At “Manufacturing’s Next Chapter,” a recent business summit hosted by The Atlantic, industry leaders, government officials, and economic experts discussed a range of issues focused on the manufacturing sector. The increasing role of Lean manufacturing was evident in the proceedings. Also known as lean production or lean management, Lean manufacturing refers to a complete business system for organizing and managing product development, operations, suppliers, customer relations, and the overall enterprise. It requires less capital, material, space, time, and human effort to produce products and services with fewer defects to precise customer desires, compared with traditional modern management.
John Shook, chairman and CEO of the Cambridge, Mass.-based Lean Enterprise Institute, spoke to what he termed “right shoring,” an approach he said manufacturers should think of instead of re-shoring or off-shoring. “Things will be made in different places and they should be,” Shook said, “but we can be smart about it. Being smart about where to make products usually means locating design and production closer to the markets where products are sold.” But it also means knowing the total costs—not just labor costs—of each location where manufacturing facilities are, and Lean can be an invaluable asset in this effort. Shook noted that many companies who chased lower labor costs a decade ago discovered to their chagrin that labor savings were more than offset by higher supply chain costs. Decisions were made without understanding the implication of “hidden costs.”
In a recent post on “Leaning out” manufacturing processes with ERP, we noted the benefits that are establishing Lean manufacturing as a best practice for manufacturers: shorter lead times, better quality, lower costs, higher productivity, and improved levels of customer service and satisfaction. While we noted five ways ERP can help the application of Lean in manufacturing (i.e., reducing waste, facilitating continuous improvement, identifying sales and customer service opportunities, extending the benefits of orderless manufacturing and Kanban, and collaborating across the supply chain), of particular value in understanding real costs is the critical role enterprise systems play in documenting and communicating the records of enterprise activity. As American manufacturers come to realize how their ERP systems can work to support the goals of Lean manufacturing, they may find a competitive advantage heretofore not fully considered or leveraged. They certainly are positioned to do so.
According to industry analyst Dave Turbide, good enterprise system support is an essential component of virtually any Lean initiative. We couldn’t agree more.
Posted by Epicor Social Media Team
The US has encountered several decades of declining manufacturing, much of it moving off shore to regions where lower labor costs are available. Today, we are seeing a chance as these same regions confront increased costs, largely as a result of these same workers’ wages increasing. This change is also as a result of manufacturers desiring to be closer to their end customer and reducing an emerging cost, freight, etc. for the products they sell.
But wait. As the offshore move happened, so did the needed supply chain to support the manufacturing of products. As this work comes back to the US, these supply chains will need to be rebuilt. We are seeing this already in the automotive industry. Our challenge in part, is to ensure that new emerging suppliers see greater efficiency than did the previous suppliers.
How can we accomplish these hefty goals? From the webcast (see link below) with American Machinist on Driving “Preferred Supplier” status for your manufacturing business, discussion includes the needs of the supply chain for “new visibility” and the new overall efficiencies that will follow.
This may seem to be a scary proposition for many businesses to share information with suppliers on an ongoing basis and not all businesses will be ready to take this on. However, in this new rapid-paced manufacturing environment, there will be companies that can take action and those that fade away.
For more details, check out free on-demand webcast; http://americanmachinist.com/webinar/driving-preferred-supplier-status-your-manufacturing-business
Posted by: Christine Hansen, Manager, Product Marketing at Epicor
The realities of competition in today’s global marketplace have made Lean manufacturing a megatrend. This shouldn’t be surprising. Lean delivers what companies need to survive and thrive: shorter lead times, better quality, lower costs, higher productivity, and improved levels of customer service and satisfaction.
It also shouldn’t be surprising that what was often seen as a conflict between Lean and ERP is increasingly understood as a synergistic alliance: the bottom-up methods of Lean and top-down perspective of ERP together can form a powerful, holistic approach to making organizations and their processes more efficient and effective.
A white paper by industry analyst, Dave Turbide, details five ways ERP can help manufacturers implement leaner processes:
Reduce waste. As the “central nervous systems” of manufacturing organizations, ERP solutions carry the definitions, data, and records of enterprise activity. They provide the measurement systems for knowing where opportunities for improvement lie, and for determining the progress of efforts to reduce and eliminate waste.
