Automating real-time demand-driven supply chains

Feb. 28, 2018 – Sadly, the number of large, multinational manufacturers who are still using spreadsheets and manual processes to manage their largest cost centre, production operations, remains common. These manufacturers have reverted to spreadsheets for two reasons.

First, there is no reliable “single version of the truth” from any one system they can draw upon. Secondly, manufacturing software packaged with enterprise resource planning (ERP) systems lack flexibility; they don’t really work the way the manufacturer needs them to and fail to provide meaningful access to real-time and accurate data.

While ERP software is a critical business tool for managing transactions – and translating data into financial insights – it often falls short in managing the activities behind those transactions. Also falling short are other software products such as MRP, APS, and FCP systems due to a singular focus, rigid transactional design, and inability to support modern manufacturing methods including lean, constraints management, and demand-driven manufacturing.

A lean, layered approach to transformation
Manufacturers continue to invest in technologies to transform their environment through digitization, synchronization, and ubiquitous visibility. Increasing numbers of manufacturers are taking advantage of more flexible and highly configurable cloud technologies that allow them to affordably layer on value-added capabilities, rather than “rip-and-replace” expensive enterprise systems.

A layered approach goes hand-in-hand with the lean and continuous improvement principles inherent in modern demand-driven manufacturing. Layering technology allows manufacturers to approach transformation to modern methods pragmatically and achieve significant wins.

For many modern demand-driven manufacturers, transformation begins at the core of their business: Throughput. That is, how quickly and cost-effectively can you get your product into the hands of the customer. Toward that end – and the most common application of layering technology I’ve experienced – is the layering of a manufacturing system of record MSOR on top of the ERP system to automate and – this is critical – synchronize planning, scheduling and production execution. Synchronization of all production-related elements is the key to eliminating costly downtime, driving end-to-end production flow and ultimately increasing throughput.

The MSOR leverages the ERP system for its intended purpose – transactional data – but its core function is to drive end-to-end production flow. It leverages synchronization technology to align all elements needed to execute an order, utilizes constraints management to optimize the pace of production, collaborates with the extended supply chain to automate replenishment, and enables real-time, universal, enterprise-wide visibility.

Instead of collecting data for data’s sake, the MSOR curates data from multiple sources then serves it up in ways that help the manufacturer achieve goals that are meaningful to them such as predictive maintenance, reducing lead times and improving inventory flow. As a result, we’re seeing new Industrial Internet of Things (IIoT) enabling intelligent devices springing up all over the shop floor.

As a side benefit – but not one to be understated – these intelligent devices are not only making it easier to gather much-needed data, but they are also improving the productivity of individual workers on the shop floor. For example, instead of requiring a work center operator to decipher a spreadsheet-based production schedule (that is probably out-of-date within minutes of being released) and then adjusting work accordingly, a MSOR dynamically adjusts production schedules to reflect up-to-the-minute information on orders, priorities, delivery schedules and production flow.

One extrusion equipment manufacturer deployed a MSOR to reduce stock outs of stocked parts by 25 per cent and returned to profitability for the first time in three years. In another case, and after only a month, a steel wire manufacturer achieved an all-time production record and attributed the performance increase to the new MSOR. Similarly, the largest wood products producer in the U.S. experienced a 20 per cent bump in capacity and a 10 per cent increase in throughput after implementing a MSOR. These quick ROI-producing improvements were not made by replacing large enterprise systems, rather by layering specialized, performance-producing software.

Synchronization matters
Manufacturers are responding to more enterprise-level requests for synchronization to provide a real-time, single version of the truth to all. Access to order status, priorities, production schedules, replenishment across multiple facilities, supplier networks, and outsourced/contract manufacturers is possible thanks to both the MSOR and Industrial Internet of Things (IIoT) technologies.

As mentioned, a MSOR benefits manufacturers because it synchronizes equipment, processes, data, and people to drive uninterrupted production flow. IIoT technologies are a valuable part of this equation because they standardize the data from multiple, disparate sources (systems, machines, sensors, etc.) providing the ability to universally access, aggregate and analyze the data. The next step is to synchronize data from these sources and apply the appropriate contextual insight. For example, a machine goes down on the shop floor. Understanding the environmental conditions associated with the machine’s location – temperature, humidity, particle count, etc. – could lend valuable insight into the issue as would the age and maintenance history of the equipment. Imagine the value to the manufacturer in synchronizing these data elements for immediate root cause analysis. IIoT technologies serve up this level of detection detail to drive corrective action while the MSOR is adapting the schedule in real time to maintain promise dates.

Trusted version of the truth
Synchronization technology enables the MSOR to become the trusted “single version of the truth” accessible to all. And synchronization technology curates data to make the IIoT actionable with decision-driving information that is instantly available to improve production flow, address quality issues, mitigate downtime events and more.

It’s never too late to prepare your organization for a better future. By synchronizing all activities and resources to actual demand, modern demand-driven manufacturing synchronization technologies and a MSOR can help you reach your most important KPIs. Perhaps finally, we can now retire spreadsheets and operate in real time.

Modern demand-driven manufacturing
Demand-driven manufacturing is a method of manufacturing primarily used by discrete, custom manufacturers where production is based on actual demand (orders or consumption) rather than a forecast.

Modern demand-driven manufacturers are today’s truly lean thinkers. While they are continuously improving, they are also innovating. Modern demand-driven manufacturers realize that this combination not only gives them an advantage in the marketplace, but it drives their efforts to work smarter, more profitably and exceed customer expectations. Modern demand-driven manufacturers embrace technology, but with a different lens. Solutions, not just systems, drive progress.

John Maher, vice president of product strategy at Synchrono Inc., has more than 20 years of experience working in manufacturing environments and has been with Synchrono since the company’s inception. He holds subject matter expertise in ERP, MRP, APS, supply chain, manufacturing planning and scheduling systems and constraints management which drives the continuous improvement of the company’s lean and constraints management-based software and services.