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Do the Impossible: Minimize Manufacturing Cost and Improve Quality

Do the Impossible: Minimize Manufacturing Cost and Improve Quality 150 150 David Sheriff

Do the Impossible: Minimize Manufacturing Cost and Improve Quality

By: Scott JessupThe Holy Grail of any manufacturing operation is to minimize manufacturing cost and improve product quality. While to some that might sound impossible, it can be done with proper planning and forecasting, effective negotiating, and working closely with vendors to control costs. Let’s first take a look at the role that planning and forecasting play in controlling the three basic manufacturing costs: materials labor, and overhead. Materials are the parts, components, and systems that go into making a finished product. For manufacturers operating with Lean or Just-in-Time (JIT) strategies, it is vital to accurately forecast needs and plan purchases and deliveries so that the right materials and quantities can be available at the right time to meet various process requirements. If materials aren’t in inventory when they’re needed, last-minute purchases and delayed production schedules can quickly drive up costs. Accurate forecasting and having flexible, responsive supply chain agreements in place can go a long way toward mitigating materials problems and controlling costs.Labor costs play a significant role in any manufacturing operation, especially those that utilize a highly-skilled workforce. By employing realistic and efficient scheduling techniques, unnecessary overtime can be avoided and labor costs kept to a minimum. Overhead includes all indirect costs associated with manufacturing, including building costs, equipment depreciation and maintenance, utilities, and quality control, among others. Once again, proper forecasting and disciplined budget control can substantially impact general cost containment.One major area where quality and cost collide is scrap-and-rework. Poor manufacturing processes and quality control results in higher scrap rates, which require more labor to produce additional finished products to fulfill the order. Having a solid quality assurance program that includes an effective quality management system and documentation procedures will significantly help reduce scrap-and-rework.Key to controlling all of these costs is analytics. Utilizing a best-practices ERP system with efficient data management and sophisticated analytics will enable you to conduct root cause investigations that can help identify and fix weak spots and bottlenecks in the system. By creating greater efficiencies and optimizing overall performance, unnecessary costs can be driven out and quality improved.The role of contract negotiations in minimizing manufacturing cost and improving qualityThe devil is in the details, as the saying goes, so it’s vital to look at every element of a contract and negotiate the best possible terms to minimize costs. For example, transportation can be a significant cost factor, so look closely at freight terms. In a global supply chain arrangement, freight, along with insurance, duties, and other costs can greatly impact overall material costs.Contract negotiations can also affect quality. The level of expectations spelled out in contracts can have a direct effect on quality and costs. For example, product characteristics can be a double-edged sword. Poorly-defined product characteristics can lead to more time (and money) spent on design, prototyping, and approval. At the same time, highly-defined product characteristics increase the risk of rejections, scrap and rework.In addition, customers may require specific certifications, testing, analysis reports, and/or production part approval processes (PPAPs), to name a few. All of these take additional time and money, so if they weren’t clearly defined in the contract and you’re then put in a position where you have to do these, you’ve just lost some or all of your profit. Whether the contracts are with customers or vendors, the key to minimize manufacturing cost and improve quality is positive relationships. The best customers and suppliers are more like partners – everyone benefits from working closely together, openly communicating, sharing data, and holding each other accountable for the good and the bad. Understanding and working well with your supply chain and customer base is crucial for controlling costs and improving product quality.Minimize manufacturing cost and improve quality through business/operational process improvementOptimizing the processes that affect manufacturing has a direct impact on minimizing manufacturing cost and improving quality. This involves creating a corporate culture built around a desire to pursue and eliminate waste in all its forms.Most often overlooked are front office activities – after all, how can they possibly impact manufacturing on the plant floor? The truth is, they do. How products are designed and produced affects material and labor costs. Order entry and contract review are other key activities that, may not directly affecting quality, can affect cost.  Inefficient purchase order processing and entry can eat into production time availability and cause an unnecessary and expensive rush to fulfill orders.Optimizing processes through continuous improvement through strategies and methodologies such as Total Quality Management (TQM), Lean, JIT, and Six Sigma plays a significant role in minimizing costs and improving quality. But it’s important to understand the difference between improving a production model and a process model. It’s often easier to tweak what’s needed to produce a finished good (production model) by adding more equipment or labor. While that will certainly help with costs and quality, a far greater impact can be achieved by improving the process – how something is made. That takes a little more analysis and hard work, but the pay off in the end can be substantial. 

