The tune at leading companies has changed from cost cutting to product and service innovation. The need to incorporate technology innovation faster into product lines is fueling an executive push for higher levels of process improvements. Can we scale our old practices to handle higher levels of product and process change? Probably not. We probably need to rethink processes at a strategic level to enable new business paradigms and increase speed for product updates and new product
introduction.
Engineers are using the latest CAD technology to make better 3D models faster with more reusable components, more product and manufacturing information (PMI). Model-Based Manufacturing practices are leveraging 3D models to simulate and accelerate production process innovation, develop shop floor work instructions, and create automated inspection and test procedures. So what is holding back our organizations from these types of process innovations? Why are some organizations still working with 2D drawings, spreadsheets, and paper work instructions at the shop floor?
Is IT investment cost holding us back?
U.S. aerospace and defense companies have been generating large amounts of cash reserves for quite some time. The largest aerospace and defense contractors have tens of billions of dollars in cash available to them. [2] There is still uncertainty that the U.S. will pass a defense budget in the
near future but companies have to move forward with process innovation or be left behind by the competitors that are gearing up with strategic investments. The cash reserves are there in many companies to make the required investments. However, the tight budgeting processes, that organizations put in place to control the wallet over the last few years, could be holding the organization back from large strategic investments.
Is commercial software maturity holding us back?
Based on Gartner’s 2014 Hype Cycle for Discrete Manufacturing and PLM information technology [3], commercial applications for Manufacturing Execution Systems (MES) and Enterprise Quality Management (EQMS) are in the “slope of enlightenment” moving to a stable maturity state. Applications for Model-Based Manufacturing (MBM), Supplier Quality Management, Manufacturing Integration Standards, and Operations Intelligence are beyond the hype peak for early adopters and are expected to fully mature within 5 to 10 years in the market.
Even companies that are industry followers versus leaders and very conservative in technology adoption, should probably be investing in these technologies which are ready for the pragmatic majority of the market. Some technologies like Model-based Manufacturing can be implemented in a pilot area to gear up organizations for the next program or product initiative.
Are we complacent with small continuous improvements?
Organizations with a proven record of continuous process improvement through localized short term Kaizen and Six Sigma efforts might have a hard time tackling the bigger strategic projects. “Good enough” can be the enemy of excellence.
Kaizen and Six Sigma efforts look to identify and eliminate areas of waste and variability. But
focusing solely on those efforts can lead to organizations overlooking initiatives like Model-Based
Manufacturing that can enable new business paradigms and revenue opportunities. The organization can fall behind in the changing competitive landscape.
It is not always possible to achieve higher levels of performance through small incremental
localized efforts—efforts that slightly improve on old business processes. That is why some
organizations follow the Lean practice of an annual Hoshin Kanri (business strategy improvement)
effort in which the organization makes an assessment of what resources and capabilities it needs to
stay competitive, win new business and grow.
What else could be holding us back?
Significant strategic process re-engineering can only happen when organizations face head on the
following potential barriers.
Dependence on Manual Processes
With the technology available today, the organization should not be relying on paper-based or spreadsheet-based processes at the shop floor to collect data, track progress, and prepare product or service documents for the customer. Yet, a recent survey [4] by IYNO Advisors found that over 50% of the companies surveyed were depending on homegrown or spreadsheet systems for their production systems. Many other companies are still depending today on paper-based processes at the shop floor.
Even traditional Lean Manufacturing practitioners like Toyota are now embracing information technology to raise the organization’s performance to a new level. This was the topic of a presentation by Toyota US CIO, Tim Platt, who spoke about "Lean's High Tech Makeover" [1] at the 2014 Industry Week conference. If an organization like Toyota can move beyond the manual Lean processes they promoted for years, your organization can change too and embrace automated Lean processes supported by information technology.
