Tag: continuous improvement

Lean Manufacturing Driven by Rapid Return on eKanban Technology Investment

Lean Manufacturing relies heavily on trusted relationships with suppliers and pre-negotiated terms of engagement. Through the use of supplier quality certifications and blanket (long-term) purchase orders, a manufacturer can accurately and effectively calculate the optimal level of inventory needed to fulfill demand requirements through the duration of replenishment lead time.

Ensuring supplier performance

When a relationship is setup with a supplier, a service level agreement is defined. Items such as negotiated lead times, packaged quantities, order receipt confirmations, and advanced shipment notices must all be specifically spelled out. An eKanban Pull-based inventory replenishment system monitors that each aspect of the service level agreement is being met by the supplier in real-time. If they are not, a series of alerts and notifications are issued to all interested and affected parties. This gives everyone a chance to quickly adjust their behavior to bring performance back in line.

eKanban software also makes all of this real-time information available for historical analysis and to identify trends in performance. Late shipments, short shipments, and other supply chain performance concerns are all captured and presented in terms of percentage of conformance to the service level agreement. These reports give everyone in the supply chain information about how to focus their continuous improvement energies.

Eliminating inventory waste

eKanban is heavily based on Lean and Six Sigma principles and tools, and adds focus to these efforts by eliminating inventory waste through real-time demand signaling and just-in-time replenishment.

eKanban replenishment is based on the notion that if you take one, you make one. As such, you are reducing on hand inventory and not building assemblies or products without actual demand. You dramatically reduce the amount of inventory that becomes old or obsolete, free warehouse space and you build flexibility – and potential capacity – into your production process. An eKanban system exposes this flexibility so that manufacturers and suppliers can rapidly evaluate the true capability of the system to respond to a specific change in demand.

Manufacturing operations utilizing Lean are increasingly implementing Pull systems with more suppliers. And eKanban systems are taking hold as a relatively easy, and non-disruptive way to introduce Lean thinking into the organization – and bank on a quick return. Just in “right-sizing” inventory levels alone, some manufacturers have saved millions and added tens of millions back to cash flow that can be put to use in more productive ways than filling a warehouse. Additional savings are being realized in improved supplier relationships, lead times and inventory turns – and a dramatic reduction in administrative paperwork.

If you have an experience using a manual or eKanban system, please add a comment. I’d like to hear it!

Additional Resources:

Case Study: Dynisco, A Roper Company

White Paper: Exploring Push v. Pull Manufacturing with Kanban

October 18, 2016
Demand Driven Manufacturing in the Engineer-to-Order Space

Aligning Lean Manufacturing and Continuous Improvement Practices

Demand-driven manufacturing (DDM) is an approach to manufacturing where production is based on actual demand rather than forecasts. DDM enables a synchronized, closed loop between customer orders, production scheduling and manufacturing execution – all while simultaneously coordinating the flow of materials and resources across the supply chain. The terms Pull-based manufacturing and Just-in-Time (JIT) manufacturing are also used within the context of DDM and the flow of materials.

Synchronizing engineering and manufacturing

Engineer-to-Order (ETO) product designers attempt to provide “mass customization” of unique, one-of-a-kind products better, faster, and cheaper than competitors. DDM methods and systems allow for many or all portions of the ETO process to be automated, providing quicker turnaround, lower engineering costs, and consistent adherence to product rules and standards. Extending Demand/Pull automation capabilities beyond manufacturing to the engineering group, ensures that they are in alignment with manufacturing production, and ultimately, customer needs. We’ve found that engineering groups who are engaged in this way realize significant increases in Engineering throughput.

ETO, along with MTO (made-to-order), CTO (configure-to-order) and MTS (make-to-stock) environments can improve production flow and throughput (profitability) through synchronization (people, process, machines, materials and data) enabled using demand-driven manufacturing methodologies.

Process automation and big data

Synchronization of data improves processes, production flow and visibility. The practice of analyzing, documenting, optimizing, and automating manufacturing processes starts by evaluating value-added tasks. Well-developed DDM systems create a seamless link from initial client contact throughout the supply chain to customer delivery. Automation of these processes improves the accuracy of the information transferred and ensures the repeatability of the value added tasks performed.

In addition to automation, effective ETO technology solutions drive engineering innovation. Data integration and aggregation with machines and systems across the enterprise provides insight to develop new features and additional product offerings. Instant visibility into design requirements, compliance, quality, process and machine data through a single window not only empowers engineering with essential product development knowledge and lessons learned, but provides an information platform from which they can direct continuous improvement efforts.

