP systems, customer sotware, andERPs specically adapted to serving these needs in a Lean environment provide the neededunctionality to manage the operations that support the demand-driven production line and closelycoordinated supply chain. The good news is that these systems are also the key to keeping theLean plant operating in a chaotic world.

Lean or not, manuacturing companies are aced with the challenge o recognizing change as earlyas possible, assessing the potential impact o the change, ormulating an appropriate response,and implementing that response in the most expeditious manner possible. The intelligentapplication o inormation management technology is a key part o that process.



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Lean enterprises are demand driven meaning that, at least in theory, nothing happens untilthere is a customer order (demand). As soon as there is demand, all activities are tied to thatdemand in a pull execution strategy materials are pulled into and through the plant to make the

product and ship it out. In reality, everything must be prepared in advance to be able to respondto the demand signal. And that takes planning. Inherent in that planning process is some kindo orecast. Based on the orecast and plan, production acilities are set up, materials andcomponents are staged, and everything is ready to respond quickly. When the demand hits andthe products are produced, replenishment activities pull replacements into line ready or the nextdemand.

When demand changes, or does not t the orecast, the otherwise smooth execution no longermeets demand exactly and the intricate arrangement o production and material fow is now outo synch. The most eective preventive strategy is early detection and quick adjustment to

minimize waste and assure product availability.

First o, the orecast must be as accurate as possible and careully monitored. This is best donethrough working closely with key customers using collaboration technologies built into modernplanning suites. Then monitor the orecast and use business intelligence applications to helpdetect trends and changes. Next, advanced demand planning applications oer simulationcapabilities to let you try various what-i scenarios to identiy the impact o changes and ormulatethe best response strategy. Finally, lock in the revised plan and let the system communicate thenecessary changes through the plant and down through the entire supply chain.

Beore Pawtucket, Rhode Island-based Colonial Mills installed Inor ERP SyteLine (now Inor

ERP SL), the maker o braided rugs struggled to maintain an 81% on-time shipment and 7.5days rom order to shipment or the 150,000 items that they manuacture and distribute.Ater implementation, company CIO Bill Turgeon says Now we can view all details within themanuacturing processalerting us to potential problems so we can react in time. Colonial Millsquickly raised its on-time record to 92% while cutting order-to-shipment time in hal. Most o ourcompetition quotes delivery o 20 days or longer.

Even though the rug designs Colonial now manuactures are the most complicated in thecompanys history, production rates and other key measurements translate into higherprotability. We credit SyteLine and a dedication to Lean principles. The application made all the

dierence in helping us maintain our position as industry leader in on-time shipment and lowturnaround time. Colonial is much better able to respond to varying demand and has reducedcosts at the same time.

Demand disturbances


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It happens to all o us. A key supplier ails to meet a delivery date. A transportation oul-up delaysa shipment. A key material suddenly becomes in short supply. A lot ails inspection and is notusable. I there isnt enough extra inventory to cover the problem, production will be interrupted.

Again, early detection and quick response, and xing the problem once and or all, are the keys toresolving this kind o problem. But preparation can help minimize the damage.

Most Lean enterprises have established close working relationships with suppliers pretty mucha necessity or getting the kind o service necessary to be successul with Lean. Working closelywithin those relationships to avoid the kind o disruptions listed above is the rst step. Despiteyour (joint) best eorts, sometimes problems cannot be avoided. In those cases, your planningsystem can help you quickly identiy the impact o the shortage and how you might be able toredeploy production resources in the interim. Also, you may have contingencies built into your plan(alternate suppliers, substitute parts) that could be activated on short notice. Its good to have

thought these things through in advance so you are prepared to move quickly to resolve theproblem.

Changes in the global supply chain hit hard when lead times or critical materials went rom aew days to at least 30 days and sometimes as much as 120 days or cleaning product andindustrial chemical supplier CPAC, Inc. This wake-up call motivated CPAC to get better control oinventory inormation and integrate business inormation rom orecasting to manuacturing anddistribution with Inor ERP Syteline. The fexibility that the system gave us was critical in allowingus to react to constantly changing customer needs and the market while maintaining reasonableinventory levels, according to Jim Mullin, CPAC division IT manager. Rush shipments havedecreased by more than 40%. The company is implementing the SyteLine orecasting application

to help manage the changes in the ordering process required by the new, longer lead times.

