Pursue the perfect plant

Look into creating the “perfect plant” by integrating product and operational management into your environment. This provides the ability to respond faster and minimize impact to the business and bottom line, driving increased yields, asset utilization and order fulfillment.

By John Harrison, SAP Canada

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Global competitiveness is placing tremendous pressure on cost, quality and responsiveness in manufacturing. Increasing emphasis on output from distant sites hampers management visibility and control. A premium is put on asset efficiency but effective comparative measures are difficult to achieve. Plants use copies of master data, creating compliance and quality issues. Production personnel lack the decision support information to meet their targets. The business and financial impacts of production asset exceptions can’t be monitored or controlled at the enterprise level. Resources — money, people and time — are stretched thinner and thinner.

If you face any of these issues, you should take a look at integrating product and operational management into your environment. With such integration, you have visibility into all aspects of your manufacturing operations (Figure 1).

Figure 1. Effective plant-to-business integration enables faster response and better use of assets.

Figure 1. Effective plant-to-business integration enables faster response and better use of assets.

This provides the ability to respond faster and minimize impact to the business and bottom line, driving increased yields, asset utilization and order fulfillment — in other words, you’ve got the "perfect plant."

The perfect plant

Such a facility must excel in three essential areas (Figure 2):

Figure 2. Success requires aligning asset utilization, operations planning and manufacturing execution.

Figure 2. Success requires aligning asset utilization, operations planning and manufacturing execution.

Asset performance and utilization. Assets are monitored so that events of concern automatically get visibility. Enterprise Asset Management (EAM) processes are optimized and details about all assets are available in a single source. EAM processes are tightly linked to manufacturing processes. Asset performance and utilization has moved from traditional preventive maintenance to a collaborative model.

Manufacturing execution. This is so effective that it’s nearly event-free due to proactive monitoring and automated event handling that’s tightly coupled with EAM and the enterprise. Here you have visibility across all critical processes that contribute to success of manufacturing execution. The reach of your Enterprise Resource Planning (ERP) system extends to the shop floor, accelerating operational efficiencies while at the same time ensuring safe and compliant operations.

Operational scheduling/planning. Changes aren’t primarily driven by unplanned events in manufacturing but rather by demand shifts and other factors. Manufacturing is able to manage and react more rapidly and reliably to these changes. This allows for the optimization of existing manufacturing assets and processes to reduce waste and variability. The integration of the plant with the extended enterprise and supply chain increases responsiveness to any changes.

The perfect plant aligns and improves key performance indicators and so offers significant benefits in a number of areas:

  • decreased manufacturing/raw materials costs (5% is typical) through process monitoring and increased visibility;
  • increased plant efficiencies (25%) via optimization of manufacturing processes and integration with the enterprise;
  • higher production yields (10%) by proactive monitoring of manufacturing events;
  • lower maintenance costs (10%) due to more effective practices, and alignment with manufacturing metrics;
  • reduced capital investments (10%) because of better asset availability;
  • smaller inventory (10%) through more efficient and consistent operations; and
  • enhanced value chain agility and customer responsiveness thanks to complete value chain integration and visibility.

The first step in your quest is to decide on the elements that make up your perfect plant — such as better quality analysis, enhanced maintenance strategies that ensure better uptime, shop-floor visualization capabilities, more effective procurement, etc.
Once you can "see" your perfect plant, you can start prioritizing the individual items based on their benefits and then begin implementing those items piece by piece.
However, the devil is in the details. The following four cases illustrate some pitfalls.

Inventory surprises

Everyone believes (and they’re usually correct) that inventory levels are too high. One of the prime causes is incorrect data in the planning process. Everyone calls accurate inventory counts or the master schedule crucial. Yes, they’re important; and don’t believe that just anyone can count inventory. Other, more fundamental areas can cause significant errors that impact the inventory levels, though. For instance, don’t assume that the bills of materials or recipes are correct.

It’s amazing how many people can compare a bill of materials/recipe report to the original and miss errors. My favorite errors are around decimals; 10.0 looks a lot like 100 after a number of hours in front of a terminal. Then, there’s getting the conversion factor the wrong way around. However, even if the bill of materials exactly matches the specification, things can go wrong.

In one facility, we consistently had too much material in inventory at period end. When we showed the operators a computer generated pick list for the product and asked them what they thought the problem was, they told us that if they ever used the listed quantities of materials the product would be too thick to flow through the pipes.

As this highlights, what’s reviewed, audited and approved by management and supervisory staff isn’t necessarily what happens on the shop floor. So, do a reality check. The best way I’ve found is to generate a bill of materials’ explosion for normal production batch quantities. Then give the list to the operators who pick and move the material and who therefore have a good idea of what really is normal, and ask them if it makes sense.

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