How to Get Lean Scheduling Right

How to Get Lean Scheduling Right 150 150 David Sheriff

How to Get Lean Scheduling Right

By: Jamie BzdokLean manufacturing is not a scheduling-centric strategy or methodology, rather Lean concepts affect processes around scheduling and help make it more efficient and productive – hence, Lean scheduling. At its core, however, Lean manufacturing is all about eliminating waste in production, including: 

  • Work-in-process (WIP) and inventory
  • Defects
  • Parts movement
  • Over-production
  • Over-processing
  • Delays

The main reason manufacturers often struggle with Lean is because its implementation can expose issues in the production process such as gaps and bottlenecks. Many companies will address these issues with tweaks to production, but not process. For example, some manufacturers will labor under the common misconception that increasing production quantities will decrease costs, so they increase WIP and inventory which, of course, adds labor and materials costs.What’s not being looked at are the hidden costs that occur by increasing batch sizes. As we just noted, increasing production requires the purchase of additional raw materials. This additional cash outlay may not be recouped for months, adding the risk of cash-strapping the company in addition to increasing expenses. It’s easy to see the potential for snowballing here.And it doesn’t stop there. Increasing production batch sizes increases the load on production, which oftentimes leads to a misallocation of production capacity. This, in turn, leads to the added labor expense of overtime, further increasing costs. This is hardly Lean scheduling. To add insult to injury, increasing production adds the risk of over-producing and stockpiling too much inventory (more waste!). Instead of committing cash and resources to producing finished goods that ship and bring in revenue, unnecessary waste has been incurred for products that will sit, unsold, on shelves instead. And we’re still not through. More waste is piled on in the form of added hidden costs such as managing all that additional inventory. This is how poor planning and unaccounted-for hidden costs can impact scheduling, production, and profitability.Lean scheduling: Less is more
Just by reducing batch sizes to what will actually ship can reduce WIP, inventory, lead times, and cost. By minimizing and better controlling these processes, more effective, Lean scheduling can be implemented. Of course, there will be times when cost and complexity of set-up will warrant an increased batch size; however, it’s important to be aware of the costs this will add to the process.The same concept applies to purchased components. Just because a price reduction on materials for a larger production batch size may be available does not automatically make buying it and bringing it into inventory the right decision. Instead, it’s more important to fully evaluate the true need for inventory items or safety stocks and set them at the correct levels.Speaking of costs, it’s important to not focus strictly on the standard efficiencies that are typically associated with manufacturing. Consider the concepts of throughput accounting and realize that there may be excess capacity available to sell at lower costs once initial labor and burden are paid for. Look at different measurements such as throughput (sales minus materials and outside service costs), total spending, cycle time, quality, and on-time delivery.Often when implementing Lean principles a manufacturer will find an increase in sales, a decrease in WIP/inventory costs, excess capacity, lead time reduction, and an increase in on-time delivery. The key reason is Lean scheduling – working on the right thing at the right time.There are tools available, such as VISUAL Easylean/DBR schedule for example, that will help a company enforce these Lean principles in the manufacturing scheduling process. DBR (Drum-Buffer-Rope) focuses on scheduling constraints in the system and enforces the reduction in batch sizes. VISUAL will attempt to only have produced what is truly needed, as well as reduce the amount of time that Planning will typically spend on material planning efforts in an ERP system. The real effort is to resist the urge to fight the system and instead let it do the work. If you can successfully do that, you’ll quickly see the benefits mentioned earlier, including a decrease in WIP/inventory costs and excess capacity, a reduction in lead-time, and an increase in on-time delivery. Lean will uncover issues in your manufacturing processes, enabling you to fix the underlying, fundamental problems and not just patch them up in production.   

