Monday, July 28, 2008

Best-in-Class Success via ERP

Pressures to reduce costs outweigh all other business drivers regarding Enterprise Resource Planning (ERP) systems. While ERP is generally viewed as required, it can also be key to streamlining the business processes. Aberdeen Research has surveyed over 1200 manufacturing companies and found that while ERP implementation generally produced a reduction on costs and improvements in scheduling across the entire organization, Best-in-Class companies had better results:

  • 20% reduction in levels of inventory with 97% accuracy
  • 95% manufacturing schedule compliance
  • 97% on-time and complete shipments
  • An average of 3.3 days to close a month

This survey showed that Best-in-Class companies:

  • Implemented 30% more ERP functionality
  • Implementation is 33% more likely to be owned by line-of-business executives
  • Standardized enterprise wide procedures for all business processes

In order to achieve Best-in-Class, companies need to:

  • Assign ownership of ERP success to line-of-business executives
  • Broaden the use of the ERP system to include all of the functionality available
  • Standardize common practices and ERP implementation

Are you Best-in-Class???

Wednesday, July 23, 2008

Gain Visibility across Production

Manufacturing executives have many challenges optimizing performance while attaining corporate goals. In today’s economic environment, a significant reason for performance management is operating cost reduction while continuing to serve the customer. Aberdeen research has found that:

  • Best-in-Class manufacturers operate with 25% operation margin.
  • Best-in-Class manufacturers realize 19% increase in On-Time Delivery, a 21% increase in OEE, and a 22% increase in yield.
  • Best-in-Class manufacturers realize 97% Raw Material Yield.

Their research also found that:

  • Best-in-Class manufacturers are 65% more likely to standardize exception handling processes and procedures across manufacturing operations.
  • Best-in-Class manufacturers are 2 times more likely to enable continuous improvement teams with analytics and real time visibility.
  • Best-in-Class manufacturers are 4 times more likely to display operational data and metrics in real-time.

In order to achieve Best-in-Class performance, companies must focus on improving operations in the following ways:

  • Automate data collection across manufacturing operations and use this data to control production.
  • Provide role based visibility to information and establish automated workflows across manufacturing operations.
  • Invest in visualization and analytical technologies to gain visibility across all operations and improve decision making.

Friday, July 18, 2008

Lean Transformation Strategies

Lean transformations that effectively improve the culture and performance of
an enterprise use an integrated approach across people, business processes,
and technologies. Based on the survey responses of over 800 manufacturing
professionals, the Aberdeen Research Group has identified specific strategies for manufactures to deploy at every stage along the Lean journey. Survey results show that firms enjoying Best-in-Class performance share several common characteristics which include:

  • Lean processes are standardized across the enterprise and are based on best practices.
  • Executive ownership of Lean initiatives exists, and these executives have worked to establish Lean Centers for Excellence across the enterprise.
  • External consultants are utilized to set expectations, help establish best practices, and train the appropriate number of internal champions.
  • Lean Scheduling software solutions are used to standardize processes and support decision makers in real-time.

Aberdeen has identified required actions for enterprises at every point of the
Lean journey. In each case, the required actions have been validated by the 800
survey respondents and shown to improve KPI performance in defects, first
pass yield, on time delivery, and throughput. Actions to reach Best-in-Class include:

  • Use external Lean domain experts to begin training, set expectations and establish best practices for pilot Lean initiatives.
  • Establish executive ownership of local Lean initiatives and establish a pilot Lean Center of
  • Excellence to support best practices across the enterprise.
  • Use manufacturing operations management capabilities to enable Lean tools that support Lean Scheduling and Execution initiatives.

Are you Best-in-Class?

Wednesday, July 16, 2008

Peak is TAG Grant Qualified

My company, Peak Enterprise Solutions, has just been qualified to deliver training and education for Lean Manufacturing under the Indiana Training Acceleration Grant (TAG) program.

