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Is Brawn Or Brains Running Your Business?

Fri, 08/25/2006 - 3:39am
Gary Flum

There’s a deployment problem with the airbags installed by a supplier of automotive instrument panels that could trigger a massive recall. Or a change in finished product configuration has increased orders for a particular component or subassembly from a consumer electronics manufacturer.

Both scenarios impact production. Can manufacturing execution systems (MES) help?

It’s possible to adjust the flow of production based on the capacity of machines on the factory floor and an awareness of the production details for the goods being made, but a change in production has broader ramifications that reach all the way to suppliers, and response requires more than tactical decisions. The CEO and CFO are concerned about the cost of retooling products or production lines to increase capacity, add manufacturing capabilities, or introduce new models that can adapt quickly to shifts in demand and help reduce capital investment in inventory.

Brawn and Brains Must Balance

Increased spending on MES is being driven by business managers’ need to know what’s happening on the factory floor. According to AMR Research, manufacturing execution systems sales exceeded $1 billion in 2005. But by relying on MES and a tactical approach to changes in demand, manufacturers could depend too much on machines – the “brawn” of manufacturing – when strategy is needed, too.

It’s human nature to think a busy machine is better than one standing idle, but systems’ virtually limitless ability to produce means they can overrun the business with finished goods when there’s already an excess supply. That’s because MES doesn’t have the “over the horizon” view of supply chain demand and replenishment requirement.

Planning data and execution information must be exchanged continuously to and from the shop floor, the executive suite and the supply chain. Enterprise resource planning (ERP) systems and MES must work together so that information about production and demand flows smoothly.

Bring Data from Shop Floor to the Top Floor – and Back

By following a few key principles, manufacturers can establish a continuous, bi-directional flow of information between MES and ERP systems. These principles can help manufacturers transform these enterprise technology investments into real-time execution and management systems, and ultimately, optimize supply chain communication and performance.

Integration

Key performance indicators such as buffer don’t reflect actual performance, unless ERP and MES data are tied together. But these systems speak different languages, so manufacturers need to keep in mind the principle of communication.

System integration “middleware” makes it possible for demand data to be dispatched to the plant floor, and actual production information to be sent back. The middleware translates ERP data into formats that manufacturing execution systems can understand. This capability may reside in devices ranging from programmable logic controllers (PLCs) that physically manage equipment, to barcode scanners and RFID chips that collect and store relevant information. Even the andon boards on the shop floor must be integrated to ensure that production is in cadence with demand.

Planning

From integration, it’s not much of a leap to imagine data flowing to and from systems so quickly that operations function in “real-time” mode - that is, planning with the clock instead of the calendar. Real-time planning is a valuable principle in connecting the shop floor and top floor. Systems with an event-driven planning engine can instantaneously alter plans and schedules to dynamically respond as inventory levels rise or fall, customer demand fluctuate or bills of material change on the shop floor.

This kind of dynamic adjustment helps reduce inventory while still maintaining high levels of customer satisfaction on a daily basis. Market leading companies that employee these concepts such as Johnson Controls Inc., a Tier-1 automotive supplier, use this type of system to turn inventory in the space of hours. Components received in the morning go out the door as finished products before the end of the day.

Simplicity

ERP is like the brains of manufacturing operations, where forecasts and schedules stimulate a plan for how the business should run. MES is like the nervous system, the conduit for data from the brains to the brawn – the machines on the shop floor.

The connection between ERP and MES needs to be simple, so that it’s easy to maintain and easy to diagnose when problems arise. Rules-based architecture is one characteristic that makes it easier to roll out an integrated platform to plants around the world, and easier to support from a central location. And whether they’re in Thailand, Poland, Mexico or Detroit, employees can configure the system for their local needs, without extensive software modification.

Insight

Companies that have integrated ERP / MES also experience a host of indirect benefits gained with insights from a comprehensive view of demand and production information. It’s smart to make insight a governing principle for integration, instead of an afterthought that yields accidental advantage.

For one consumer electronics producer, the combined capabilities of ERP and MES serve as more than a means for monitoring the logistical flow of inbound components: The manufacturer has gained global inventory insight that it’s using for more accurate promise-to-delivery commitments. Manufacturers also can harness the amalgamation of ERP and MES capabilities to completely peg component requirements to planned production.

Enter a Perfect Lean Market

Recently, an Aberdeen Group benchmark study revealed that best-in-class manufacturers are taking a broader view of MES. They’re enlisting corporate IT, as well as looking at ways to integrate systems into a common factory floor information framework.

That’s good news, because crisis situations further heighten the need for communication between the business and the factory floor. Take Dell Computer’s recent, widespread laptop battery recall. Customers were given information regarding the sales period, notebook computer models and battery models in order to determine whether they owned a defective battery. When it comes to product recalls, the more precisely components can be traced, the better the manufacturer can control the scope of recall – and the scope of its cost.

Gary Flum is general manager, Advanced Manufacturing Solutions for QAD Inc., a provider of enterprise solutions for global manufacturers.

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