Connecting and communicating through a demand-driven ecosystem

ETO manufacturers invest in demand-driven methods based on (among other things) the value of significantly reducing lead times, engineering and manufacturing cycle times, and product rework while improving customer service, internal communication, capacity and throughput. There is additional value to the clients of ETO manufacturers when their product is of high quality, designed precisely to their requirements and delivered on time and within budget. As such, demand-driven technologies for the ETO market extend value when they create a single version of the truth through an ecosystem that connects sales/customer service, engineering, operations and the shop floor with the same, real-time information.

With nearly 60% of ETO sales now based globally, the ability to operate in a web-based data-driven environment becomes more critical. ETO manufacturers build unique products designed to customer demand (specifications). Each product requires a unique set of item numbers, bills of material, and routings. Estimates and quotations are required to win business.

Unlike standard products, the customer is heavily involved throughout the entire design and manufacturing process. Engineering changes are typical and material is not purchased for inventory, but for a specific project. All actual costs are allocated to a project and tracked against the original estimate. Once complete, the product is typically installed at the customer’s site. In most cases, aftermarket services continue throughout the life of the product. And while it sounds onerous, these one-of-a-kind manufacturers are thriving because they recognize the value (and growing market opportunity) in implementing manufacturing solutions based on actual customer demand. Case studies demonstrate that margins are better when proven, demand-driven solutions geared for discrete manufacturers are implemented.

If you work in an ETO environment, I’d welcome your comments and thoughts around demand-driven and Lean practices.

Recommended reading:

White Paper: Why Become More Demand-Driven? Responding to Customer Needs

Article: What is Demand-Driven Manufacturing?

Webpage: Lean Manufacturing and Demand-Driven Value

October 4, 2016
Demand-Driven Technologies Evolved

By John Maher

When I first began instituting demand-driven practices in the late 90s, we were into creating pull, eliminating waste, and getting on a path of continuous improvement. Technology at the time was seen as an inhibitor rather than an enabler. Most people active in Constraints Management and Lean Manufacturing were abandoning their technology and going to purely manual solutions. I always believed that technology was important to get the most out of the system and to make it scalable, however, in the late 90s, the lack of technologies that enabled pull made manual the only logical choice.

One of the more fascinating developments in demand-driven enablement has been the shift of demand-driven manufacturing back to technology as an enabler rather than an inhibitor. There is recognition today that technology has to play a significant role in eliminating waste and synchronizing operations and extended supply chains. Along with this trend, the creation of open ERP systems that are easily integrated with service-oriented architecture allows companies to leverage the system they already have and benefit from today’s best-of-breed, demand-driven solutions through seamless, real-time integration. Finally, the web-based, SaaS revolution has made this process more cost effective, with expensive internal services now “downloaded” to the software provider, freeing up IT and manufacturing teams to focus on what matters. The digitization of demand-driven practices has, in effect, opened up companies’ ability to manage inventory and constraints more effectively; free up capacity; control operating expenses; drive flow; dampen variability; and create innovations to meet customer demand.

Based on decades in this business, I have found that demand-driven manufacturers realize the most benefit when they keep their eyes on the prize: Each day, they stay focused on demand-driven behaviors and remain disciplined in their efforts. It can be a difficult road. But it is my hope that this conversation will validate why demand-driven matters and inspire you on your journey each day. Until next time, keep it Lean!

Additional resources on this topic:

White Paper: How Technology Will Connect Your Enterprise and Create the Demand-Driven Factory of the Future – Today

White Paper: Why Become More Demand-Driven? Responding to Customer Needs

Article: What is Demand-Driven Manufacturing?

February 3, 2016
Five Key Elements that Drive Manufacturing Flow
If you follow the Demand-Driven Matters blog, you know we specialize in Demand-Driven Manufacturing and have identified the two key components of this method as synchronization and flow. At an enterprise level, synchronization is all about fully connecting your organization to aggregate and share information in real-time. Data from machines, tools, applications, enterprise systems – any data source – is synchronized to drive decision-making (In our view, this also enables the Industrial Internet of Things – IIoT.)

Synchronization is also an enabler of flow. In this post, I want to introduce a discussion around what we’ve identified as the Five Key Elements that Drive Flow in manufacturing production. They are:
1. Control the release – create “Pull” by gating the release of work into production.
2. Synchronize activities – align upstream operations to downstream needs, paying attention to convergence points and final assembly.
3. Continuous improvement – use the first two Elements as a baseline for defining areas for continuous improvement – and never get complacent.
4. Extend to the supply chain – synchronize activities beyond the factory to the extended supply chain.
5. Align metrics – 6 metric categories to monitor for driving action in Demand-Driven Manufacturing environments.
On their own, each of these Elements would likely improve production flow. Our position is that by working these Elements together, you take a demand-driven leap in overall flow improvement. An episode of the podcast, Demand-Driven Matters, explains this in greater detail – along with data points on actual improvements manufacturers have gained:

Recently, we’ve been hearing from more manufacturers who want to do more with what they have. That is, drive flow to the point that they’ve increased capacity to take on more work – or enter new markets. One client we worked with saw the Demand-Driven method – and its ability to drive flow – as a means to expand one of their business units without dramatically increasing headcount. Another client was able to use this method to free capacity to enter a new market – and doubled revenue in 2.5 years.