5 Biggest Material Requirements Planning Pitfalls

5 Biggest Material Requirements Planning Pitfalls 150 150 David Sheriff

5 Biggest Material Requirements Planning Pitfalls

By: Scott JessupMaterial requirements planning (MRP) plays an essential role in manufacturing, enabling the production process to proceed smoothly and efficiently. As an inventory management system, MRP helps production managers plan and schedule the raw material purchases required for manufacturing. Without the proper MRP processes in place, the ability to reliably and consistently manufacture products is put in jeopardy.To ensure that an MRP system runs smoothly, it’s important to avoid five major material requirements planning pitfalls:1. Inadequate bill of materials (BOM)All production planning starts with a bill of materials – if that is wrong, virtually everything else affecting production will be wrong as well. The BOM drives operations, purchasing, manufacturing, and logistics – the data from a manufacturing BOM is used to inform ERP, MRP, and the manufacturing execution system (MES). Inaccuracies in a BOM such as ordering the wrong parts or the wrong quantities can result in significant problems, especially for companies operating on a lean strategy. The more complete and accurate a BOM, the better the decisions made regarding inventory levels, operational efficiency, and the most cost-effective and profitable way to get products to customers.2. Incorrect or obsolete material requirements planning policiesERP and MRP systems are essentially sophisticated calculators – they utilize mathematical inputs to determine how much stock to buy and keep in inventory, what lead times should be, and other policies affecting the manufacturing operation. Unfortunately, some planners “set-‘em-and-forget-‘em.” They set up the system to manufacture a certain product, input some numbers that may or may not be based in reality, and then never revisit the numbers once they’re in place. If those inputs are wrong, all the planning will be, too.

3. Lack of understanding of planning fundamentalsProper material requirements planning is a complex process that requires good analytical skills and strategic thinking. However, many companies have the wrong person in the position – often they’ll use buyers and simply call them planners. What’s important to understand is that planning is a strategy and purchasing is a task. The individual in the planning role may not be familiar with the principles of supply and demand or know how to interpret the information coming out of the MRP system. This can be a major stumbling block for effective material requirements planning.4. Absence of forecastingAn MRP planner must anticipate what the company will need to successfully manufacture and deliver products. The only way to do that is to have a forecasting mechanism and model. Without proper forecasting there is no planning. Material requirements planning becomes reactive instead of proactive – that’s not an MRP strategy, that’s simply purchasing.

5. Treating suppliers as vendors, not partnersYour main suppliers are the initial key to effective material requirements planning. Without their cooperation, you will have no materials to make your products. It’s critical to involve your key suppliers in your MRP beyond simply sending them purchase orders. By developing a close relationship with them, you can have a better view of the supply chain and create supplier agreements that work well for both parties to ensure a ready supply of raw materials for production.These five major material requirements planning pitfalls all highlight the need to establish good metrics and business analytics. Metrics enable you to measure planning accuracy and facilitate the continuous improvement critical to optimizing ERP and streamlining manufacturing operations.

How to Prevent Customer Changes From Killing Your Production Schedule

How to Prevent Customer Changes From Killing Your Production Schedule 150 150 David Sheriff