Facilitate continuous improvement. ERP systems contain the definition and documentation of processes and procedures—the “as is” state before any changes. As improvements happen and changes are made in the system’s records, these new definitions enforce and perpetuate the improvements.
Identify sales and customer service opportunities. Lean initiatives strive not only to remove waste from customer-facing processes, but also to improve customer service. When waste is eliminated from these processes, the things that imperil customer satisfaction (e.g., delays, hassles, mistakes, and costs) are history, making it easier for customers to do business with the manufacturer.
Increase orderless manufacturing and Kanban. To meet the challenges of increasingly turbulent work environments (due in part to more volatile markets), ERP systems can support flow/Kanban production by issuing signals to match demand and optimize resource utilization while meeting schedules. This expands the benefits of flow/Kanban across the manufacturing enterprise.
Extend through collaboration. Collaboration tools built into or integrated with enterprise systems help extend Lean principles beyond the traditional “four walls,” supporting both the demand and supply sides of the business. Initially, it may seem that ERP may not fit the ten technical elements of Lean, but in fact it can support and extend them.
“Good enterprise system support is an essential component of virtually any Lean initiative,” concludes Turbide.
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Oil and gas (O&G) are some of the most important raw materials on earth. As an evolving market landscape, the O&G industry faces increased competition in response to growing pressure for better and newer revenue streams. Few other industries demand the scope and complexity of management required by the oil and gas industry, and this can have a dramatic impact on global commerce and economics.
Through today’s integrated and automated tools like enterprise resource planning (ERP) solutions, O&G companies stand a strong chance of meeting market demands, optimizing their productivity and sustaining their industry’s contributions to global progress. In order to succeed in the industry now, the oil and gas industry suppliers need enterprise applications that:
Integrate the working processes across disciplines, including engineering, fabrication, on-site construction, aftermarket service management and project management.
Standardize processes to better secure quality, including work performed internally as well as work performed by outside contractors and subcontractors.
Provide a complete overview of projects, along with tools to manage the project pro-actively and in real time.
Project resources planning tools- allows customers to better schedule tasks in parallel rather than in sequence. In this environment, for instance, you often start fabrication long before drawings and product structures are completed.
Engineering functionality and a centralized Product Data Management deliver what is in essence a combined ERP and PLM (product life management) solution. For companies that are involved in both engineering/design and purchasing/material management—and maybe even fabrication/installation—this central repository for engineering data that is shared throughout the enterprise allows for efficient and error-free handover of data between functions. It facilitates handover from engineering to purchasing, between fabrication and installation and maybe even, in the case of last-minute changes to the design, between engineering and installation. This level of integration with enterprise applications deliver detailed tracking of those difficult and unexpected project changes.
Posted by Kathie Poindexter, Manager, Product Marketing at Epicor
Your customers have always demanded the best quality, lower prices and streamlined delivery. But today, they want something a little more – revealing. They want access to information about their parts, orders, shipments, product documentation, account status, and even deeper access to your business data, such as quality or job status.
Is your business prepared to address these new demands for information transparency? If your answer is not unequivocally “Yes,” you are not alone. There are a number of considerations that organizations should consider when architecting their operations to provide improved customer access.
· Data on Tap: Before a business can provide open access to information, they first need to ensure that the data they make available to the customer is comprehensive and accurate.
· The Portal Principle: Access to information is being driven to a self-serve model where systems today enable business data analysts and power users to develop views of the data that can be consumed and used by all.
· Web Services: Manufacturers should consider adopting technology built on 100-percent service oriented architecture (SOA), where Web services enable access to every function, from the first sales order to the final invoice.
· Bypass Manual Processing: Customers that electronically communicate through Electronic Data Interchange (EDI), vendors understand the involved complexity and costs. Reducing manual entry can help in their own enterprise resource planning (ERP) system, but the speed at which they can respond to the latest changes in demand on the plant floor is the real benefit.
