Driving Both Flexibility
and Quality into the
Deep visibility enhances a flexible manufacturing environment
With a complete view into operations, supply chain value and product development, discrete manufacturers can fully connect across
the value chain and more meaningfully link risk, compliance and quality.
Operations. Most discrete manufacturers face inherently dynamic, complex and rapid product lifecycles. As a result, sales and
operations planning must be expertly integrated across the enterprise and the supply chain. When discrete manufacturers can use
data to forecast consumption, they can meet just-in-time production needs and shorten fulfillment cycles, producing components
on an as-needed basis. For example, aerospace manufacturers rely on just-in-time production to reduce costs. However, final
aerospace products can require hundreds of thousands of parts. Deep data insight helps these discrete manufacturers accurately
forecast demand and adopt lean manufacturing programs across the supply chain.
Supply chain value. With accurate forecasting, discrete manufacturers can rapidly respond to demand, especially when they
share that data with suppliers. Consider the example of an automobile manufacturer: Its products contain thousands of distinct
components provided by suppliers from around the world. The most recent market trend reveals manufacturers adopting customer-
specific customization in the same production line. Subtle shifts in demand as well as black swan events—unexpected events that
have massive impact on a supply chain—can cause dramatic material needs across the globe. The sensitivity of the supply chain
can be evidenced by the case of the losses in production experienced by natural disasters. In a 2011 case in Thailand where flooding
halted production for a number of prominent Japanese automobile manufacturers, including Toyota, Honda and Nissan, with
Southeast Asia bases, daily losses amounted to approximately 6,000 units of production. When data is shared with supply partners, it
can enhance operational flexibility across the value chain, allowing for production processes to be fine-tuned as necessary.
Product development. The more flexible the supply chain is, the more the manufacturer can leverage prior-version data to
accurately anticipate and meet changing consumer preferences and tastes. This flexibility enhances the manufacturer’s ability to
accommodate make-to-order or engineer-to-order demands. For example, computer manufacturers can charge more for PCs if the
customer wants a customized product and a faster-than-normal delivery. To be able to re-plan and reschedule manufacturing on
the basis of custom orders with delivery priorities, these discrete manufacturers require a flexible supply chain and total control of
all aspects of the manufacturing process. Having access to real-time information from all of the manufacturing stages, beginning
with incoming parts, makes it easier to assign a higher cycle time priority to a specific customer order and run it through the
manufacturing process faster.
Supply chain visibility enhances collaboration
The most successful discrete manufacturers focus on two important goals in the manufacturing environments: improvement of supply
chain visibility and supply partner collaboration. The key to meeting those goals is well-organized and clearly communicated data. By
linking data entering the organization and extracting insights in real time, discrete manufacturers gain high visibility into the entire
supply chain. Consequently, patterns in the data can be identified and used to better predict future demand, source more efficiently,
and reduce lead times for production. This is especially important for discrete manufactures that want to push into emerging markets.
A unified information management system often means a manufacturer can more quickly respond to problems that emerge around
product quality. That was the impetus for Boeing to invest in a three-dimensional software-enabled manufacturing process for its 777
jetliner1. The initiative allowed engineers to simulate the geometry of an airplane design on the computer and perform digital assembly,
collaboratively working with supplier and partner teams along the way. When a change needed to be made in the construction
of the model, any other processes or parts that were affected by the change were automatically alerted. This instant supply chain
communication improved the accuracy in part design and assembly, and reduced changes and rework. A physical mock-up was not
Discrete manufacturers produce and sell high-quality, highly complex products such as automobiles, technology
and machinery. The manufacturing environment for these products is characterized by a need for flexibility in
order to effectively link demand with production, improve quality and time-to-market, and lower costs. Goods are
typically mass-produced, using standard assembly lines and require a means of managing mass customization.
Best-in-class discrete manufacturers foster highly collaborative enterprises with in-depth visibility into supplier
quality, performance, compliance, and risk.
The Boeing example illustrates how enhanced supply chain visibility and supply
partner collaboration enhances a manufacturer’s ability to mitigate risk and
manage mass manufacturing. In-depth supply chain visibility also allows the
supply chain partners to provide differentiated parts or services that enhance
relevancy in the marketplace. Consider the case of the BMW and SGL Carbon
collaboration to produce carbon fiber—a lightweight material stronger than
steel. Carbon fiber is the raw material for BMW’s i-Series, an electric/hybrid
vehicle family developed on a clean sheet platform with major structural use
of carbon fiber reinforced plastic. By sharing data and collaborating within a
solution-oriented atmosphere, the two companies developed a production
system to enable BMW to effectively mass produce high performance electric
hybrid vehicles that are efficient, light, modern, sustainable low emissions and
high performance. Currently there is a city car (i3) and high performance sports
EQMS and the discrete manufacturer
Discrete manufacturers understand that a reliable exchange of information
across the enterprise helps to improve manufacturing operations management,
supply chain efficiency and product development. An integrated Enterprise
Quality Management System (EQMS) connects external parties to the
manufacturer’s internal quality processes, providing that exchange and
visibility. When a supplier has secure access to participate directly in quality-
related interactions such as supplier onboarding, supplier communication, and
compliance and quality management, an EQMS provides a way to keep them in
the loop and notify them of changes and issues in near real-time. With suppliers
becoming increasingly more integral to the process, this visibility allows the
manufacturer to gain control over quality and compliance and better manage
In order to ensure and validate that suppliers conform to manufacturing and
quality requirements, an EQMS system can put early warning triggers in place.
