Studdiford recognized as a 2018 Pro to Know for vast knowledge of Lean and Demand-Driven Manufacturing strategies that help manufacturers impact production performance and throughput…MORE
Most manufacturers have, at one time or another, deployed an “ERP add-on.” These are the bits and pieces of functionality sold through third parties that round out the capabilities of an ERP system. Common ERP add-ons can include core functionality like Advanced Planning and Scheduling (APS) and Supply Chain Planning (SCP), but for major ERP systems, there are dozens if not hundreds of add-ons available.
Because add-ons are such a familiar term to manufacturers, we’re often asked if this is what we mean when we talk about deploying a layered technology approach to Demand-Driven Manufacturing. Not exactly, but before I go into the differences, let me bring everyone up to speed by sharing Gartner’s viewpoint on the layered approach so we can put the differences in context.
In a recent report, Supply Chain Maturity Assessment for the Demand-Driven Supply Chain, Gartner defines 5 Stages of Supply Chain Maturity. On one end of the spectrum, Stage 1 is a reactive environment where the manufacturer primarily uses manual processes (for example, spreadsheets for scheduling). On the other end, Stage 5, is a fully integrated enterprise, leveraging algorithms and predictive analytics for continuous improvement across the supply chain.
Progression through each of these stages does not require replacing an inadequate ERP system with one that is more fully functional. Instead, Gartner advocates layering on technology to progress to ever-higher levels of supply chain maturity. The layered approach allows manufacturers to apply maturity-enabling technology at a targeted and affordable pace. It also drives a faster ROI than a traditional ERP implementation. Here’s an example:
So, how is what Gartner is recommending different from the add-ons ERP vendors have been offering for decades? We see three major differences. There is some overlap with what some add-on vendors offer, but when taken together, the layered approach is a major step-forward for organizations looking for a fast, affordable way to leverage technology to improve operational performance.
Philosophy before function. Add-on applications tend to focus on addressing capability weaknesses within an ERP system. For example, an APS application may offer the ability to do finite capacity planning. That’s good, but finite capacity planning is a point-solution to a specific problem.
Layering technology provides a broader, more business objective-oriented approach to systems than simply adding on an application to plug a hole. For example, our Demand-Driven Manufacturing layers help manufacturers achieve a leaner, more agile environment by implementing philosophies like Lean, Six Sigma and constraints management.
Source agnostic; big picture. Add-on vendors are getting better at working with disparate ERP systems, but there’s often still an integration challenge to be addressed before the add-on can start providing the promised benefits. If there are multiple sources, e.g. financials, CRM, home-grown point solutions, the project can get very complex. Many questions need to be answered such as: What format does the data need to be in? How do we ensure the data gathered is current? How do we combine the data from multiple sources?
Furthermore, because the add-on is focused on a specific challenge, it only provides one aspect of the big picture. Any given role in a manufacturing organization needs analysis from multiple systems. Requiring that the user access reports and dashboards across systems to get what they need wastes time and resources.
Our approach involves layering technology that can connect to any data source – even raw data from the machines on your shop floor – and standardize the data so that it can be aggregated, analyzed and visualized across the enterprise in real-time. Users don’t have to access multiple point solutions or machines to get the information they need.
Supply chain ready. Layered technologies are web- and cloud-based, where a shared pool of resources are available on-demand. The subtle but important difference is that our approach means that the technology layers can be used across supply chain partners for end-to-end supply chain visibility and management.
Related Resources:
White Paper: The Demand-Driven Supply Chain
Article: The Changing Role of ERP in Manufacturing
In preparing for a better future, many manufacturers are synchronizing resources with modern demand-driven technology to help reach their most important KPIs, such as reducing lead times and lowering inventory levels. To help you consider your options, Synchrono has released its 2018 list of Top Ten Trends for Modern Demand-Driven Technology…MORE
Through this guest blog series, my intent is to share some of my experiences implementing supplier quality and Lean manufacturing initiatives by focusing on eKanban systems. My first post offered advice for planning an eKanban rollout (advice that could be applied across any Lean manufacturing project). In my second installment, I reviewed strategies for rolling out an eKanban project that have proven successful for me. In this final entry, my focus turns to continuous improvement.