Organizations that standardize their business on the latest ERP technology have a competitive advantage through an end-to-end system that supports their manufacturing business processes, a toolset for access to information that fosters end-user access to information, and ability to collaborate for improved productivity and cost efficiencies. These leaders will successfully master the show and tell the game to maintain their “preferred supplier status.”
Read the full article here: http://www.thefabricator.com/article/forceos/how-a-fabricator-can-stand-out-to-customers
Posted by Christine Hansen, Manager, Product Marketing at Epicor
For those looking for ways to get a better quality product manufactured and delivered, faster, to customers, a recent webinar is definitely worth a listen.
Best practices for discrete manufacturers are detailed, including the importance of understanding and differentiating inventory-based and job-based methods of manufacturing. Typically, these methods follow quite different approaches for the classic quote/order>purchase materials>produce>ship>bill manufacturing process.
- Inventory maintenance (maintaining items in inventory)
- Purchase of materials (receiving items in inventory)
- Issue material (issue inventory to production)
- Receive production to inventory (receive items in inventory)
- Customer shipment (ship from inventory)
- Invoice entry (invoice the shipment)
This contrasts with more efficient job-based systems:
- Part on the fly (no maintenance in inventory)
- Reduced work (purchase direct to production)
- Reduced work (receive direct to production)
- Reduced work (accurate WIP)
- Reduced work (ship directly from WIP)
- Invoice entry (invoice the shipment)
Most manufacturers have mix of inventory and job-based practices, something that Epicor Express accommodates.
Express is a comprehensive software system for all types of discrete manufacturers. Whether you are in business as a stamping firm that makes standard products sold from inventory or a job shop that makes complex, multi-assembly custom products that involve numerous sub-contractors and iterations with the customer, Express can easily accommodate your unique requirements.
Key functionality within Epicor Express includes:
- Generating accurate estimates/quotes from scratch or job history
- Tracking orders and associated changes from placement through shipment
- Creating simple or unlimited, multi-level bill of materials
- Providing a centralized workbench for product engineering, workflow and revision control
- Accurately tracking standard product and custom job costs
- Sophisticated scheduling for optimally managing workloads and resource use
- Control routing, scheduling, costing and tracking on the shop floor
- Enabling “what if scenario” planning and changes “on-the-fly”
- Advanced functionality for accounting and financial analysis
- Extensive standard reports and advanced performance management tools
All of this is now available in a cloud-based version of Express, which facilitates flexibility of scheduling, review of performance on a job-by-job basis to support continuous improvement, and quality as part of the process— not contained in its own silo.
The advantages for small and mid-sized manufacturers include minimal upfront and reasonable ongoing investment, the elimination of traditional ERP barriers (e.g., implementation, system maintenance, upgrade and migrations), and enabling focus on a company’s core business rather than IT issues. All of this facilitates capacity for growth.
For more information on how cloud-based Epicor Express can help your small business, click here.
Posted by the Epicor Social Media Team
A number of market trends are driving the adoption of lean initiatives in the medical device industry:
- Greater FDA oversight of outsourcing coupled with a significant increase in the use of outsourced resources. This is leading to more refined supplier selection processes, as well as tighter quality checks and tracking of incoming data (including documentation) from suppliers.
- New and expanded sales channels. The emergence of these channels demands a more streamlined approach to communications with the sales function, and has driven the need for reduced lead times from quote to order to production.
- The need for streamlined fulfillment. To meet rising customer expectations, agile delivery of products is essential. The quality and traceability of all products shipped must be safeguarded, while also ensuring that products are matched to unique, country-specific requirements.
- New regulations. Medical device manufacturers need to be ready to cope with the uncertain and often changing regulatory environment.
An Aberdeen Group study shows how best-in-class manufacturers are leveraging IT tools and architectures (e.g., business intelligence, master data management, service oriented architecture [SOA], business process management) to support business process improvement. A recent webinar sponsored by Epicor and moderated by the editor-in-chief of Medical Device and Diagnostic Industry (MDDI) featured a detailed case history of a medical device manufacturer successfully leveraging ERP to support its effort to implement leaner processes, underscoring the Aberdeen findings.