When these triggers are established as part of a supplier non-conformance
procedure or as a leading indicator threshold, key people can be automatically
notified and/or an action can be initiated to create a streamlined workflow for
this specific action.
For example, Tesla Motors is the smallest auto manufacturer in the world. Yet,
Tesla has big plans to revolutionize the industry with its innovative electric
vehicles and manufacturing process. To do that, the manufacturer developed
an entirely new base of 300 suppliers and re-engineered the typical automotive
business process to be more collaborative and vertically integrated, much like
software companies2. Because Tesla sees its supply chain as a key differentiator,
it makes sure that close-to-real-time-access to information is available to its
suppliers. This is to be sure that there is no latency in using leading indicators
instead of trailing indicators to initiate critical tasks.
For companies as small as Tesla, recalls can be especially costly. Many larger auto
manufacturers have seen bottom lines and brand perception suffer greatly as a
result of safety recalls (see sidebar), but for a smaller company with an even more
highly specialized product, the surface costs and hidden costs of a recall could
be particularly crippling.
How quality management
protects against recall
A major concern of discrete manufacturers is
that defects can take years to surface. With the
need to continually release new models to stay
competitive and satisfy customer demands,
managing defects plays a significant role in
the ability to stay competitive and profitable.
Auto manufacturer General Motors is a prime
example. Just this year, GM has made 54
separate recalls, affecting nearly 29 million
vehicles worldwide3. GM estimates that those
recalls will cost the company $2.5 billion.
Having deeper supplier visibility and integrating
that knowledge across its entire enterprise may
have helped GM identify the problems with
its ignition switches sooner. It might also have
closed some of the information gaps that exist
in the supply chain when trouble struck.
Integrated Enterprise Quality Management
Systems (EQMS) are key to a discrete
manufacturer’s ability to identify and deal with
defects. EQMS can help isolate problems to
a particular production line, batch or pallet.
It can also connect suppliers across the
manufacturer’s enterprise—an imperative for
automakers like GM that have hundreds of
original equipment manufacturers that supply
parts and components from all over the globe.
An EQMS is also key to a manufacturers’ ability
to respond more effectively in product recall
situations, ensuring consumer safety and
mitigating risk and litigation exposure. In GM’s
case, it took them a decade to recall 2.6 million
Chevrolet Cobalts, Saturn Ions and other
vehicles over an ignition-switch issue. If supplier
data had been properly managed and shared,
GM could have more effectively reached out to
consumers. By poorly handling the recall, the
threat undermines the company’s economic
viability: its share price has dropped and the
company is burdened with the costs associated
with investigation, product replacement,
remarketing and a loss of brand equity.
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Sparta Systems, an industry pioneer and leading provider of enterprise quality management software
(EQMS) solutions, enables businesses to safely and efficiently deliver their products to market. Its
TrackWise® EQMS, a trusted standard among highly regulated industries, is used by quality, manufacturing
and regulatory affairs professionals to manage compliance, reduce risk and improve safety across the
global enterprise. Headquartered in New Jersey and with locations across Europe and Asia, Sparta Systems
maintains an extensive install base in the pharmaceutical and biotechnology, medical device, electronics
manufacturing and consumer products markets.
www.spartasystems.com | http://blog.spartasystems.com
While leading companies like Tesla, Boeing and BMW stand as examples of companies using near real-time information to drive and
inform its supply chain, discrete manufacturers of various sizes and myriad tiers of suppliers can benefit from implementing an EQMS.
With an EQMS in place, discrete manufacturers can:
Forecast consumption in order to meet just-in-time production needs and shorten fulfillment cycles.
Enhance supplier accountability for quality and drive a collaborative supply chain.
Identify problems before (proactive) they become public issues through effective use of insightful data and shared across the supply
Validate the right supply partners and identify those who are able to meet increasing demand for lean/just-in-time production.
Identify and contain non-conformances before they make it into the production chain through predictive analytics.
Gain deep insight into all aspects of production and make better business decisions.
An EQMS system like TrackWise® allows discrete manufacturers to centralize and automate quality management processes while
integrating with existing enterprise systems such as enterprise resource planning (ERP), customer relationship management (CRM),
product lifecycle management (PLM) and manufacturing execution systems (MES). When coupled with a product like Stratas, the
web-based software-as-a-service (SaaS) application that extends TrackWise supplier quality management, discrete manufacturers gain
an added layer of insight into the supply chain and can easily fold third parties into a holistic quality management platform, while
keeping the EQMS secure.
1 Boeing web site, 777 Family, “CATIA Development”
2 Sikich, “Supply Chain Strategies: Learning from Tesla Motors”, J. Moran, September 2013
3 NBC News, “Nearly Every GM Model Touched by Recalls This Year”, P. Eisenstein, July 2014