In thinking about this final entry to my eKanban blog series, it may be helpful to review where we’ve been (irony of this to follow). Previously, we talked about establishing a plan to include what we want to accomplish, why and how we will measure results (Real-world Advice for Getting Started on eKanban). We reviewed the importance of engaging leadership in the eKanban project and strategies for turning frontline contributors into change-agents.
Then, we turned toward execution, reviewing replenishment process mapping and rolling out a pilot with examples of how to engage suppliers (Start Your eKanban Implementation with Value-stream Mapping and Engaging Your Suppliers). I left you with the thought of keeping the goals of the mission in mind and continually reinforcing and communicating key outcomes and progress toward the attainment of those goals. The fact is, you need to keep evangelizing the project; particularly after the software goes live and rolls out across the organization. Keep the momentum strong. Communicate results. Win advocates.
These immortal words from the great Jimi Hendrix couldn’t be truer. With regards to our eKanban project, knowledge and communication were critical to complete the first part of the journey, listening comes next.
As the organization starts to use the new eKanban system, start to listen. Tune into the process and listen for feedback from both internal (inside the four walls) and external (customer and supplier) sources. This is the start to the continuous improvement process.
Through patient listening, you’ll receive good – and sometimes surprising – process feedback that can lead to key quality and performance improvements. As you collect feedback, you will need to start assessing your options. Typically, it breaks down into:
For one manufacturer, I was involved in an eKanban implementation across six facilities. After implementing the software – and listening to the process – an issue came up where suppliers would receive replenishment signals, but wouldn’t know which facility initiated the order. The quick fix was to add a source code to the order. Problem solved.
The same manufacturer also required a fix that took a little more time, due to some software adjustments. They wanted to add a date and/or the revision number of the part to the eKanban label. So, we created a plan with our software partner (Synchrono), tested it, and when it was validated, we implemented. An easy fix that needed to be worked into the software development cycle.
While listening is a very important part of the continuous improvement process, data gained from the eKanban system also has value in identifying areas for performance improvements.
For example, a manufacturer using their eKanban system for tracking their on-time delivery rate, was able to identify suppliers who were consistently late. Worse, because these suppliers were known to be late, purchasers (with the best intentions) would trick the system and override the Kanban quantity. Of course, they ended up with too much on hand inventory. Through access to the eKanban system data, we were able to get to the root cause of the problem and take corrective action.
Sometimes the continuous improvement process may leave you feeling like things are never good enough. Not true! Just take a moment to take in the view.
The analogy I use in teaching Lean Manufacturing is mountain climbing. When you’re climbing, you’re just focused on getting up the mountain in the most expedient way. And, in doing so, you may start to lose steam.
Re-energize yourself (and your team) by looking back occasionally to see what you’ve accomplished. Look at the new terrain you’ve traveled; the boulders you’ve moved – and how much you’ve saved the company!
You’ll find that sometimes reflecting back is just as important as looking ahead.
Jim Shore is the Principal of Quality Lean Solutions, a Consultant Firm that specializes in Medical Device companies, Supplier Quality and Lean Manufacturing principles. Mr. Shore is co-author of “Proactive Supplier Management in the Medical Device Industry” (2016: Quality Press). Jim has 25 years of quality and supplier management experience in medical devices, semiconductor, aerospace and defense for firms and organizations including Titan Medical, Nypro Healthcare, Boston Scientific, Aspect Medical, Brooks Automation, Raytheon and ACMI Gyrus (now Olympus). He is Six Sigma Black Belt and Quality Manager/Operations Excellence-certified by the American Society for Quality (ASQ), as well as an ASQ-certified Quality Auditor and Mechanical Inspector. A veteran of Operation Desert Storm, he served in the U.S. Marine Corps for more than 15 years.
A new study in Modern Materials Handling reports that 86% of industrial organizations are currently adopting IoT (Internet of Things) solutions, and 84% believe those solutions are very or extremely effective. Manufacturers lagged behind the industrial segment as a whole, with only 77% of manufacturers implementing IoT in their facilities.
So, what is holding manufacturers back? Anecdotally, I can share that many of the manufacturers I talk to intend to implement the IoT in their facilities or have already started a project. But, they are less sure about their results than the respondents to the study.
In this series of posts, our goal is to break through the hype and the uncertainty around the IIoT (Industrial Internet of Things) by focusing on projects you can execute and for which you can achieve a measurable ROI in 2018.