Webster, Texas-based IDEV Technologies, Inc. is an innovator and developer of next generation medical devices for use in interventional radiology, vascular surgery, and cardiology. The company started operation in 2000, had sales of $9 million by 2010, and a sales target of $40 million in 2012. According to Carl Heeder, director of ERP at IDEV, like many companies who grow very fast, IDEV had implemented ERP but failed to leverage its capabilities for value. In 2010, the company made a number of decisions to change that:
- They determined to re-implement their Epicor ERP.
- They decided to employ tailoring to make processes leaner.
- They geared up their system validation capability.
At that time, IDEV’s environment was in need of change. All quality process and many manufacturing ones were paper-based. They had no experience with software validation, in light of 21 CFR Part 11. Because it was essentially a start up, there was a lack of focus on efficient processes, and a clear need to focus on lean techniques.
“By tailoring, we mean using features inherent in the software to add or modify controls, limits, and actions of processes,” says Heeder. “The Epicor core processes remained intact; there were no code changes to delivered processes; we tailored to add functionality before or after standard processes.”
IDEV focused on three process areas to begin implementing lean techniques: purchasing and supplier, sales order, and shipping. “None of these were manufacturing per se; but they were most promising for achieving lean efficiency and quality improvements,” says Heeder.
To see the details of how IDEV improved these processes, look at the webinar. The overall results were impressive, moving the enterprise toward its goal of shifting from manual processes to systems-based processes:
- Eliminated the need for manual review of each PO.
- Achieved better control of time-sensitive inventory.
- Eliminated the need for hard-copy sales order approvals.
Eliminated manual verification for each shipment.
Posted by the Epicor Social Media Team
It’s been a little over two years since the publication of Building a Lean Fulfillment Stream; this little workbook (111 pages) remains essential reading for anyone thinking about supply chain logistics. Published and sold by the Lean Enterprise Institute (LEI), the book is also readily available on amazon.com.
Authors Robert Martichenko and Kevin von Grabe detail a step-by-step, comprehensive implementation process for optimizing a fulfillment stream, from raw materials to customers. Particular emphasis is given to two critical concepts: calculating the total cost of fulfillment and collaborating across all functions and firms in the total fulfillment stream.
According to LEI, most companies calculate costs at different points within departments (e.g., the piece price paid by purchasing to a particular supplier). Few companies derive the total cost associated with each major function across its supply chain, despite the fact that calculating total cost allows for the measurement of how improvement efforts impact operations (i.e., performance) and bottom-line income.
They define guiding principles for lean fulfillment systems:
- Make consumption visible throughout the fulfillment stream.
- Reduce lead time to enable pull and reduce inventory.
- Create level flow to reduce variation and enable stability.
- Use pull systems to reduce complexity and overproduction.
- Collaborate, solve problems, and focus on process discipline.
- Increase velocity to drive flexibility for meeting customer demand.
- Lead and make decisions based on total cost of fulfillment.
Implementation of these principles is meant to eliminate all waste, so that only value remains.
Like any true system, lean fulfillment must be considered from a holistic perspective. According to a seminal study on how organizations learn, “The defining characteristic of a system is that it cannot be understood as a function of its isolated components. …The behavior of the system doesn’t depend on what each part is doing but how each part is interacting with the rest of the system.” When systemic thinking is abandoned for a focus on components, inventory accumulates, and functional silos within the organization proliferate.
It is important to note that lean manufacturing techniques, including lean fulfillment, are applicable not only within the enterprise but across suppliers and business partners. Customer demand is driving products to be produced at an ever-increasing pace with tighter lead times and lowered costs. The only way to get ahead of the pressures is through speed; in order to do this, everyone in the supply chain needs to react quickly and efficiently. As a result, manufacturers who traditionally have declined to implement lean principles may feel pressure from customers or suppliers to migrate to lean practices as a way to streamline overall operations for end products.