How to Prevent Customer Changes From Killing Your Production Schedule

By:Jamie Bzdok

Lean manufacturing is now a way-of-life for many manufacturers; its principles, methodologies and process have helped hundreds, possibly thousands of manufacturers in all sizes and industries cut waste and inventories while speeding up production.However, some Lean manufacturers are faced with increasing customer pressure to maintain more inventory than the manufacturer would like. This is often a result of the customer’s inability to plan accurately and the desire to reduce lead times as much as possible. However, maintaining too much inventory, of course, runs counter to the very core of Lean manufacturing principles.One of the most effective – and the most obvious – strategies for minimizing customer disruptions of your production schedule is to spend the time and effort to really understand their manufacturing and inventory needs, sales cycles, and distribution. By gaining a comprehensive picture of how their sales and distribution system works, it becomes easier to anticipate production and scheduling needs.In today’s high-speed manufacturing environment, production items — from raw materials to subsystem components — are flowing through the manufacturing process at very high rates, with constant pressure from customers to reduce lead times. To accommodate this level of manufacturing and production schedule timing, it can be valuable to have customers provide you with their forecasts.  The data from these can be imported into a flexible ERP system to more accurately evaluate material needs and production schedule requirements. By integrating your customers’ forecasting into your resource planning and production scheduling system you can better react to their needs and even anticipate changes or other potential glitches that could disrupt your production schedule.Your ability to react positively to any customer changes that can adversely affect your production schedule is directly related to how well you maintain and utilize your ERP system. For example, if your company uses an ERP scheduling module in addition to Lean methodologies and focusing on products that actually ship out the door, you can more effectively prioritize your production schedule and proactively address customer needs to minimize disruptions. An ERP system enables you to quickly see where you need to add or shift capacity to accommodate customer requirements. Properly implemented, the right ERP system enables you to run “what if” scenarios that can help you determine how changes will impact your production schedule. You can then communicate with customers in a timely manner to avoid unnecessary changes, or inform them of additional costs incurred by unforeseen last-minute revisions early enough in the production cycle to help avoid damaging customer relations.Good customer communications are key for building and maintaining a successful and profitable partnership relationship. End-to-end manufacturing process visibility that comes with a well-maintained, sophisticated ERP system enables you to stay ahead of most manufacturing issues or help you make well-informed decisions to minimize their impact.

5 Common Production Planning & Scheduling Mistakes

5 Common Production Planning & Scheduling Mistakes 150 150 David Sheriff

5 Common Production Planning & Scheduling Mistakes

By: Scott Jessup

Manufacturing planning and control is all about the acquisition and allocation of resources required to manufacture a product that satisfies customer demand within a certain time frame. In order for that to happen, a variety of materials and labor need to be seamlessly coordinated to yield optimal results. Consequently, any problem with production planning and scheduling – keys to effectively controlling manufacturing — is a process optimization problem.While there are any number of issues that can affect production planning and scheduling, there are five common ones that are prevalent among a wide range of manufacturers. They include:Not properly establishing capacity. Capacity is at the very heart of the manufacturing operation. As a mathematical point in ERP equations, if capacity is not accurately established at the beginning of the manufacturing process, all calculations are going to be wrong. To make it even more challenging, capacity is dynamic – machines go down, workers get sick, overtime comes into play. All these things affect capacity and need to be taken into account to accurately establish it.Utilizing incorrect routings. Routings are essentially operation times. If routings are over- or under-estimated and run times are wrong, the incorrect routings will adversely affect output.Planning production from a desk. Today’s sophisticated ERP software and powerful computer systems can lull production planners into a false sense of highly-efficient production planning and scheduling security. Software flexibility and customization make it easy for planners to sit at a desk and think, “if I look at this screen long enough and make a few adjustments, our production schedule is going to work perfectly.” Nothing could be further from the truth. To avoid production planning mistakes that can’t be seen on a computer screen, it’s important for production planners and schedulers to get out on the shop floor and interact with production personnel. An active presence on the shop floor enables planners to personally see what’s happening and double-check ERP calculations against the physical reality of actual manufacturing operations.Attempting to do tomorrow’s planning with yesterday’s tools. Many manufacturers, especially small-to-medium-businesses (SMBs), attempt to do production planning and scheduling with legacy systems or data manipulation tools poorly equipped for the task. For example, Excel is good for exporting reports and providing some data analytics, but it makes a poor production planning engine.Any modern, integrated ERP system such as VISUAL is able to process data, lay out a production schedule, and then provide a set of reports that will indicate any problems that need to be addressed. Good ERP systems that are fed the proper data will do all the math and produce an appropriate production schedule. It’s important for production planners to let the ERP system manipulate the data and provide scheduling answers so they can use their time to focus on solving problems.Ignoring maintenance for production. Complex discrete manufacturing has a lot of moving parts, including high-performance machines that need considerable maintenance and fine-tuning. If machines are out of calibration and not performing at full potential, production slows as workers struggle with inefficient or unreliable machinery, scrap and rework increase, and overall product quality suffers, all of which can adversely affect company growth and reputation.In manufacturing there has always been conflict between production and maintenance and it’s easy to see why. Production traditionally wants to keep machines running while maintenance wants to take machines off-line for service so they can continue to operate at capacity.Quality and efficiency are the cornerstone of profitable manufacturing and preventive maintenance is critical for enabling machines to operate at peak efficiency. If manufacturers want to improve performance and optimize productivity, it’s crucial to focus on preventive maintenance and find a balance between that and production.

