Subscribe to our free, weekly email newsletter!


Pearson on Excellence: Strategies for aligning manufacturing with business and supply chain goals

By Mark Pearson
February 01, 2012

Most companies’ manufacturing strategies involve decisions relating to landed cost per unit, cost/quality balance, and various SKUs’ compatibility with supply chain parameters—transportability, packaging, serviceability. However, one thing is often missing: insights for connecting manufacturing operations with business results. Few companies excel at understanding and optimizing the business value of their manufacturing decisions.

This is not to say that all manufacturing companies have similar goals or priorities. However, ensuring that smart manufacturing choices are also smart business choices should be a largely universal theme. And for most companies, using technology to generate, clarify, and disseminate manufacturing information is the best way to raise the business value of manufacturing operations.

Consider how technology acumen can benefit the business missions common to many manufacturers:

  • Improve customer centricity. Every year, manufacturing customers want more customization, higher quality and greater value. Manufacturers can respond by using technology to integrate customer feedback into manufacturing and design processes; cost-effectively increase customization; reduce product and process complexity; and help designers, suppliers, and contractors work more interactively.

  • Become more globally and more local. More and more manufacturers must combine global operations with a regional (locally knowledgeable, market-customized) presence. Technology can help support this dichotomy by enhancing network visibility, data security, product tracking, and total landed cost management at the global, national, regional, and local levels.

  • Maximize agility. Everything about business is moving more quickly. Advanced information technology can help manufacturers do a faster (and better) job of identifying profitable customers, right-pricing products, determining the drivers of financial success, and shifting capabilities during reorganizations, M&A situations, and outsourcing engagements. Every company that manufactures products also manufactures information.

And more often than not, companies that do the best job of leveraging their manufactured information will derive the greatest business value from their manufacturing operations. Here are three technologies that can help make manufacturing more strategic and businesses more profitable:

1. Analytics. Manufacturers have an immense opportunity to improve manufacturing—and overall business—effectiveness by better interpreting information that originates on the shop floor. The linchpin is analytics, which can be woven into work processes in several ways:

  • Automated decision applications. These applications sense online conditions or data, apply logic or codified knowledge, and make decisions with minimal human intervention. The best conditions for this kind of decision-making are when experts can readily codify decision rules, surrounding processes are highly automated, and high-quality data exists in electronic form.

  • Applications for operational and tactical decision-making. Recommendation and planning applications can incorporate near-real-time information and multiple models to make manufacturing decisions that balance conflicting goals such as profitability and customer satisfaction.

  • Strategic decision-making. As shown in Figure 1, analytics can be applied with increasing sophistication based on the needs and abilities of the organization—moving from what-if based questions to forecasting and business optimization.

2. Lean Six Sigma (LSS). Lean Six Sigma’s roots are mainly in cost reduction—eliminating or reducing process inefficiencies, excess inventory and motion, and unnecessary downtime. However, LSS also can help produce higher-level advantages focused on margin enhancement and profitability.

Companies often begin their LSS experience by establishing a set of disciplined processes based on industry standards, such as IT Infrastructure Library (ITIL), the eSourcing Capability Model for Service Providers (eSCM-SP), the Capability Maturity Model Integration (CMMI), ISO 9000 or AS9100 for aerospace and defense companies.

Using this underlying framework, manufacturers can then aim higher—driving micro-process adjustments and tracking the value impact of those changes across manufacturing operations and across the company. This continuous improvement of the production environment can raise agility significantly.

3. Enterprise performance management. Enterprise performance management (EPM) technology can help ensure that accurate, well-formatted information from manufacturing (and other locations) is available for use across multiple business functions, such as new product development, financial planning, and supply chain management. Savvy use of EPM often means:

  • Better decision making: The result of providing managers with meaningful and actionable information to formulate budgets and plans, develop targeted reports, and analyze performance.

  • Improved collaboration: Superior, reliable metrics, and a common language.

  • Increased productivity: Achieved by reducing rework and manual fixes.
image

It isn’t rocket science: Manufacturers that excel at generating, clarifying, and disseminating manufacturing information are well positioned to turn production operations into strategic assets. Key to making that happen are technology enablers such as analytics, Lean Six Sigma, and enterprise performance management.

About the Author

Mark Pearson

Mark Pearson is the managing director of the Accenture’s Supply Chain Management practice. He has worked in supply chain for more than 20 years and has extensive international experience, particularly in Europe, Asia and Russia. Based in Munich, Mark can be reached at .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Almost all companies today are aware of their labor or material costs... but what about energy consumption? It all comes down to having the energy data needed to determine what actions you must take to improve. The payoff is worth it, as insight into energy data allows you to make more valuable, relevant operating decisions.

With lower energy prices sparking domestic economic gains, coupled with solid manufacturing and industrial production activity, improving jobs numbers, and a GDP number that shows progress, there is, or there should be, much to be enthused about when it comes to the economy and the economic recovery, which has been raised and discussed and dissected from basically every angle possible, it seems. But that enthusiasm regarding the economy needs to be tempered, because big headline themes seldom tell the full story at all really.

The annualized turnover rate for large truckload carriers in the third quarter rose one percentage point to 97 percent, according to the ATA.

The Pacific Maritime Association (PMA), representing employers at 29 ports, and the International Longshore and Warehouse Union (ILWU), which represents 20,000 dockworkers, have come to a tentative agreement on a key issue in ongoing contract negotiations.

Diesel prices continued their ongoing decline, with the average price per gallon falling 6.7 cents to $2.866 per gallon, according to data issued this week by the Department of Energy’s Energy Information Administration (EIA).

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA