Thought Leaders
To put into scale how big of an issue succession planning is in Canada right now, consider that in the next five to 10 years, 70 per cent of today’s businesses will change hands. Or, as Grant Robinson, director of the BDO SuccessCare Program likes to phrase it, “Three out of four businesses will have reached retirement age in the next one to two car leases.”
Let’s face it—for the past several years, manufacturers in this country have been in survival mode. This has created a reactive environment of short-term management focus and seat-of-the-pants decision-making. But with the rising optimism we’re seeing in the manufacturing industry, now is the time to raise the level of your game and take a more comprehensive and sophisticated view of your business to seize opportunities for growth. And Canadian manufacturing is in growth mode these days. We are seeing expectations of higher revenue and profits, and anticipating the re-emergence of the U.S. market. Merger and acquisition activity is also expected to pick up, especially in emerging markets, where companies can potentially capitalize on rising demand generated by population growth, increasing wages and real economic expansion. Manufacturers are quite used to the need for sophistication in innovation and product development. However, sophistication is just as essential when preparing your growth strategies. Having well-thought-out strategies for acquisitions, developing trusted and proactive relationships with lenders, seriously exploring emerging market opportunities and their critical success factors, and implementing comprehensive domestic and international tax planning processes are just a few examples of things you should be thinking about.   Create proactive and thoughtful strategiesWhen it comes to mergers and acquisitions, smart manufacturers will make sure to have a proactive and thoughtful strategy in place so they can filter potential acquisition candidates. This includes comprehensive criteria and thresholds for things like geography, operating results, tax and litigation risk, IT systems and controls, operating capabilities and synergies—all a necessity for successful M&A activities in the industry today. The more that you can tie these elements to your overall strategy, the more successful the transaction will be. These considerations are especially important when looking to acquire companies in emerging markets—especially since Canadian manufacturers don’t actually have a long history of successful ventures into emerging markets. Financing is a key element of any M&A strategy, and operations that are well managed and have a strong financial position can typically secure conventional financing. However, even these companies need to be aware that all funding needs are not created equal. For example, the kind of funding required to provide liquidity for shareholders because an owner is planning to retire will be evaluated differently from funding needed to make an acquisition in an emerging market. Many manufacturers ultimately find themselves looking beyond senior debt lenders to alternative providers. Inevitably, though, these alternative sources of financing come at a higher price. While bank financing and senior term debt generally come with an interest cost from 3 to 8 per cent, interest on subordinated and mezzanine debt can reach anywhere from 8 to 15 per cent, depending on the financial strength of the company and structure of the financing required. While stable companies with solid finances can find lenders, manufacturing executives shouldn’t be complacent and wait until capital is required before arranging the necessary financing. Having a good relationship with your financial partners is more important today than ever before. Looking closer to home, there are also a number of federal and provincial government financing vehicles and tax credits available to help manufacturers support growth right here in Canada. Make sure you are not only aware of these programs, but that you take advantage of them. Similarly, there are countless foreign investment incentives available to finance growth in the United States and emerging markets. In some instances, these incentives will be the deciding factor when Canadian manufacturers are choosing a market in which to invest.    Remember—growth opportunities happen quickly. Be prepared to identify them, and be ready to take advantage of them. Don’t get left at the starting gate. Jim Menzies, CA, has more than 20 years of experience in public practice and is currently the national leader of the Manufacturing and Distribution practice for the audit, tax and advisory firm of Grant Thornton LLP. This article originally appeared in the May 2013 issue of Manufacturing AUTOMATION.
I recently had a chance to chat with Ministry of Labour (MOL) engineer, Don Caskie, about machine safeguarding. Caskie has been with the ministry for 25 years. He assists inspectors on field visits, inspections and investigations. Take a look at what he had to say about the challenges he faces as an MOL engineer, and the most common machine safety error he sees.
At Mohawk College, we’re proud to be part of an award-winning solution that makes good help easier to find for a major provincial employer. More than 30 per cent of Hydro One’s highly skilled and experienced workforce is set to retire within the next few years.  It’s an all too familiar challenge across all sectors of our economy as growing numbers of workers retire and fewer young people enter the workforce. The Conference Board of Canada estimates Ontario alone could face a shortage of more than 360,000 skilled employees by 2025, and up to 560,000 unfilled positions by 2030. To replace retiring workers, Hydro One is counting on college graduates to get the job done. In the Fall of 2007, Hydro One initiated a strategic partnership with Mohawk, Algonquin, Georgian and Northern Colleges to train and recruit students for engineering technician, technologist and skilled trades positions in the electricity sector. The partnership marks the first time in Ontario that four colleges have joined forces to meet the workforce training and development needs of a provincial employer. Hydro One is investing $3 million in annual scholarships, new equipment and technology for the classroom and curriculum development in our colleges’ Engineering Technology programs. It also provides cooperative work terms and summer jobs so students gain real-world and hands-on experience. Students who graduate at the head of their class are invited to the front of the hiring line at Hydro One. The Hydro One – College Consortium delivers real benefits to students, to Hydro One and our four colleges. Students get an education that is custom-designed and gives them a definite competitive advantage in the job market. Hydro One gets job-ready graduates who hit the ground running. And our colleges get full enrolment and waiting lists for the Hydro One programs in our Schools and Faculties of Engineering Technology. In February 2009, the consortium won the Corporate Partnership Award from Colleges Ontario. The program can serve as a blueprint for other employers looking to replace retiring workers, close their skills gap and stay competitive on the world stage. The consortium also previews the future of industry and education collaboration. At Mohawk, the success of our students rests in large measure on the strength of our partnerships. We have more than 1,000 business and industry, education, community and government partners. We have partners throughout the Greater Toronto and Hamilton Area, across the province, from coast to coast and beyond Canada’s borders. It’s the power of partnerships that helps Mohawk transform students into highly skilled and future-ready graduates. Our industry and community partners provide hands-on learning opportunities and extend the classroom into the workplace. Our partners hire our graduates for great jobs and rewarding careers. And our partners help keep Mohawk responsive and adaptive to rapidly evolving needs and emerging trends. Mohawk quickly tacks to changing winds because of our partners. New winds were blowing in November 2005 when more than 150 business, government, community and education leaders took part in a Think Tank of Technology Education. Those leaders identified a pressing need for a new type of technology employee, who had both excellent technical capabilities and outstanding management and supervisory skills. In direct response to industry need, Mohawk and McMaster launched Canada’s first Bachelor of Technology Program. The program provides an accelerated path to both a university degree and college diploma in technology for working technologists, internationally educated professionals and graduating high school students. Like the Hydro One consortium, the Bachelor of Technology Program is an award winner. In 2006, we received the Innovative Manufacturing Technology Program Award: University Level from the Yves Landry Foundation. The success of our Bachelor of Technology program reflects an educational partnership that is unique in Ontario. In place of competition, Mohawk and McMaster have opted for collaboration to the benefit of our students and to the credit of our institutions. Mohawk and McMaster were the first in Canada to bring college and university health science education and research together under one roof. Today, the Mohawk-McMaster Institute for Applied Health Sciences is home to collaborative programs in Nursing and Medical Radiation Sciences that have achieved the highest possible levels of accreditation. This Fall, a team of recent graduates from our Medical Radiation Sciences won a North American research award, considered within the profession to be the pinnacle of career achievement. The team won the award for a research project they completed as undergraduate students using state-of-the-art equipment donated by Philips Medical Systems, a long-standing corporate partner. At Mohawk, we aim to be the prime job-creating engine in the communities we serve. Our job is to build the talent dividend and supply the human capital, the most valuable resource in our knowledge economy. Today’s college students are tomorrow’s inventors, innovators and entrepreneurs who will launch, lead and grow companies. Across all sectors of our economy, they’ll be creating new jobs, new wealth and new prosperity. And our college partners play a key role in making that happen. The economic, environmental and social challenges facing us at home and around the world are simply too great for any one sector of our economy to solve alone. We will always do better by working together, and even greater industry-education collaboration will turn those challenges into opportunities. Our partnerships with Hydro One and McMaster showcase what’s possible. And at Mohawk, we’re ready, willing and able to share what we’ve learned to close the skills gap and build an even stronger and more prosperous economy driven by highly skilled, future-ready college graduates.   Cheryl Jensen is a member of the Manufacturing AUTOMATION editorial advisory board and vice-president Academic with Mohawk College.
Depression, recession, meltdown and bailout were keywords in 2009. The focus of most companies has been on numbers instead of people, and the business strategy seemed to be on “how to survive” rather than the creation and implementation of a compelling vision. It does not come as a big surprise that the morale in most organizations is at an all time low, which obviously has an immediate impact on productivity and the bottom line. Now, more than ever, it is important to create a positive and dynamic outlook for the future. The automotive industry and its workforce were hit the hardest and it was devastating to see that many organizations simply followed the trend to move companies from Canada to low cost countries. What impact will this have on the future? What price have Canadians had to pay for this impulsive decision? Did Canada lack assertiveness? Did Canada do everything possible keep business here by doing things in a better and more effective way? The trend overall seemed to be more reactive than pro-active. • What about 2010? • Is there a light at the end of the tunnel? • How can you shift from crisis to opportunity? • How can you create an environment of initiative, ownership, accountability and pride? • How can you know, go and show the way as a leader? If you think this is mission impossible, think again! Management can no longer depend on old answers because the problems companies are facing in this fast paced global market are new. The playing field and rules have changed and we are doing business in a different world. Now, more than ever, it is important to create a positive and dynamic outlook for the future. We are surrounded by too much negativity and it is important to change the way we think, learn and grow. It is all about getting to the next level by being creative and innovative to out-perform the competition. Most business people are reluctant to admit that business involves a lot of emotion, and they very rarely make room for it. If your company has had to deal with recent layoffs, this is a definite concern. Emotions need to be dealt with, processed and released — otherwise, it can and will hurt your business. If your team is paralyzed by fear and anxiety, it is very difficult to move on. People are stuck in their emotions and prefer to drive the BMW (blaming, moaning and whining) rather than moving into possibility thinking to get the creative juices flowing. Negativity is overbearing and I think we are ready for an attitude change. If you choose to ignore this serious issue, people’s productivity will suffer and so will your bottom line. The biggest advantage Ontario has is its diverse workforce, but somehow very few companies seem to take advantage of this tremendous global competitive edge. Management has to do deal with seemingly endless challenges and the solutions seem to rest mainly on their shoulders. Wouldn’t it be immensely powerful and advantageous to tap into the brainpower of the workforce? With people from China, India, Eastern Europe and virtually every other country in the world, we have the global advantage right at our doorstep. Viewing a problem from another perspective and letting your team play a key role in the problem solving process will not only lift the spirit and increase motivation, it will also increase the self-esteem and energy level of your workforce. Letting your team play a key role in the problem solving process will not only lift the spirit and increase motivation, it will also increase the self-esteem and energy level of your workforce. People learn best when they face new challenges, and it is important to teach them responsibility and ownership by not taking away their problems but by encouraging them to find solutions. If you not only accept but appreciate the creative process of possibility thinking, your people may surprise you with their innovative ideas and solutions. Performance and quality improvement tools such as Lean manufacturing and Six Sigma are an excellent ways to implement culture change and boost the bottom line. It is unfortunate that the implementation is often very superficial as most companies focus more on “5S” and “just in time” without understanding Lean as an entire culture change, including an understanding of people and what motivates them in order to get their buy-in. Without employee buy-in, no program will succeed. Times of job security, complacency and resistance to change are over. It is time for every single employee — from the shop floor to the executive suite — to focus on themselves and his or her contribution to the business success. Going forward, it is not only about encouraging accountability, it is about having the courage to hold each other accountable for your behaviours, actions and reactions, and the maturity and humility of being held accountable. Leading through crisis requires strength, vision, passion and the ability to create a culture of recognition and involvement. It is important for people to learn how to overcome failure and to see it as a roadblock on the way to success. If you see 2010 as an opportunity to grow… if you see it as a way to create a learning culture… if you learn to listen to your people and act rather than react… if you see it as a new era to discover new possibilities, methods and ways of doing things… I am convinced that 2010 will be a great year, which will showcase many manufacturing organizations in a positively new and different light. As the founder of Karico Performance Solutions, This e-mail address is being protected from spambots. You need JavaScript enabled to view it has developed a reputation as a corporate coach, trainer, facilitator – and inspirational speaker. She moved from Austria to Canada six years ago and today she is a business owner and the president of Toastmasters in Richmond Hill, Ont. Specializing in helping bolster workforce performance and satisfaction in manufacturing environments, she assists people in reaching their professional (and personal) potential. Contact her by phone at 647-401-5274 or by email at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .
If you’re buying equipment as a quick fix for a rapidly growing business then there may be a better way to make the most of your investment without draining the company’s cash. “That equipment purchase can be a costly decision. Entrepreneurs need to anticipate growth and do some long-range planning first,” says Mary Gagliardi, Business Development Bank of Canada (BDC) Vice President and District Manager, Southern Ontario. Gagliardi has seen many companies unexpectedly pick up new contracts and buy new equipment without carefully assessing their needs. “In capital-intensive sectors such as manufacturing, if you have an unusual blip in production, you need to know whether that’s just temporary and how new equipment will serve your business.”
Surveying the plant, it is easy to “see” automation opportunities. A typical signal is a manual operation performed at several manual or semiautomated stations on a product family. Typically these are “adjustment” operations, packaging and secondary processing operations. The product may be assembled/manufactured upstream with automated process equipment, (molding is a good example), and this is the final manual operation, (degating, secondary finishing or assembly). Management’s response to this is often a fluctuation of labour to meet demand, leading to significant costs and other inefficiencies. “Throwing bodies” at the capacity problem as it were. Inefficiencies include labour cost variations; quality variations and personnel turnover rates.   The converse situation is also a good visual indicator for an opportunity to automate. That is a high skill operation that is so specialized and operator dependent that only a limited number of employees are qualified to perform this crucial manufacturing step. This leads to lack of predictability as well as dependence on a select few members of the team so that cross training becomes difficult and costly, especially when an employee leaves and that specialized knowledge leaves with them.   In the previously mentioned situations, the operations may be manual or semi-automated simply because the status quo has been accepted with no engineering or management investigation into automation of the process, which can decrease overall costs. The problem is seldom technical, but rather managerial, as competing priorities for scarce capital let this low hanging fruit “die on the vine,” and the manufacturing process is that much less efficient because of it.   Value stream mapping results and strategic core competency decisions are guided by what is happening on the manufacturing floor, and if you perform an on-going survey of opportunities to automate, those key decisions can be better informed by our results. Constantly “picking” the low hanging fruit either in practice or in theory gives manufacturing management more options with which to make those strategic decisions.   The automation survey of your plant isn’t a one time event, as the reality you create by picking the first set of low hanging fruit exposes the next readily available set of low hanging fruit and so on. Therefore, the automation strategy must be an ongoing discipline of looking for and exploiting opportunities to reduce labour content, increase capacity and streamline process through cost effective automation. This approach is perhaps the “handmaiden” of lean manufacturing as it works in the service of waste reduction.   Whether performed by our outside automation partner or through our in-house automation team, the identification of opportunities to automate is a high impact manufacturing activity that has the transformative effect of clearing bottlenecks and can change the basic manufacturing cost structure and improve overall profitability. While sustaining manufacturing activities maintain and incrementally improve our manufacturing competitiveness, automation has a more far-reaching impact if it’s properly thought through and executed with creativity.   By starting with the simple rules that any operation can be automated and automation must pay for itself, you can then walk through the manufacturing floor and assign automation levels to what is presently being done and then perform a paper simulation of increasing every operation to the next level of automation and “seeing” how that impacts throughput.   For the simulation, you must set four automation levels:   1) Manual 2) Fixturing 3) Semi-Automated 4) Fully Automated   Assign your parts per man-minute or capacity levels accurately as the low hanging fruit will appear in your simulation matrix and several attractive opportunities will present themselves. These should “smooth” capacity by eliminating bottlenecks in the process. Then it becomes a management decision of priorities and you will have given your manufacturing management a “menu” of automation low hanging fruit to select from so that the decisions can be well informed.   So we may generalize that there exist, at any and all times, automation low hanging fruit, which will make the process more profitable and efficient. Following a systematic and disciplined process survey, using the visual signals of labour allocation on the floor itself, you can identify candidates for automation, which are justified through labour reduction and capacity increase. Finally, by performing the simulation of theoretically increasing all manufacturing operations to the next level of automation, some of your visual signals will be confirmed by the theoretical capacity increase by implementing the next level of automation. With this information you can provide management options for making the necessary capital investments in the process.   Chris Stergiou ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it ) is a manufacturing consultant with 25 years of experience. He provides custom automation and consulting services to clients, many of them Fortune 500 companies.
Every plant has one, a troublesome automated system that’s been around forever. Or perhaps, this machine services a dying product line and replacing it isn’t feasible. Maintenance is high and uptime and reliability are low and it may require an additional operator simply because they’re the only one who “knows” the system. Furthermore, there may be little documentation and no one wants to open that “can of worms.”     This common situation presents a dilemma: how to get more reliability and uptime from this obsolete system without investing huge amounts of money? If a new product line and its accompanying new system aren’t on the horizon, the company may just struggle along.     There is another option however, that can turn the problem into a competitive advantage by looking at cost-justifiable “fixes” that eliminate the headaches. Begin by employing a technique that machine builders use to make a marginal machine design work at the debugging and optimization stage. Engineer a solution that works, accepting the hardware as it is and acknowledging that it’s not optimal.     Performing a detailed survey of the operational system typically reveals a few problem areas, such as a worn part feeder jamming, requiring operator intervention or a worn pneumatic actuator running open loop and based on variations in air pressure or system timing issues doesn’t always make its full stroke. A flaw in PLC logic or no feedback may also cause out of sequence actions under certain conditions. Parts may also regularly jam at some load location, causing a system crash.     These failure modes typically exist because while the design was adequate when new, the functionality was based on the components running at their rated performance and after millions of cycles and infrequent maintenance, normal wear has taken its toll. Replacing those components is the first step. (Often, this can be enough and is indicative of a lack of maintenance rather than deeper wear on the system.)     Beyond the first step, the remaining problem areas will deal with mechanical hardware, which means we will be looking at wear on those items that can’t readily be replaced. For corrective action, we isolate the problem area as if it were a stand-alone module and introduce the appropriate combination of mechanical, electrical and/or control solution that “designs-in” the wear as part of the solution. Accordingly, a “patch” must be engineered.     This solution will most often be low tech, as it will simulate whatever the manual operator intervention that corrects the problem is. For example, if the operator is periodically “poking” a tool at the end of the feeding track to clear a jam, a cylinder can be mounted at that position and perform this operation to 100 per cent of the cycles, as if we are clearing the jam 100 per cent of the time. If the problem is an out of sequence timing issue, the system can be “tricked” by making an artificial interrupt to the logic, mechanically or electrically. If the problem is that the system is open loop and the parts don’t always get there in time, a buffer can be created so that the system can always be ready to deliver the next part. Regardless of the problem, the solution basically designs the flaw into the system and treats it as part of the new design.     By developing this “engineered patch,” something that would be unacceptable in a new design, the problem is solved safely and reliably. The objective is increased machine uptime on a system that is dying by simply prolonging its life, not redesigning the system.     In summary, first accept that this is an end of life system and the objective is to increase uptime/reliability with minimum investment. This can be accomplished by replacing all low-cost worn components to get back into operational specification. Finally, since certain parts of the system are too costly to replace, such as tooling, feeders, controls etc., a creatively-engineered, low-cost “patch” to the problem that accepts and designs in the wear/flaw as part of the new system design will yield increased uptime and reliability from the system without impacting the final output (product) of the system.   Chris Stergiou ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it ) is a manufacturing consultant with 25 years of experience. He provides custom automation and consulting services to clients, many of them Fortune 500 companies.
In uncertain economic times, the IT department will be called upon to contribute to cost cutting efforts within the enterprise. With over half the IT budget allocated to purchasing goods and services, poor purchase planning and wasteful purchasing may represent potential for budget improvement. Manufacturers can use a combination of common sense and adherence to some tried and true purchasing principles to cut the fat from IT procurement. IT SPENDINGAccording to Info-Tech’s last "Budget and Staffing Report," the purchase of Hardware/Software, IT and Communications Services, as well as Supplies makes up 53 per cent of IT spending on average. It follows that the purchase process itself has the potential to affect IT’s bottom line. A common mistake in the enterprise’s effort to cut costs in technology procurement is to blindly place price over product performance. The resulting cost of "purchase failure" is likely to be more substantial than savings realized by selecting an inferior product or service since a failed solution has to be corrected with a purchase that works. THE TOTAL COST OF PURCHASINGEnterprises with low purchase maturity have the potential to realize additional gains by improving several aspects of the purchase process, but there are associated costs to purchasing which may not necessarily be measured, and are therefore more difficult to identify. • Administrative costs. The amount of time spent defining purchase needs, searching out vendors, evaluating and selecting vendors, negotiating contracts, and managing vendor performance results in significant person-hours. • Opportunity costs. Opportunity costs. A foregone opportunity to realize cost savings should be seen as a loss, particularly in the case of commodity-like purchases, where cost is a higher factor than performance. • The cost of fixing poor purchase decisions. Where hardware, software, or a service that does not fulfill the purchase need, or where the product or service yields inadequate performance, an additional solution or modification has to be provided leading to unnecessary costs. The unmeasured costs of purchasing are diametrically opposed. On one end of the spectrum, too much effort on low risk purchases represents wasted administrative costs, and on the other end, poor planning for complex purchases could result in purchase failure. Resources allocated to procurement should have a direct relationship to purchase significance. FACTORS OF PURCHASE SIGNIFICANCEThe significance of a purchase is a culmination of several factors, including purchase cost, purchase risk, purchase impact and purchase complexity. These factors answer two questions: how likely is this purchase to go wrong, and what will be the impact? RECOMMENDATIONS• Categorize purchasing by significance. This means that cost, impact, and risk of a lease, purchase, or contract must be quantified in order for the right amount of purchasing resources to be allocated. Reduce the risk associated with significant purchases by formalizing the requisition process, and ensuring that greater time and effort is spent in the selection, evaluation, negotiations, and post-purchase vendor management processes. • Clearly define purchase needs. Avoid having to make the purchase twice by ensuring purchase needs are clearly defined for both business needs and technical specifications. • Aggregate purchasing. Combine orders to reduce shipping costs, and to benefit from greater vendor discounts. Consider going through a Value Added Reseller (VAR) that can combine purchases from multiple vendors of hardware and software. Evaluate purchases across the enterprise that could potentially be combined into larger volume purchases. • Eliminate or reduce carrying costs. Resist the temptation of purchasing in bulk and unnecessarily carrying inventory. This reduces loss due to shrinkage, obsolescence, or spoilage, and won’t tie up the IT budget unnecessarily. • Retain expertise by capturing knowledge. Reduce time spent researching purchases by keeping records of past purchases, maintaining lists of standard purchases and preferred vendors. • Build a purchase manual. Put together catalogs of standard purchases for lower significance items that have already been approved by the IT depart • Preferred vendors list. Benefit from existing relationships with vendors. Keeping records of those vendors who may have offered the enterprise trade discounts saves time the next time around. • Rate and record vendor performance. Keep track of on-going vendor relationships, particularly relationships with technical services such as Telcos and ISPs where service levels will determine contract renewals. Cost-cutting enterprises can find savings in improved purchasing practices, but compromising on service and performance will only increase costs in the long run. Refael Keren is a Research Analyst with Info-Tech Research Group in London, Ont. You can reach him at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .
Once upon a time, most plants had in-house machine design departments to develop new equipment. Alas, this is no longer the case as manufacturing doctrine is driven by a strategy of outsourcing non-core competencies. This “back to basics” approach means that in-house efforts are geared to product design and development and this has created a manufacturing process knowledge gap as in-house engineers are focused on production. As a consequence, many third party systems integrators (SI) have emerged to fill this gap. Manufacturing engineers specify equipment and maintenance has assumed some of the “hands on” deployment tasks.     Systems integrators are a fragmented group of companies that specialize by industry, geography, technology or may be generalists that integrate various technologies based on client specifications. By using SIs, we tend to lose the continuity that we once enjoyed with in-house groups and development inefficiencies are created, as process knowledge has to be “re-learned.” So, is there a way to have our cake and eat it too? Or, can we outsource machine design and still keep some of the process continuity benefits of an in-house group? The answer to both questions is yes.     Selecting the right SI is more critical to successful automation than the decision to automate itself. Unfortunately, sourcing this strategic resource is too often accomplished using the same criteria with which we buy commodities. The criteria used varies by company, but the main objective is to identify a supplier for the project at hand while minimizing the development risks. Since new equipment development has a direct impact on product launch, profitability and manufacturing success, you might consider selecting an SI a strategic decision and one that your company might leverage as a competitive advantage.     The first round of selection criteria includes experience in the industry; financial stability; facilities; personnel; references; price; delivery; after-deployment support; familiarity with a technology and other metrics with weighted values. Totaling the results yields a list of the candidates in numerical order, but too often this is as far as we go and No.1 is automatically awarded the project. However, you can go a bit further and leverage your practical choice into a strategic choice.     An important but not always obvious attribute doesn’t reveal itself in the spreadsheet analysis. That attribute seeks to answer the question, “Who is the best candidate to become our long term systems integrator partner?” Much like an HR interview, our goal here is to identify someone that can deliver the project at hand, but also to identify an SI that is willing to grow during that process into a partner, a strategic resource and a competitive advantage for future requirements. Those future requirements will call for increasing levels of process knowledge and the SI will increasingly become a source of new ideas and innovative possibilities for your process.     Invariably, new equipment development leads to innovative knowledge that is part of the equipment, but while you have paid for it, you can’t take it with you. The reason for this is simple. That new knowledge, apart from any patent, designs or other “hard” deliverables, is an accumulation of “soft” knowledge about your product and process that the systems integrator develops and simply keeps. In effect, you are leaving “value on the table” if you never work with this systems integrator again. And it’s a lost opportunity for both your company and the SI.     Therefore, our ideal SI candidate is the company that does well in our spreadsheet matrix — not necessarily No. 1 — and also offers longer term potential. Often this comes down to “chemistry” or a “feel,” but a good match is found when you are convinced that this particular SI can become a predictable source of solutions for you in exchange for your commitment to become a predictable source of business for them. Since the SI is usually relatively small, you are usually dealing with an owner or a senior manager and you need to reciprocate and have a suitable senior person from your team have this strategic conversation with him or her.     In summary, you are looking for the candidate who scores high on hard metrics but also, offered the opportunity, accepts the prospects of becoming your long term strategic partner.   Chris Stergiou ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it ) is a manufacturing consultant with 25 years of experience. He provides custom automation and consulting services to clients, many of them Fortune 500 companies.
Info-Tech recently completed in-depth research on IT Project Management. Data was collected from 51 manufacturing organizations representing a variety of company sizes. This gave us insight into challenges that many manufacturers face regarding delivering projects in scope and on time. There is no shortage of challenges when it comes to project management. Over half of manufacturers cite meeting project timelines and managing scope creep as either "significantly challenging" or "challenging." Managing scope creep was at the top of the list of challenges for organizations that Info-Tech surveyed as part of its Impact Research. This challenge came second to meeting project timelines for manufacturers. Third on the list for manufacturers was resource planning. The area that manufacturers find least challenging is quality assurance. Not a single manufacturer surveyed indicated that they were "very successful" at executing projects on time. Only 16 per cent of manufacturers said that they were "successful" and a further 39 per cent indicated that they were "somewhat successful" at this performance metric. Delivering projects that are within scope was only slightly better, with 19 per cent of manufacturing organizations indicating that they were either "very successful" or "successful" at this performance metric. This is significantly worse than the other industries surveyed. On average, other industries were 75 per cent more successful at being on time than manufacturers and 47 per cent more successful at being in scope. RECOMMENDATIONSManufacturing organizations struggle more than other industries when it comes to completing projects on time and in scope. Info-Tech’s research has shown that managing both is crucial to improving overall project performance. • Manage timelines. Executing projects on time results in advantages such as earlier time-to-market and earlier onset of benefits. Further, failing to meet project timelines creates a ripple effect and can make resource planning difficult. To improve performance in this area, consider the following recommendations reported by peers successful in managing timelines: • Communicate with key stakeholders. Keep the big picture out in front of staff and communicate when resources will be needed and what the critical dates are. This will enable meeting high demand times and anticipating support needed. • Manage risks. Actively mitigate risks throughout the project to minimize project disruptions. • Track staff time. One of the biggest reasons why projects are not on time is due to an underestimation of time required to complete the associated tasks. Time/task reporting should be required of staff to use the historical data to forecast work effort requirements. • Build in a buffer. Review past project performance to determine the buffer. If projects usually end up being bigger in scope than originally planned, then a time buffer is crucial. • Manage scope. Delivering a project in scope means that the project meets the needs for which it was undertaken. Improperly managing scope could result in time and money being spent unnecessarily. To improve performance in this area, consider the following recommendations reported by peers successful in managing scope: • Invest time in planning up front. One of the biggest mistakes made in project management is not spending enough time in the planning and requirements gathering process. Investing more time up front makes requirements creep less likely and provides the necessary scope boundaries for creating iterations. • Make scope changes a documented process. Any requested scope changes should be formally documented. A form with the relevant information should then be presented to the executive sponsors and steering committee for approval. This enables the team to understand why the change is being requested. If more money and time is going to be spent, the person making the request should be able to justify it to the executive sponsors and steering committee. Often, people will realize that their request was a nice-to-have and will not go through the process. Creating this type of process will ensure that only the changes delivering value will be put through. • Know when to say no. Do not be afraid to push back on requested changes. Incorporate a process for saying no that identifies who makes the ultimate decision (typically the sponsor). Explain that changes are not necessarily bad, but they need to be controlled. Recommend major scope changes as a phase two or phase three of the project instead. The bottom line is that manufacturing organizations struggle to complete projects on time and in scope. Understand the impact this can have on the organization and consider taking action to improve these two areas. Jennifer Colasanti is a Senior Research Consultant at Info-Tech Research Group in London, Ont. You can reach her at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .
High mix, low volume manufacturing is everywhere and build-to-order requirements may sometimes look impossible to automate economically. However, that’s not the case. A useful approach is to identify "common" process requirements for many or all part numbers of a product family and to automate using quick-change tooling and re-configurable parameters to handle the parts range. Your first thought might be that it can’t be done because of size or other variations and overcoming your hesitation is as much faith as it is expertise. This approach leverages in-house product knowledge along with automation tools, which are integrated. Creativity can take any operation to a higher level of automation if you use process knowledge to "see" what the manufacturing floor might look like with a particular step or operation automated. In a job shop environment, investment in automated parts handling/feeding is not easily justified. Instead, we focus on automating the process itself in order to reduce cycle time by making the operator the load-unload function and designing our system to perform the operation with hands-off automation. A familiar example of this is the manual loading of stock into a CNC machine, which executes a preprogrammed sequence including tool changes and machining without operator intervention. We can extend this to our secondary assembly operations by developing custom tools that work in the same way. To accomplish this, the first step is to design a "universal" fixture that can present the part/assembly for as many operations as possible in a single set-up. Secondly, the process sequence is automated using a PLC, reducing operator skill level and variation. Custom tooling is required and an initial set-up for a specific part number should take some small multiple of process cycle time. By way of manual set-up or automation of the set-up itself, set-up time should require approximately 10-20 times the cycle time. So if we have a 10 second cycle time, a 100-200 second set-up time should be acceptable, but the lower the better. The physical form factor often looks like a simple tabletop fixture with quick-change tooling or set-up parameters. The operator is positioned in front of the universal fixture and has an input of raw parts and an output for completed assemblies. Inputs can vary from a single piece or several unique parts, which are presented to this single set-up for assembly or other operations. Operations can include press assembly, dispensing, leak testing and automated fastening, among others. In developing a universal process automation tool, first a matrix of mechanical or other common attributes in the product’s intrinsic design must be developed. Sorting this matrix will produce at least one common parameter to all products in that family. This may be a common centreline, bolt pattern, dimension or other feature. If a common parameter isn’t found, then the family of products will have some scaleable attribute/parameter that will become the common parameter with adjustment. The design engineering group can often assist in identifying this parameter. In either case, this common parameter or "handle" will "hold" all products in the universal fixture. You know you’ve found a good "handle" when it is simple and applies to the full target family of products. The 80/20 or Pareto Rule is relevant here, meaning that some of the products in the family fall outside the economic justification because in order to accommodate them, more money would need to be spent to automate them. Actually, by automating as few as 20 per cent of the part numbers, 80 per cent of the volume is effectively automated. The next step is to identify all operations required for the product at this stage and to sequence those operations so that as many/all operations on this single set-up are covered. Often operations can be pulled downstream into this set-up or pushed upstream. The goal is to perform as many operations and bury as many cycle times as possible into this universal setup and maximize value. At a minimum, other setups are eliminated and in most cases the total cumulative operation cycle time is reduced. The result is almost always a net gain in cycle time and usually quality improvement as multiple handling/variation is reduced. In summary, the automation of high mix, low volume operations can be achieved by rejecting the notion that it can’t be justified. It’s possible to meet the challenge with creative process automation that addresses the full range of the target product family and seeks to eliminate direct labour while maintaining or improving quality as standard tools that remove operator skill and variation from the target operation are introduced. By leveraging the knowledge of automation tools and framing this challenge as a goal that is achievable, it becomes a question of how, rather than if. Chris Stergiou ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it ) is a manufacturing consultant with 25 years of experience. He provides custom automation and consulting services to clients, many of them Fortune 500 companies.