In upcoming posts, we’ll review each Element in greater detail – you can also learn more about them through the Demand-Driven Matters podcast. In the meantime, let us know if you’ve worked through any or all of these Elements – and what your results were.
November 5, 2015
Smooth the rough spots with TOC, then Lean – and fine-tune with Six Sigma
What Grade of Sandpaper Will You Use? Part Four

Here we are at the final installment of our four-part, Sandpaper blog series about when to use the tools of Lean Manufacturing, the Theory of Constraints (TOC) and Six Sigma to address constraints, drive flow and promote continuous improvement. With regard to sandpaper, I talked a lot about what level of grit you will need to smooth out your processes—and what could happen if you try to start with Six Sigma as a first step in creating continuous improvement momentum.

Refine with Six Sigma

Six Sigma is the fine grit sandpaper, best used on a relatively smooth board that you want to make like glass. After TOC has helped with global flow and directed you to the location of numerous 5s and Kaizen events, you are beyond the point of dealing with special-cause variation. You identified processes that are within statistical control, but now, you need to move the baseline for the process. To do this, you need the depth of understanding that Six Sigma lends.

I have seen countless presentations by companies that begin with Six Sigma. There seems to be this focus on how many hundreds or thousands of Six Sigma projects they performed as an indicator of the value of their continuous improvement dedication. For me, the number of projects you run in an organization that is not ready for the level of refinement that Six Sigma provides, only means doing more work, at more cost, to get fewer benefits.

There are some improvement metrics that in my opinion, are based on funny numbers. But if you start with TOC, you can really see what is changing. That’s because TOC only impacts financials if you move Throughput (T) up, Operating Expense (OE) down, or move Inventory (I) down. (It is important to note that OE includes both direct and indirect labor.) If you take 25 percent of the labor content out of a process but there is no actual reduction to the payroll expense, then you have not impacted the financials unless that 25 percent of freed-up time can be spent increasing throughput. Six Sigma is exceedingly effective, but it can be a costly, slow, and exhausting process if you are trying to apply its fine-grit approach on a very rough board.

The Right Tools at the Right Time

Let’s quickly go through the steps to using TOC and Lean Manufacturing—before you try to use Six Sigma to significantly move the needle.

1) Start with the coarse grit sandpaper – TOC – to point you toward critical constraints that when managed, will provide the greatest return.

As you maximize throughput through constraints and remove obstructions to flow, global throughput and flow goes up. This causes the next level of items impeding flow to come to light as you begin to see more global changes affected—and it creates momentum and visibility for “the next right thing” to do.

2) Use the medium grit tools of Kaizen events and Lean Manufacturing to refine further.

As you get rid of the more glaring impediments to flow, you begin to see where your Kaizen events should be staged. You have more data to make value stream mapping and other Lean tools smooth the process even further.

3) The fine grit of Six Sigma is a great way to finely-tune to your continuous improvement processes.

Six Sigma tools allow you to refine and adjust big picture items with laser-like focus. It allows you to understand common-cause and special-cause variation. So you can determine if you need to bring the process into control or overhaul the process to move to the next level of performance. These areas for improvement may have been hidden until you applied TOC and Lean tools that revealed the changes you need to make the most impact to both global improvement – and the bottom line.

If You Could See Me Now

When I was first working with Lean Manufacturing, TOC and Six Sigma, I made plenty of mistakes and I learned a lot about how to refine the continuous improvement journey. One of the last things I would like to say to help you— keep your eyes open.

A very wise man once said there is a vast difference between looking and really seeing something at depth. I found for myself that when I look at the surface of the issue, I don’t make as much progress as when I try to really see. If you keep these methodologies at hand and combine them with the ability to see (with context and clarity) what to do next to keep your continuous improvement ball rolling, you’re sure to experience great improvements for you, your processes and your people. Let me know what you are doing to keep the continuous improvement fire burning at your company.