Supply snafus


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In a conventional (non-fow) plant, production control and capacity planning applicationsprovide the tools to schedule and manage the fow o work through the plant. When that fowis interrupted because o schedule changes (change in demand, late order change, late

engineering change), material or part shortages, or because o production problems (machinebreakdowns, unscheduled maintenance, personnel issues, etc.), the scheduling system willreact immediately to adjust to the changed conditions. Once the scheduler is made aware o thechange in production status, the impact on job completions can be seen immediately. I thereare possible work-arounds (alternate work centers that can complete the operations, outsidevendors to o-load the work to) that impact can be simulated to get new estimates o completionand shipments. In any case, the system can tell you when work will be completed under the newsituation so you can alert customers, i necessary. In addition, schedules can and should beadjusted or all other resources in the plant to keep them productive while the problem isbeing rectied.

In a fow shop, its not so easy to adjust to disruptions. In some cases, it may be possible to changethe product mix to work around changes in demand or supply but generally changeover has aconsiderable cost and unplanned changeovers should be avoided i at all possible. In most cases,then, it is best to attack supply and equipment problems directly, in order to get the processback on-line as quickly as possible. Once again, preparation is the key. I there are alternatesuppliers or substitute materials, now is the time to activate them your planning system canshow the impact o the disturbance and simulate the recovery alternatives so you can choosethe best approach. It is also o critical importance to utilize enterprise asset management andmaintenance management systems to proactively avoid equipment breakdowns andunplanned outages.

For production problems, options are limited. When a line is down, its down. The system can showthe impact on projected customer shipments and, i it is a eeder line thats down, immediatelyidentiy the products, customers and shipments that will be aected and by how much. Simulationo potential ailures can help you be better prepared by clearly identiying the impact and helpingyou choose compensatory strategies to result in the best customer service and minimumoverall cost.

Production perturbances


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Late order changes and late engineering changes those that occur ater the start o production are a dicult but unavoidable act o lie or many manuacturers. There are two strategies thatcan help here prevention and eective change control.

Enhanced engineering processes might help avoid late changes by shortening the engineeringprocess and improving the quality o the initial release. Integrated engineering control and releaseapplications manage documents, specications and workfow. They enhance the ability tocoordinate with other departments procurement, production, nance, and customer service to improve the manuacturability and appropriateness o the design, and manage the releaseprocess so that all areas o the business are on board with the release o the product or change.Collaboration enhancements help you include customers and suppliers in the design anddevelopment processes to exploit their expertise and capabilities as well. I it is a change to anexisting product or an item already in production, the integrated tools can help assess the impact

o the change and assist in determining the best break-in point to minimize waste, scrap, andobsolescence.

In cases where there is a change ater production has started, the important thing is to put thechange into place as quickly and eectively as possible. Eectively, in this instance, means ullcoordination with all aected departments and resources, careul consideration o the impacto the change, management o the change implementation process or minimum waste anddisruption, and good communication so that all parties are on board with the change as it goes intoeect. It should be obvious that integrated inormation management systems are essential oraccomplishing a smooth engineering change implementation. The workfow unction manages thecommunication and coordination as well as the updating o les and schedules. The integration

supports impact analysis and planning.

Design dilemmas


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Regardless o varying demands, supply disruptions, production problems, or all o theaorementioned challenges, quality is and will remain a basic requirement or all manuacturers inall industries. Although modern management theory dictates that quality should be designed

in and built-in rather than added on through inspection and old-ashioned QC, it is imperativeto measure, monitor and, in most cases, document quality through all stages o the productliecycle. Integrated quality applications help get this important job done with minimal impact onproduction and operations.

In the context o variation and uncertainty, solid quality processes and quality management canhelp reduce surprises more reliability o incoming parts and materials (ewer rejects throughworking closely with suppliers to insure quality), ewer production disruptions (early detection ocontrol issues, oten beore bad products are produced or production must be disrupted), andreduced rework and rejects on completed products.

Quality quandaries


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As with most things, the earlier a problem or situation is recognized, the easier it is to x and theimpact will be minimized. It is ar better to identiy a potential uture shortage than to nd out thesupply is exhausted when the part is needed. Preventive action is nearly always less expensive

and less disruptive than corrective action. Thereore it is important to always know what ishappening within the plant, and as much as possible, up and down the supply chain.