As lean manufacturing concepts have broadened, lean advocates have come to recognize that ERP and lean manufacturing work together very well. Each one supports and enables the most important objectives of the other. Lean purists point to several basic ideas as the foundation of lean manufacturing. The five lean principles of value definition and specification, value stream mapping, uninterrupted flow, customer pull, and the pursuit of perfection are all supported and enhanced by the comprehensive information control and management tools that an end-to-end enterprise software suite delivers. Click here to find out more about how Epicor can facilitate the building of lean fulfillment streams and the realization of the five lean manufacturing principles.
Posted by the Epicor Social Media Team
Several recent articles in Industry Week have us thinking about the recent revival of the U.S. manufacturing sector. In a recent piece on the strong manufacturing showing at the start of the year, the sector is touted as a stabilizing force for the U.S. economy’s still uncertain economic rebound. Pulled along by an increase in the growth of new orders, manufacturing picked up its pace in January 2012. The Institute for Supply Management's manufacturing index rose to 54.1 in January from 53.1 in December 2011—the 30th month of expansion for the sector.
The second article appeared a couple of weeks later, and praised the benefits of lean manufacturing principles being applied to manufacturing’s use of information technology. In this piece, Ryan King, director of information technology at ARPAC, a Schiller Park, Ill.-based manufacturer of packaging machinery, explains how his company has used lean concepts to improve performance. He views lean IT as a way to “use technology to improve processes and eliminate waste from those processes,” a basic tenet of lean manufacturing.
The article cites ARPAC’s implementation of Epicor ERP as one of the major source points of King’s approach to using lean principles:
When ARPAC implemented an Epicor ERP system in 2007, King used it as an opportunity to automate routine practices and remove time-consuming paperwork processes. For example, employees can simply scan a barcode to generate a purchase order and replenish needed parts, which are then typically delivered in a day or two. "It has saved us an average of 20 hours per week on our master schedule for manufacture," King notes. "And for our purchasing buyers, it eliminates a day of their week from worrying about stocked kanban parts."
The pressures placed on manufacturing during the recession have forced successful manufacturers to execute operations more efficiently to remain viable. Lean manufacturing has been an important tool in this effort, particularly for job shops and smaller manufacturers.
Those interested in learning more about how lean manufacturing principles can be applied to their business are encouraged to view the webcast, How to Run Lean by Improving the Quote-to-Cash Manufacturing Cycle.
Posted by the Epicor Social Media Team
Reduced paper-based processes are rapidly translating into leaner operations for manufacturers. Here are three prime examples:
1) Faster, more efficient new product innovation
When moving away from paper, examine processes around bringing new products to market and managing product change. The business process of requesting a product change, communicating the change to engineering, making the change, delivering the updates, and finally communicating the change to purchasing and shop floor can be improved by going to paperless processes.
Technologies are available today to support these processes, both within and outside the organization. Many businesses use Product Lifecycle Management (PLM) systems to manage the documentation and processes in developing market requirements for new products alongside the engineering workload, CAD files, and material specifications needed not only to prototype and bring the product to market, but also to fit aftermarket requirements. These systems not only manage the electronic documents, but integrate with CAD directly for a seamless handoff from engineering that drives “a single version of the truth” down to the production floor.
2) Better receipt of product change throughout the supply chain
One thing is certain: product change will happen. For businesses on the receiving end of product changes, processes are needed to support the receipt of product changes and communicate them to the shop floor quickly—a great benefit from deploying paperless processes in the business. Manufacturing ERP systems that support Product Data Management (PDM) and Document Management can receive data electronically and link it to a production job so that operators on the plant floor can log in and see the new drawing, material certifications, and other documentation that flows into production.
3) Better customer service
If you aren’t sending electronic invoices and you haven’t received an electronic AP invoice lately, it might be time to check your inbox. More businesses are reducing lead times in transacting these documents to improve cash flow, eliminate waste in the office, and operate more sustainably. Technologies can support these efforts. Enterprise Content Management (ECM) systems support and control the flow of documents to and from your business without the use of paper.
Epicor has a range of solutions that can help you transition to more efficient paperless processes at your own pace. Why not see how we can help streamline your manufacturing operations?
Posted by the Epicor Social Media Team