In the first post, we looked at how the IIoT can help manufacturers lower inventory levels. (Read the full post here.) We also shared how one of our customers was able to reduce inventory by as much as 55% in one factory, while at the same time reducing lead times from twelve weeks to two.
Some of the customers I talk to are initially skeptical that they can both reduce inventory AND reduce lead times. Achieving these results at the same time seems counter-intuitive because they think they need to keep high levels of inventory on hand and in process to meet customer demand. In today’s post, I want to unpack that by focusing on how the IIoT and Demand-Driven Manufacturing (DDM) can help you achieve both objectives in your facility by implementing one specific manufacturing philosophy.
Today’s IIoT project leverages the Theory of Constraints (TOC) or constraints management principles. Like the Kanban project we talked about (see How the IoT Can Help You Lower Inventory Levels), TOC isn’t inherently an IIoT project. You can implement TOC manually, but when IIoT data-sharing technologies are leveraged, your TOC efforts are turbocharged for even greater benefit to your bottom line.
Many of you are, no doubt, familiar with TOC, but let’s quickly cover what it is so we’re all on the same page. TOC says that, in any given manufacturing environment, there are a small number of constraints that limit the throughput of the factory. Increasing productivity at any other point in the system will not increase overall productivity because the constraint cannot keep up.
For more details on the four types of constraints, refer to my recent post: It’s Time to Revisit Your Constraints.
In the Demand-Driven Manufacturing environments we work in, we apply constraints management technology (based on TOC) to constraints in the system. By understanding the constraints – and their capacity – we can set the optimal rate of flow to that constraint (see CONLOAD™ Scheduling Methodology: Set the Right Pace for Production). This reduces congestion and keeps work flowing throughout production. Real-time, IIoT data allows for automated adjustments based on changes in demand, priorities, etc.
So how does synchronizing the pace of production to the constraint in real time lower both lead times and inventory levels? In a traditional make-to-stock manufacturing environment, as much as 90% of cycle time is queue time, that is, a part waiting for its turn on the machine or in the work center. By synchronizing the flow of material to the constraint in the system, material spends less time in queue and cycle times are shorter. And, because less material is in queue, WIP drops as well.
Related Post: It’s Time to Revisit Vendor Managed Inventory
Some of you may be thinking, “Ok, that explains how cycle times and WIP inventory drop, but how does constraints management affect lead times? We measure lead time from the time an order is taken until it is shipped. I still can’t manufacture anything faster than my constraint, and it doesn’t lower lead times if I can’t start the order any faster.”
Good point. But, what we’ve found is that lead time typically drops as well for a variety of reasons such as better prioritization of projects at the constraint and increased capacity. When all work throughout the facility is synchronized to the pace of the constraint, everyone knows what they need to do next, and no time is wasted running orders through the system that aren’t a priority. This is especially
impactful in facilities where changeovers take time either because of retooling or a paradigm constraint, such as a focus on productivity at every workstation that slows the overall factory down.
In my last post, I shared the example of Dynisco, a leading manufacturer of materials-testing and extrusion-control instruments that reduced inventory levels by 55% in one of its facilities while at the same time reducing lead time from 12 weeks to 2. Today, I want to tell you about another Synchrono customer that addressed a lead time issue with Demand-Driven Manufacturing.
Rex Materials Group (RMG) manufactures custom vacuum-formed ceramic-fiber products. In the late 1990s, the company implemented TOC and modified its home-grown systems to apply drum-buffer-rope principles. That system worked for a while, but eventually, the company decided they needed something better to feed their continuous improvement efforts.
RMG implemented SyncManufacturing™ synchronized planning, scheduling and execution software from Synchrono® across three separate facilities. The first facility went live in 90 days and the second and third in 45 days each. By accelerating their TOC efforts, RMG went from lead times of three to four weeks, on average, to delivering 30-40% of products within five days of receiving the order. They can even ship some overnight. Read the full case study.
Want to learn more? Here are some related resources that can help you get started on your next IIoT project in 2018:
Video: What is Demand-Driven Manufacturing?
White Paper: Three Key Strategies of Modern Demand-Driven Manufacturing (Watch the video here.)
Video: Manage Manufacturing Constraints and Optimize Production Flow with CONLOAD
Provides guidance for supply chain evaluation and suggests layering technologies to advance synchronization and visibility…MORE
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