By partnering with the Apprentice Academy of South Bend and Vincennes University, the Lean Enterprise Education curriculum developed by Peak is eligible to be used as part of a TAG grant where the company will be reimbursed for out-of-pocket expenses incurred for on-site training and education for Lean Manufacturing.

In addition to the reimbursement from the state, the individuals that participate in the program can qualify for course credit in the Vincennes University Business and Industry Division continuing education program “Customized Certificate of Applied Learning in Advanced Manufacturing”.

This hands-on education and training program is a great way for a company to start down the path to Lean and with the TAG grant, out-of-pocket expenses for this training are reimbursed by the state.

Why Peak Enterprise Solutions? All of our consultants have 25+ years of experience in both consulting and management, our approach uses a proven methodology, our projects are ROI based and we are locally owned.

Please visit the site for more information regarding the TAG grants.

Monday, July 14, 2008

Measurement is Key to Lean Success

Aberdeen research studies have consistently reported that the majority of manufacturers
have begun some form of Lean initiative and are at various states along their Lean journey. Manufacturers are focusing on improving operational factors in an effort to garner profits to the organization while continuing to meet customer expectations. They also report that:

  • While most companies indicate that they are Lean to some degree, few are Best-in-Class: adequate measurement and control is one missing link.
  • Operational factors are among the top three reasons driving Lean Measurement and Control
  • Operational metrics are often misunderstood or misaligned with strategic goals

Going through a lean transformation requires change to occur in all areas of the business and without some basic metrics beings in place, it is difficult to know where you have been and how you are succeeding in your effort. Developing metrics also forces the organization to determine what it is they are really trying to achieve by going lean so it facilitates getting everyone on the same page from the outset.

These metrics need to be basic, straightforward and close enough to the operation that those involved can actually influence them. Things like cycle time, changeover time or WIP inventory are things that people can see, touch and affect. Things like ROI, P/E ratios and ship-on-time percents are difficult since people have a hard time relating what they do day-to-day with these results. What is important is that the metrics being used at the tactical level support and contribute to the results desired at the strategic level, so careful consideration must be made when developing the lean metrics to be used.

Lots of things can be measured in a lean effort, so pick the few that are critical to your success. I'd love to hear what metrics are being used in your lean effort, so please let me know.

Friday, July 11, 2008

How Lean is Your Manufacturing Machine?

Manufacturing is more challenging today than ever before and most businesses struggle with many of the same critical issues:

  • Customer definition of value is constantly changing and is a lot more challenging.

  • Lead times are shrinking and on-time delivery to customers is less than satisfactory.

  • Inventory is out of balance with both shortages and excesses.

  • High cost purchasing/material mangers are expediting material.

  • There are more “Hot” tags on the floor than ever before.

  • Capacity problems…struggling to get enough product out the door.

  • Some work centers are idle while others are over capacity.

  • Profit margins are shrinking and cash flow is a problem.

  • Processes have excess labor, material or time or all three.

Becoming a lean organization can eliminate these challenges. Reduce inventory, lead times, labor cost, expediting and frustration. Increase customer value, throughput, capacity, cash flow and profits. Sounds idealistic? It's not. Going down the path to lean is rewarding and productive, both for the individual and the organization. Especially in these economically hard times, eliminating waste and concentrating on value added activities can give an organization the competitive edge it needs to stay afloat during hard times and really prosper during better times.

As I see it, there are two keys to being successful in the lean transformation:

  • Having a plan - going through the process with a plan and clear expectations will allow everyone involved to know where you are going and how well you are accomplishing the goal.

  • Managing the change - going lean is a likely a culture change/paradigm shift for the organization. It's probably a fundamental change in how the business is run, so working to make the change in behavior and then sustaining it has to be a conscious effort.

Companies that are successful at going lean are flexible, agile, good places to work and most importantly - profitable. They are able to change with the times much better than most and are poised for success in the future. There is lots of help out there if you are not sure how to go about it (most don't) so, go for it! Good Luck!