Proven Production Scheduling Techniques

Proven Production Scheduling Techniques 150 150 David Sheriff

Proven Production Scheduling Techniques

By: Jacques Pelletier

Production scheduling boils down to two very simple questions: “what should be done first?” and “who should do it?” In technical terms this is referred to as establishing “priorities” and “capacity,” both of which are used to determine the timing for performing a task – the simplest definition of production scheduling. Unfortunately, many manufacturers have trouble with production scheduling and for a number of reasons. Often they’re able to produce quality products and ship them on a timely basis to customers, but they struggle with a set of inadequate or inefficient planning and production processes, unreliable or inaccurate information, ad hoc responses to unexpected issues, and a myriad of other challenges to production efficiency and effectiveness. At the heart of the production scheduling problem is human decision-making that is too often based on guesswork, opinion, and faulty information. Fortunately, ERP systems were developed to address these very issues. There are three main benefits associated with production scheduling: 

  • It helps you understand how much of your manufacturing capacity is already occupied
  • It identifies possible future threats to on-time deliveries
  • It helps your production, procurement, and shipping departments work together as a team

To implement reliable and effective production scheduling, it’s important to:

  • Have a good definition and understanding of your resources and processes
  • Know your capacity for any of those resources
  • Update and maintain accurate times for production set-up, routings, and the cycle time for any routing operation
  • Keep and manage a calendar of availability of all resources and exceptions such as maintenance and downtime

Identify and avoid production scheduling bottlenecksConstraints – more commonly known as “bottlenecks” — are a main adversary of any efficient manufacturing operation. They can be defined as any facility, function, department, or resource whose capacity is equal to or less than the demand put upon it. Effective management of bottlenecks is a key to productivity and profitability.The Theory of Constraints is a methodology for identifying bottlenecks that limit manufacturing and finding ways to improve or work around that bottleneck so that it is no longer a limiting factor in production. Often the fix is more expensive than the limitation, and so work-arounds and best-practices become the most efficient way to deal with bottlenecks.Some recommendations for increasing capacity at a bottleneck include: 

  • Improving bottleneck processes as much as possible
  • Adding resources at the bottleneck operation when cost-effective
  • Adjust your production scheduling to minimize overall demand on the bottleneck
  • Always have a part in process at the bottleneck to avoid as much delay as possible
  • Always have the bottleneck working even when other operations are idle
  • Minimize downtime by adjusting maintenance schedules around the bottleneck and keeping resources available as much as possible to meet its needs

Sometimes, in an effort to minimize bottlenecks, manufacturers will fall prey to a desire to optimize set-up in an effort to improve production operations, but end up hurting their ability to produce the correct amount of quality goods in the amount of time required. The lesson here is don’t optimize for optimization’s sake. Some processes really are better left alone.Production scheduling best practicesProduction scheduling is a juggling act that requires keeping a lot of elements moving. This requires a level of focus and efficiency that can be challenging for anybody. In an effort to make production scheduling as easy as possible here are some best practices you can employ:

  • Optimize set-up where needed to ensure quick turnover on the production floor without sacrificing your ability to effectively produce goods
  • Work should be based on material availability as much as possible
  • Schedulers should have knowledge of what’s happening on the production floor at any time
  • Routings should reflect all the products that need to be built on the production floor
  • Schedules need to be able to change based on evolving priorities and available resources 

In manufacturing, every product in production is competing with other products for resources. Proper production scheduling is vital for bringing order to potential chaos and ensuring that all goods are produced in the right quantities at the right time. 

