For years, manufacturers have searched for ways to boost ailing production performance. From the promise of ERP, to Lean initiatives, Six Sigma and a plethora of other tips and techniques, manufacturers have become the experts at sizing up what works and, just as importantly, what doesn t.
A couple of months ago, Invistics circulated a survey to some 1,500 pharmaceutical manufacturers about production performance and the techniques and technologies they ve used to break down barriers and achieve sustained results. Some of their responses were predictable; others surprising.
For instance, you d be hard-pressed to find a pharmaceutical manufacturer who doesn t have an ERP system with millions sunk into license fees, implementation and maintenance, yet just a little over a third of these manufacturers feel their ERPs have produced the ROI they expected. There are a variety of reasons, not the least of which is the fact that most of these systems are trapped in silos with little or no integration among them and no real-time visibility into plant floor dynamics. If you can t see what s happening on a minute-by-minute basis on the floor, you re already behind the performance eight-ball.
ERP systems are also designed for perfect world scenarios and static parameters, while pharmaceutical manufacturers are awash in variability and constantly changing dynamics. Survey respondents said variability in products, processes and customer demand is a huge performance challenge and that a lack of tools to manage variability is a major impediment to success.
Variability Kills Manufacturing Performance Variability is directly responsible for creating customer service issues and over 70% said it makes scheduling difficult. SKU volatility and shared equipment add to the complexity that ERP systems can t account for these systems simply expect you to have the answers. Consequently, your performance is only as good as the estimates you input, which in reality are not based on what s actually happening on the plant floor. Add-on products can help, but many require you to break out your PhDs to operate them and take months to compile adequate data.
While ERP has its problems, inventory optimization, advanced planning and scheduling (APS) solutions, and manufacturing execution systems (MES) were rated even lower. Less than 20% of our survey respondents felt their MES and inventory optimization solutions had delivered satisfactory results, while less than 10% felt their APS had produced improvements in manufacturing performance. Again, variability seems to be the biggest culprit. That makes sense when you consider that most technologies anticipate what s in front of them by looking back at what s happened in the past and don t consider the variability ahead. In order to effectively optimize in highly variable environments, manufacturers have to have simulation tools that can help them compile what-if scenarios that take variability into account.
Of course, variability isn t the only factor limiting performance optimization. Manufacturers in our survey also laid blame on functional silos within the organization, a lack of focus on manufacturing agility, limited skills and training in the workforce, limited visibility into plant performance and a lack of metrics to motivate change. Interestingly enough, in an Operational Excellence survey Invistics recently sponsored with Pharmaceutical Manufacturing, some of the same organizational issues were cited as obstacles to improvement.
That survey also pointed out an overwhelming concern about a lack of manufacturing agility again, the inability to quickly adjust to changing customer demands creates significant performance problems.
Getting Lean Gets Mixed Results The manufacturers surveyed by Invistics haven t shied away from performance improvement techniques either. Well over 50% have implemented Lean, Six Sigma or Operational Excellence and results have been somewhat better. Almost half said their Lean initiatives have produced satisfactory results, while around a third felt Six Sigma or Operational Excellence have helped. Manufacturers are still plagued by variability and other limiting factors when attempting to implement these initiatives, particularly Lean.
New Methodologies Combined with Simulation and Analytics Software Better Address Performance Problems Since almost all the survey respondents said that performance optimization was important or critically important to their success, a solution beyond what s already been tried seems to be in order. Invistics suggests a flow manufacturing methodology combined with simulation and optimization software to attack all the barriers to performance improvement.
Flow manufacturing methodologies break down organizational silos and help manufacturers be more agile while also blunting the impact of limited skills and training. Decisions are made based on product flow through the factory, not departmental metrics. Employees have more control and KPIs, including capacity utilization, inventory and cycle times, improve almost immediately.
Combined with advanced analytics and optimization software, these innovative methodologies help manufacturers utilize real-time data from the plant floor to set metrics and better control inventory levels and cycle times to improve customer service levels. And, since that same updated plant floor data is fed back into ERP and MES systems, all systems works better and delivers more consistent results.
Finally, simulation software lets manufacturers model a variety of scenarios to determine their impact on inventory, cycle times and customer service levels. Need to reduce costs? Dial in lower inventory levels and see how customer service is impacted. Want to raise customer service levels? Change cycle times and add inventory to balance acceptable levels of cost while achieving customer service goals. Advanced analytics software helps manufacturers make better decisions and also overcome their chief nemesis: variability.
Utilizing this kind of methodology combined with analytics and simulation software lets manufacturers fully leverage investments in ERP and other technologies. Lean, Six Sigma and Operational Excellence implementations are more successful and managers can respond better to fluctuations in customer demand. All it takes is a little extra software, a more effective flow-based manufacturing methodology and a view of what s in front of you, not behind.
Author Bio
Tom Knight co-founded Invistics, a lean manufacturing software company, in 1999 and serves as Chief Strategy Officer. Prior to founding Invistics, Tom spent 10 years improving supply chains as a manufacturing executive at Alcoa and Siemens. Tom has a B.S. M.S. and MBA from Massachusetts Institute of Technology (MIT), where Tom conducted research on software to improve manufacturing planning and scheduling, receiving the Goodyear Prize in Manufacturing Management.
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