Identiying or predicting a change in demand at the outset can prevent a lot o unsold product orshortages later on. Further, demand changes have a proound impact on production schedules andthe need or parts and materials, so early detection o a change in the trend is a signal to adjustall production and procurement plans to accommodate the change. But not just blindly andmechanically one o the dening characteristics o a Lean operation is level production, so anychange in plans to accommodate demand changes should be careully considered in light o thedemand o most ecient production.

Early detection aords the luxury o time to assess the potential impact o the change. In manycases, a quick adjustment will avoid the majority o the disruption and diculty. Absent theability to make the adjustment quickly, simulation and planning systems can identiy the costs money, production schedules, and/or customer service that will result rom the disruption.

Recognizing change and assessing the impact


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Sometimes the proper corrective action is obvious i demand is turning down, reduce productionand procurement. I demand is moving up, do the opposite. But its not always that simple.Sometimes supplies are limited or production cannot be increased enough. Or it might not be

desirable to simply reduce production or various reasons. In those situations, it is extremelyhelpul to be able to conduct simulations what i analyses to model the result o variousactions.

Planning applications can model an entire supply chain and complete what-i analyses that canbe shared with suppliers so that all participants are prepared or likely scenarios. Contingencyplans with suppliers (and your own production acilities) make it easier and quicker to make thenecessary adjustments you already know what to do and its just a matter o putting thosecontingency plans into eect.

Simulation lets you try out any number o alternative strategies and determine which keepsproduction fowing smoothly with minimum extra costs (expediting, premium reight, overtime,etc.). You can speciy the relative importance o each actor and trade them o to nd the solutionthat is most acceptable.

Finding the proper response


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Plans are good but they must be executed. The nal step is to complete the actions outlined aboveand monitor the results. Because the plans and simulations are part o the same system thatmanages the process, passing the new instructions to all aected parties is quick and easy

and all departments are tied in and coordinated. It is important to monitor all activities duringand ater the response is implemented to insure that everything is proceeding as planned, theresponse is the right one, and production objectives (and customer service) are being achieved.Also, the cause o the disruption merits continued monitoring to conrm that the change occurredas predicted, is continuing, and has not mutated even more than anticipated. It is a continuingprocess, and changes continue to disrupt the best laid plans.

Implementing the response


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Manuacturers and distributors have embraced the Lean philosophy to great benet in improvedperormance, shorter lead-times, better quality and lowered costs. The tight controls necessary orsuccess with Lean, however, leave companies more vulnerable to supply disruptions, production

problems, quality issues, and abrupt changes in demand.

All indications are that variability, chaos, uncertainty, change however you choose tocharacterize it will continue to be an increasingly challenging act o lie. It is essential thatcompanies rst understand the impact external changes have on their operations, plans andcompetitiveness, and then proactively prepare themselves to thrive and grow in this new reality.Manuacturers, thereore, must be prepared to recognize impending change as early as possible,assess the potential impact, determine the optimum strategy or dealing with the change, andimplement that strategy in the most eective way possible.

The key to that our-step operating philosophy can be ound in broad-based, integrated inormationmanagement systems like Inor ERP SL. With orecasting and comprehensive measurementsystems to detect change, advanced planning systems and simulation to assess the impactand ormulate a response, integrated enterprise and supply chain applications and workfowto communicate through the supply chain, manage the response and monitor quality andperormance, Inor ERP SL gives you the visibility, tools, and capabilities to meet the challenge andsucceed.

While it is important to have Lean operations it is now also important that manuacturingoperations and the supply chain are fexible and prepared to react to change. Together, this Lean,fexible, and ecient operation will allow your acility to continue to reduce operational costs,

increase cash fow, increase company value whether public and private, and most importantly,grow your business on a global basis.

Summary


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Disclaimer

This document refects the direction Inor may take with regard to the specic product(s) described inthis document, all o which is subject to change by Inor in its sole discretion, with or without notice toyou. This document is not a commitment to you in any way and you should not rely on this documentor any o its content in making any decision. Inor is not committing to develop or deliver any specied

enhancement, upgrade, product or unctionality, even i such is described in this document.

About Infor

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