Why You Need a Production Cost Management Plan

Why You Need a Production Cost Management Plan 150 150 David Sheriff

Why You Need a Production Cost Management Plan

by: Jamie Bzdok

A modern discrete manufacturing facility utilizes a highly-complex, integrated infrastructure of processes and equipment often developed using one of the several proven efficient-manufacturing strategies such as Just-in-Time (JIT), Six Sigma, Lean and Total Quality management (TQM).All of these processes require efficient managing of the wide variety of material and human resources needed to manufacture a certain amount of finished products in a given period of time. To do this successfully requires a proper production cost management plan designed to minimize expense and maximize profitability through the careful managing of all manufacturing process costs. Effective production cost management involves managing several key elements:Resources: This includes all material and human resources necessary for production – manufacturing operations personnel, equipment, as well as the raw materials and other components that go into the finished product.For production and scheduling purposes, these costs really equate to time – the amount of time required for workers and the equipment they need to produce the specific quantities of finished goods in the time period agreed to with the customer.A good ERP platform is an ideal tool for helping effectively manage resources as they relate to production planning and scheduling. It can alert managers that production is over capacity and additional resources, such as more equipment, workers, or time (e.g., overtime) need to be scheduled. In fact, if capacity is not properly defined and established at the outset, accurate planning, scheduling, and resource management are virtually impossible. Nothing drives up production costs faster than to constantly schedule overtime to meet production schedules because capacity requirements were not properly accounted for.Material Planning: Also known as material requirements planning, this process is so closely linked to capacity requirement planning that the two processes have been gradually integrated into a closed loop system commonly called manufacturing resource planning (MRP). MRP is an integral component of best-practices ERP.Once capacity has been determined, it’s important to plan to have the right raw materials in the right amounts available at the right times for production. Accurate material planning enables material deliveries to be precisely timed to meet production needs as they occur. Inaccurate material planning can quickly drive up production costs if too much or too little has been purchased or is not available at the right time, delaying production and further driving up cost. To streamline manufacturing and control costs, material planning and production scheduling must go hand-in-hand.Finance: To manufacture products profitably, it’s crucial for an organization to understand all of the costs associated with production. Only with a complete understanding of production costs can effective financial decision-making take place to determine if a product should continue to be manufactured and if new product lines, equipment, and capabilities are required. Without this kind of knowledge, decisions are made based on assumptions and guesswork, not facts. Once again, an ERP software can help companies track actual production costs and analyze them. However, to do that accurately, it’s vital to ensure that all costs are kept up to date in the database. Analysis and decision-making are only as good as the data going into them. Clearly manufacturing has come a long way since the introduction of mechanized, and more recently automated, production. With so many processes, elements, and cost centers involved in modern manufacturing, it’s absolutely essential that careful production cost management is used to maximize profitability. Without it, business growth and success will be limited.

Cost Reduction Strategies: Closing the Gap Between Estimated and Real Costs

Cost Reduction Strategies: Closing the Gap Between Estimated and Real Costs 150 150 David Sheriff