Manufacturing automation, found in all our plants falls under the capital costs factor of the manufacturing costs equation. Automation leverages our competitive advantages and makes our products economically viable by creating an optimum mix of the three factors of production.     Capital in the form of automation is our control dial and is the most responsive control point so that we can “dial in” our resultant manufacturing costs. Therefore, as materials and labour are commodities in the global markets, automation remains our most important competitive advantage.   WHY DO WE AUTOMATE? We automate for several reasons: 1) To eliminate the process variation inherent in manual operations; 2) To protect workers from safety hazards; 3) To substitute variable labour costs with controllable capital costs; 4) To achieve faster cycle times; and 5) To produce at a predictable rate.     Implicit in the reasons to automate, is economic production so that we can compete with an optimum mix of material, labor and automation (capital). We automate based on an economic analysis of alternative uses for our capital ranging from totally manual operations to increasing levels of automation as we substitute for human effort with machine function to lower total costs.   WHAT TO AUTOMATE? In manufacturing, anything and everything can be automated as indicated by the economics of the operation and our strategic objectives. We automate labour-intensive operations that offer immediate economic justification: the so-called “low hanging fruit”. Whereas labor costs are unpredictable and recurring; capital investments are more predictable in terms of the Return On Investment (ROI), and Internal Rate of Return (IRR), and offer opportunities to invest in an internal investment instrument that has a higher economic yield.     Automation’s key driver is the economic justification of the investment for that automation which has to compete with other potential investments within manufacturing, but also with other company investments internal/external for the same scarce company capital.     In the continuum from totally manual to fully automated operations there are many economic “break points” which meet the ROI/IRR criteria for automation. These range from simple assembly fixtures to major fundamental redesigns of a manufacturing operation so that multiple steps are buried into the same cycle time.     Automation must be quality neutral or a quality improvement and the ROI/IRR must meet our minimum criteria. The automation then becomes a new revenue stream since it leverages an existing operation and that new revenue is realized as productivity improvement. A well-executed automation project meets its economic objectives, but also brings unknown and unknowable benefits, which become evident only after deployment as new opportunities are created.   WHEN TO AUTOMATE? The untimely execution of an automation strategy fails to both deliver its promised economic benefits and can increase costs. It is essetially “turning the dial in the wrong direction.”   In an ideal world, automation is timely when the inputs to the process are well understood and are to specification and the process has been value stream mapped and we perfectly understand the economic and technical value of each step.     Alas, under this rubric, we will never be ready for automation. Still, the two prerequisites to good if not perfect automation are the stability of our inputs and a good understanding of our process. Both of these requirements are achieved through the use of Lean manufacturing tools and judging the two conditions as met is as much art as it is science, requiring leadership.     Since a process is fluid and dynamic; responding to market/strategy shifts; there are always operations, which are ripe for automation. Using the two signals of stable inputs and a well-understood process, we will always find automation opportunities. If we search our process, we will find several operations, which meet the above criteria. Then using the ROI/IRR calculations, we will proceed to automate that operation which yields the highest economic benefit.     Once we have completed our first iteration, we rerun our search through the process. This second search will reveal another set of opportunities including the previous results, but likely including new opportunities that were created by our first pass automation. So our search is repeated continuously and our investment in automation is in the higher ROI/IRR available at that point.     In summary, while understanding why we automate, we run our automation search continuously, using stable inputs and an understood process as our signals and maximizing the ROI/IRR to identify economic targets for automation.   Chris Stergiou ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it ) is a manufacturing consultant with 25 years of experience. He provides custom automation and consulting services to clients, many of them Fortune 500 companies.
Dick Caro led the charge for adopting Ethernet as a fieldbus and a means of achieving interoperability between hundreds of products. He held positions at Foxboro and ARC Advisory Group, and has authored books and papers. He has also served as chairman of the Fieldbus Standards Committee, and was elected to the Automation Hall of Fame. The following is an excerpt from Manufacturing AUTOMATION contributor Perry Marshall's interview with Caro:
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