-John Maher

This is part four of a four-part series. Here are the links to the earlier posts in this series:
- Part 1, What Sandpaper Will You Use?
- Part 2, Fast Results Using TOC for Demand-Driven Manufacturing
- Part 3, Using TOC, Lean and Six Sigma to Become More Demand-Driven
John’s passion for demand-driven manufacturing is equal to his interest in how this method improves the lives of employees within these environments. “I’m here to help, not to judge” comments John whose posts reflect why demand-driven matters and are based on his experience working in manufacturing environments and expertise in ERP, MRP, APS, supply chain, manufacturing planning and scheduling systems and constraints management.
August 4, 2015
The Industrial Internet of Things (IIoT) and the Modern Marketer

For your customers, it’s more than just connectivity

I was recently reading about the Industrial Internet of Things as it relates to my business—manufacturing software. It’s exciting that technologies are now available that will liberate manufacturers from the rigid systems and processes of the past. For today’s manufacturer, the IIoT boils down to the ability to capture and connect data from multiple sources to attain truly meaningful information.

An interesting outcome of all of this is that it’s driving manufacturers to a more service-driven model to effectively compete. Manufacturing.net noted that 77% of manufacturers polled view improvements in services as a key competitive factor. (FYI – Interesting article.) They also described this movement in a blog entry:

“In this new era, manufacturers need to look beyond the single product sale transaction into a new relationship between themselves and the consumer—characterized by an ongoing delivery of value—exchanged over a platform in the form of a smart, connected product.”

Similarly, I have found that marketing manufacturing software requires me to position our services as a differentiator. Yes, most of our products can be purchased on a Cloud-based software-as-a-service model. Today’s manufacturers, however, need more than agile software, they need long-term business partners to help them navigate the changes brought on by digitization and connectivity (e.g, the Industrial Internet of Things, the Factory of the Future and Industry 4.0).

On Board Early

It’s interesting to see manufacturers really collaborate with us during the early part of the sales cycle. Long before we get to software implementation, we work with clients to address their goals and plot a course to achieve their vision. (The Orbital ATK case study is a good example.) We draw from various tools – Lean Manufacturing, Theory of Constraints and Six Sigma – to drive a demand-driven change. (Where demand equals actual customer need.)

Our prospective clients are not looking for us to just install software and leave. They need assurance that we will be true partners; always available to not only help them get the most out of their system, but to help use their new found digitization and connectivity to best manage constraints, drive ongoing continuous improvements and make informed decisions. Francis daCosta describes this perfectly in his book, Rethinking the Internet of Things:

“With the increasing automation of the factory floor, the autonomous or semi-autonomous lower–level control and feedback loops made possible through distributed intelligence within the Internet of Things may allow for higher production and better use of human resources. If integrator functions can handle lower-level adjustments and controls of operating machinery, human eyes and minds may be freed for longer-term analysis and optimization, based on exception and historical data collected at a higher level. (p. 135).”

So, with the factory floor more digitized and your machines and systems connected, you suddenly have access to an incredible amount of data. The question then becomes how do you turn that data into meaningful information? Information that will improve workflow, pre-empt issues, lend focus to continuous improvement efforts and more? This is the service component – and where experience really counts. In many cases, we become trusted advisors to our client’s in-house teams, not just because we know the software inside-out, but because we’ve been successful with a variety of similar manufacturing environments.

Selling Consultative Value

With the rate of change brought on by the Industrial Internet of Things, connected factories will look completely different in a decade. Because our clients know that Synchrono has always been ahead of the curve, they know we are not just selling them software—we’re selling them tools to better service their customers and better compete. And we’ll be there to help them realize it.

If you are a marketer engaged in classic features-benefits selling, I would urge you to move beyond that discussion. Practically speaking, of course, these matters are extremely valuable to clients because they can check off all of the boxes on their functional requirements list – but you don’t distinguish yourself. Communicate how you will help them win in a competitive market through stellar service enabled by a more informed workforce.

Case studies provide a great vehicle for communicating service value. For example, we have service plans that build continuous improvement processes into the implementation plan. We have ROI numbers from other clients that show how much they realized in waste reduction—and also, about the time they saved through our standard integrations into their ERP.

We can plot a compelling graph that shows cost-avoidance numbers because we have helped put an end to expensive expediting in their production environment. We have testimonials from our clients’ suppliers about how their new, end-to-end eKanban inventory replenishment software repaired adversarial relationships and helped them become more responsive to customer needs.

These are just a few of the stories we tell that were a result of the added services we provide. Clearly integrating services (and their results) into your value proposition helps differentiate your company in a cluttered market.

Customers need to know they can trust us—their supply chain depends on it. Building this trust requires sharing our strong record of success with other clients. Are there unique ways that you have done that? Let me know, I’d love to hear from you.

July 8, 2015

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