Cost Reduction Strategies: Closing the Gap Between Estimated and Real Costs

Accurate costing is fundamental to profitable manufacturing. If you don’t understand and control your costs, you cannot be profitable. Unfortunately, the cost of operating a manufacturing business is not entirely straightforward, with direct and indirect expenses such as material costs, utilities, wages, rent, and more. It’s relatively easy for costs to creep up, gradually squeezing profits to the point where it becomes clear that you need to consider some cost reduction strategies. So how do you get a handle on costs? It starts by understanding the two basic costing options: standard and actual. By tracking your standard or actual costs, you can compare them to your forecasts and better understand why your profits aren’t what they should be. This, in turn, will help you formulate cost reduction strategies.Standard and actual costing: what are they?Every ERP system has some mechanism for tracking costs by standard or actual costing methods, although some only accommodate standard costing, often considered the more traditional approach. Standard costing requires you to assign some predetermined estimate values to each manufacturing element – materials, labor, and overhead. Often discrete manufacturers, who produce large volumes of standard products whose raw material costs vary little over time, prefer standard costing because it can be a “set it and forget it” approach. Any change in cost is considered a variance due, say, to different labor requirements or the number of components needed.For cost reduction strategies, standard costing’s variances enable you to evaluate the root cause of a costing discrepancy and develop a solution for it. In general, standard costing is more common in manufacturing because inventory valuation is simplified and it’s easier for accounting to maintain, manage and reconcile.Actual costing requires the manufacturer to assign constantly-changing costs to every component in the manufacturing process, every time, to get an actual price. This approach tends to be more work, but produces more accurate cost reporting. As you might imagine, it’s the method preferred by process manufacturers such as job shops with variable raw materials and volatile pricing. One benefit to actual costing is that median prices can be determined by reporting inventory at a weighted average over time, which can help with forecasting.Accurate estimating: it’s all about the dataWhichever costing methodology you employ, it’s crucial that data that going into your ERP system is as accurate as possible. That ancient computing saying still applies – “garbage in, garbage out.”Depending on your stage of ERP utilization, costing data will vary in quality. A recently implemented ERP system might be populated with initial information gleaned from tribal knowledge –a mental “data dump” from knowledgeable workers. Over time, that data will be replaced with more accurate data accrued from actual material purchases and real labor costs, enabling the ERP system to make estimating suggestions based on the history it now contains. Armed with that knowledge, you can more easily introduce variables into your estimates, such as inflation or product variations. A large part of manufacturing costs, of course, is labor and performing processes that may be, in part, developed and revised by experience and tribal knowledge. A sophisticated ERP system such as Visual enables can enable you to incorporate tribal knowledge and test it against known, standard processes entered into the system. Variances or discrepancies between estimated costs and actual costs can reveal process deficiencies or even omissions that may be affecting labor estimates and driving up actual costs. As accurate data increases in the ERP system, including a range of possible variables that can affect pricing, you’ll find that expected costs will increasingly mirror real costs, enabling more accurate estimating and closing the gap between estimated and real costs.

3 Manufacturing Trends and How They Can Affect Your Business

3 Manufacturing Trends and How They Can Affect Your Business 150 150 David Sheriff

3 Manufacturing Trends and How They Can Affect Your Business

By: Dan Johnson

There’s little question that the manufacturing industry is experiencing a sea change in how it does business. Over the past several years, and even decades, off-shoring led many companies to rethink how and where they made goods, while the more recent on-shoring trend did exactly the same thing in reverse.Today, data drives everything. Evolving business models and hyper-efficient manufacturing strategies such as Lean and Just-In-Time (JIT) use data to streamline manufacturing operations and make them more nimble and responsive to customer demands and marketplace trends. Data informs every business decision and underlies the three manufacturing trends we discuss in this blog post:  1. Less is more.
Manufacturers are beginning to embrace the concept of less-is-more, which involves less of everything. By “less” we mean smaller production lot sizes for greater flexibility, fewer chokepoints to increase efficiencies, and smaller, controlled runs that meet customer demands in a more timely fashion without being a slave to set-up costs.Even manufacturing efficiency strategies such as Material Requirements Planning (MRP) can be affected – and improved – by less-is-more. The original intent of MRP was to enable manufacturers to build inventory based on predicted inventory (and predicted deviation of inventory) that was going to be consumed in a manufacturing process. This would enable Purchasing to have the raw materials required for a manufacturing process on hand, ready for use, when they were needed. But some manufacturers are finding that going to back to the traditional managing of a baseline inventory is a more efficient way for them to handle inventory replenishment management. The result? They can achieve greater throughout and a lower cost basis – again, less is more. For some, this may sound like heresy. After all, MRP was a phenomenal breakthrough in the quest to automate inventory management. But here’s the reality – 80 percent of what an ongoing manufacturing operation consumes is a stable, known quantity. It doesn’t change much so there’s really no need to include this in planning. In fact, this stock is better managed on the shop floor by the workers who consume the material. If it’s managed on the shop floor instead of by a planner in the MRP system, inventory and costs will go down. MRP will only add frustration. Less is more.2. Customers are becoming empowered to participate in manufacturing strategies. 
Technology, connectivity, and the availability of data have made customers significantly smarter and more engaged in business decisions than ever before. Manufacturers that see this and empower customers to take an active role in what, how, and when they manufacture products stand to benefit substantially from this new relationship. Customers are no longer just a revenue source, they’re a source of valuable information and inspiration.3. The value of agility is increasing.
Agility in manufacturing trends means the ability to engineer on the fly to meet customer demands and then quickly and flexibly implement a production process with that less-is-more mentality we discussed in manufacturing trend number one. The importance of agility in manufacturing is not altogether new. In fact, in the early 90’s manufacturers began to notice that rapid changes in the marketplace were beginning to outstrip manufacturing’s ability to adapt. It became apparent that manufacturers must adjust quickly or die.   Agility essentially involves a fundamental approach to streamlining production to maximize cycle-time reduction. An agile manufacturer engages employees and management in continuous business process improvement to reduce steps, resource consumption, and costs. An agile manufacturer is faster, more flexible, and more cost-efficient. These are by no means the only manufacturing trends taking shape this year. Every industry segment, geographic region, and type of enterprise could probably generate a completely different list of manufacturing trends with no trouble at all. But these are certainly major ones we’re seeing that are poised to affect manufacturing this year and for years to come.    

