Driving Value To Manufacturing Plants

By Jeff Owens, President, Advanced Technology Services, Inc.Competition, compliance and collaboration are all critical issues challenging manufacturing today. Solutions to these challenges present real opportunities for manufacturers who approach these issues with sound strategy and careful consideration.

It has likely never been more challenging to be in the manufacturing space. Globalization, economic recession, labor shortages, mature markets where growth means stealing market share and products can be differentiated more effectively with soft issues like delivery time than with product features -- these factors (and more) challenge companies daily, all the way to the plant floor.

Given these challenges, there are three critical issues that are driving manufacturing: competition, compliance and collaboration.

The solutions to these challenges present real opportunities for manufacturers who approach these issues with sound strategy and careful consideration.

An intense competitive scenario is now commonplace due to globalization and the need to deliver shareholder value, continuously innovate and manage cost pressures. The intensity of this environment has increased the drive to and importance of lean manufacturing and optimization. As manufacturing operations strive -- particularly in the current challenging economic climate -- to “do more with less,” there is significant pressure to scrutinize every dollar spent and drive a constant higher value component to customers.

Lean Enterprise
Competition has intensified across manufacturing verticals. Inefficiencies in workflow and technical or human error resulting in unplanned downtime have a negative effect on product quality, operating and lifecycle costs, customer service, and, ultimately, profits. Operational excellence has thus become a prime mantra, as the highly competitive nature of the market makes it crucial that companies find ways to improve existing products and introduce new products while managing costs. Incorporating lean manufacturing, reducing the time it takes to get product to market, and utilizing a process that has the flexibility to adapt to a company’s changing needs are all ways to address this challenge. Through measures such as elimination of waste and development of a culture fostering continuous improvement, a lean enterprise becomes much more attainable.

The Role of Maintenance Practices in a Lean Culture
Maintenance processes and practices are important factors in the overall concept of lean and total quality. Indeed, as the concepts of lean manufacturing have become an integral part of the manufacturing space, the idea of lean maintenance has followed logically after the fact. While there are varied definitional scopes for the term “lean maintenance,” most agree on several critical characteristics:

• It is proactive in nature, not reactive

• It is built on systematic, repeatable processes practiced consistently

• It utilizes robust, all-encompassing data monitoring and analysis schemes that allow informed decision-making that has a direct, measureable impact on equipment performance metrics

• It is not viewed simply as a discreet program, but as part of a total enterprise wide dedication to an overall asset management system

• It extends beyond the shop floor to include areas such as inventory management and training, and extends through the supply chain

An effective lean maintenance program complements a lean production culture by direct positive contribution to the key lean tenets of elimination of waste and continuous improvement. Best practices used in maintenance programs contribute to both sides of the return on assets equation: optimized equipment performance can increase revenues while mitigating the need for capital investment to increase output.

The compliance challenge can span a spectrum of issues, from government/agency regulations, to safety issues, to customer spec and quality demands, to data records of production processes, to environmental regulations -- the list is long. The consequences of compliance failure are also well known, ranging from something fairly benign such as a warning, escalating through a spectrum which could include loss of a customer, fines or injury to human resources. Non-compliance can also bring extreme pain in the form of plant closures and extensive negative public attention for the product and company involved.

While this punitive aspect of enforcing compliance has long dominated the general mindset in industry, a change has been noted over the last decade. Industry benchmark companies in a wide variety of segments have realized that, if compliance is a given -- it is not negotiable, it is not going away, it is part of doing business -- then the approach to compliance should not be achieving a punitive target, but should be transformed into a process of business operation that takes the organization to the next level in performance.

Achieving compliance provides the groundwork, the foundation of performance levels. From this position, top industry performers streamline processes and systems to produce sustainable practices, including everything from equipment and system performance to customer service levels to unprecedented visibility into financial performance and effectiveness. These companies have realized that they can move beyond just compliance by driving business value with systematic asset management and adoption of best practices. A concerted effort to view compliance more as a business opportunity rather than a challenge to meet regulations differentiates leading innovative manufacturers from others.

The general concept of outsourcing has traditionally focused on a “contractor” mentality in which the buyer contracted a third party to perform some activity assigned to them. There is a mentality of separation between the two entities, with the contractor firm and employees viewed as outsiders by the served entity. In some cases, the relationship may be characterized as even adversarial.

However, given issues in the manufacturing space such as looming personnel shortages and the need for highly efficient equipment performance (as it directly affects costs and customer service), this paradigm is changing. The prevailing trend is for outsourced providers to move from an “assigned contractor” status to a “collaborative partner” status. Relationships are moving from transactional- or procurement-based to partnership-based.

The changing relationship of outsourced service providers to trusted partner status drives the solution to the collaboration challenge. With both internal and outsourced teams focusing on core competencies yet integrated in their approaches, processes, and mission, best practices levels can be achieved across the organization.

In our ongoing research, we have identified several important factors as industry best practices specifically in the managed equipment services area, including:

• The expertise to re-engineer or remanufacture out-of-date or out-of-warranty parts for specific customer equipment

• Knowledge of and connection with a global supplier network, including OEMs and independent sources, for a highly robust supply chain, including the ability to find and track unique or niche suppliers of specific components

• The ability to source, through this network and its own internal expertise, troubleshooting and maintenance technical support across a broad array of equipment types.

The challenges facing the manufacturing industry today have forced companies to closely scrutinize costs in every corner of the organization. This scrutiny has reached equipment maintenance programs, where the challenge is not just to cut costs, but to drive value into the manufacturing process by increasing key production metrics such as uptime and downtime. As we have seen in both theory and practice, bringing industry best practices in a systematic, consistent way, with deep equipment expertise and a partnership mentality can bring significant benefits to the plant floor. Competition, compliance and collaboration play key roles throughout this entire process.

Jeff Owens is president and chief operation officer of Advanced Technology Services, Inc., a company that improves productivity and profitability for manufacturers through the managed services of production equipment maintenance, spare parts repair and information technology services.