Hello?! The Operation is Talking to You!

In these economically challenging times, organizations of all industries are finding that they need to control critical issues in order to survive, much less remain competitive in the marketplace. Issues such as cost control, capacity and resource utilization and reacting to demand changes become areas of concern that get executives’ attention as areas that must be mastered. An all-to-often approach to getting at these issues is for the strategists of the organization to meet, develop priorities for improvement and then mandate the “Must Do” statements to everyone in the organization that include carte blanche directives for efficiency improvements, spending reductions, and labor reductions. However, by tuning in to the operation itself, issues that can have an impact can be identified and corrected, usually in a short time and with a quick return. Activities that can have an impact in this regard include:

• Get real-time (or at least very timely) feedback from the operation as to progress of work being performed.
• Implement scheduling and control techniques the provide directions as to what to work on next on a daily or hourly basis.
• Utilize alerts, visual and/or computer, to quickly identify real time issues that need to be fixed before further work is performed.
• Concentrate on customer facing issues throughout the operation, such as lead time reduction, on-time delivery, and end-item quality.
• Reduce the inventory investment by concentrating on the reasons for having the inventory. Like lowering the level of water in the stream, more rocks will appear.
• Create improvement teams consisting of those most directly involved with the operation to identify and implement quick hitting improvements.

In order to make these tactical practices effective and pervasive throughout the organization, management needs to adopt strategies that support this collaborative and synchronized approach. By having executives focus on the operation and looking beyond simple efficiencies in the work place, organizations can improve their overall performance. Aberdeen Research has identified several actions that organizations can implement to achieve Best-in-Class performance which include:

• Improve collaboration across all functional boundaries, such as Engineering, Operations, Customer Service, and Purchasing.
• Create visibility across of the operation throughout the entire enterprise, including the executive level.
• Synchronize the output of operations to match the changes in demand.
• Dynamically update business practices as best practices are developed.
• Create a scorecard that normalizes performance across all areas of the organization.
• Engage the system integrators at the executive level.
• Automate the work flow to manage non-conformance events across the enterprise.

By achieving Best-in-Class performance, Aberdeen has identified results that will improve customer performance, improve capacity utilization and translate directly to the bottom line:

• 97% On-time and Complete Delivery to the Customer
• 92% Overall Equipment Effectiveness (OEE) accounting for variability, performance and quality
• 99% Operation Compliance as measured by in-compliance output vs. total output

It should also be noted that when these operational issues are managed effectively, an improvement in cash flow and profitability can be expected.

Are you Best-in-Class?

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???