Cloud Migration Strategy: Manufacturing and The Cloud

Cloud Migration Strategy: Manufacturing and The Cloud 150 150 David Sheriff

Cloud Migration Strategy: Manufacturing and The Cloud

By: Dan Johnson

It seems every industry and application is jumping on the cloud bandwagon and manufacturing is no exception. The cloud is a remarkably efficient solution for manufacturers facing increasingly competitive global markets, tighter turn-around deadlines, and rapidly evolving consumer trends.While traditional on-premise systems such as ERP have served their purposes well, times are changing and it’s getting tougher to maintain legacy systems in the face of more flexible and easily scalable cloud alternatives. Many manufacturers are now developing a cloud migration strategy to help them address a wide range of challenges and issues, including automating and implementing sophisticated manufacturing processes. Welcome to “cloud manufacturing.” Increased flexibility and control is perhaps the number one benefit of cloud manufacturing and migrating ERP computing functions to the cloud. In a traditional on-premise computing scenario everything is managed by IT. If manufacturing wants to make a change, they have to go to IT first, which checks the requested change against the budget, creates a value statement associated with the change request, and prioritizes it so it may or may not get done. The cloud takes control away from IT and puts it in the hands of the user. It is the user who can quickly see if a software change offers good value and return-on-investment (ROI). This direct control enables the user to actively participate in continuous improvement, which increases both operational agility and efficiency. Developing a cloud migration strategy and transitioning to cloud manufacturing provides a number of benefits across the enterprise, including: 1. Improved application integration and performance The responsibility of application development and updating for cloud-based software rests squarely on the shoulders of the software provider. Cloud-based systems are turn-key, with all the components necessary to perform the desired task included and optimized. Purchasing, installing, and properly integrating the various IT elements and components of an on-premise system; however, is entirely the responsibility of the manufacturer owner.Think of it like acquiring an automobile. Putting together your own on-premise IT infrastructure is like selecting and buying an engine, transmission, frame, body, and wheels separately and assembling them to create a complete car. You don’t have to be concerned with what’s under the hood with a cloud-based system — you’re buying a fully finished car, ready to drive. Everything’s integrated and optimized for maximum performance at less cost in time and money.2. Easy scalability As manufacturing needs can fluctuate with seasonal or marketplace demands, so can the amount of computing power you utilize in the cloud. No need to buy more servers or expand your datacenter – the cloud-based software-as-a-service (SaaS) provider will take care of that automatically. 3. Lower risks and costs If your company is adding business units or opening new locations, integrating them into your IT ecosystem is easier in the cloud. No need to add networks, purchase new hardware, or upgrade software. And should an acquisition not work out, you’re not left holding a lot of extra infrastructure and added expense.The cloud’s certainly not perfect, but it offers so many benefits not available with a legacy on-premise system that it’s hard not to embrace it. With its low cost of entry, rapid scalability and unparalleled flexibility, it’s easy to see why the cloud is becoming a major productivity driver for manufacturers. Still, there are plenty of organizations that are delaying developing a cloud migration strategy for various reasons. They do so at their own risk.