Poorly Defined Business Processes
It can be difficult to see the opportunities for improvement right in front of us if we don’t have a
good understanding of the current business processes. I have been lucky to participate in very eye
opening value stream mapping activities with experts from production, quality and engineering
departments. I have seen how different departments can often be so focused on their own daily duties that they do not give much thought to how their work is affecting downstream activities. We expect someone else in the organization is looking at the performance of the entire system. But the reality is that many organizations do not dedicate a team to enterprise level improvement and do not spend enough time cross training personnel on business processes that cross departmental walls. Many times enterprise level processes are not documented and often very few employees understand the overall value chain across the organization. These type of value mapping exercises across departments can uncover hidden gold.
If we don’t have a good understanding of key business processes across the organization documented, it is difficult to perform a proper evaluation and optimization of the entire value stream. Tools like value stream maps, business process activity diagrams, BPMN diagrams or SIPOC diagrams for each department are very useful tools in identifying processes that might not scale to handle a lot of innovation volume and speed in our product lines.
Insufficient Accurate Information
To justify bigger investments in process, product or equipment changes we need good data backing up the justification. We need better data to justify a new MES system which we need in order to collect accurate data to make better informed decisions in the future. Are we are caught in a Catch-22 situation?
It is important to know that we are delivering on time and paying the bills, but we also need to know more details about engineering and production processes if we want to improve those processes. It is important to know our delivered product quality, inspection results and defect counts but also more details about defect and cause classification to help us tackle the root cause of the problems.
Without the detail data, it is easy to always end up finding someone to blame for the problem
instead of taking a more methodical view to problem solving and finding the true system weaknesses. If we find that we keep blaming all problems on (a) lack of training, (b) personnel carelessness, and (c) human error, we should pause and figure out if we are jumping to conclusions because we do not have good data to identify other sources of potential issues. We want data that will point to any of the potential resources causing the problem which could be personnel related but could also be related to equipment, processes or product design.
Information maintained manually in different departmental databases or spreadsheets (information silos) is likely not consistent and could possibly lead to different conclusions and priorities in different departments. This information inconsistency can be tackled by implementing MES/EQMS information systems and integration standards that keep information synchronized between these production systems and other enterprise systems including PLM and ERP.
Lack of Flexibility to Change Processes
Are we evaluating software solutions based on our organization’s needs for growth and improvement or based on “fit” to our old legacy processes? It would be natural for the IT department to have a bias towards maintaining and improving the old custom systems that they developed versus looking to adopt new commercial software solutions. Commercial software benefits from the input and investment of many customers into one solution. If instead of looking at commercial solutions, the team keeps developing custom IT solutions and justifying the ongoing investment because the company is “different” than the competition, it might be good to get a second opinion from a neutral third party consultant.
It is also natural for engineering, manufacturing engineering, production control and quality
departments to be comfortable with the processes they have used for decades. It is good to expose
the team periodically to new ideas through trade conferences where they can see how other companies are innovating their business processes.
The cost of rebuilding custom integrations for new systems can also be a constraint. Integration
interfaces between enterprise applications based on integration standards like OAGIS make it easier
to replace functional modules in the enterprise system and stay up-to-date with best-in-class
functionality for different departments.
Fear of Too Much Change At One Time
Organizations might have a concern with making big changes all at once that will end up adversely
affecting production cost and schedule for even a few months. The risk associated with this learning
curve on new technology and business processes can be mitigated by implementing first in a pilot
area or “teaching plant” that can serve as an education platform for the rest of the organization
and proof point on the benefits and gains of implementing the new business processes.
Summary
The reality for most organizations include a mix of several of the barriers listed above. It is
important not to get put off by these challenges. Focus on how investments in new information
technology and new business processes can contribute to more contract wins, margin gains, and the
development of new agile, flexible and lean production operations. Expect production operations
remodeled based on the insights gained in your pilot implementation programs.
References:
[1] “Toyota Talks about Lean Manufacturing’s High-Tech Makeover”, manufacturing-operations-
management.com, 2014
http://www.manufacturing-operations-management.com/manufacturing/2014/05/toyota-talks-about-lean-manufacturings-high-tech-makeover.html
[2] “Aerospace and Defense Industry: Navigating a Global Future”, Trade & Industry Development, Jim Kemp, 2014
http://www.tradeandindustrydev.com/industry/aerospace-defense/aerospace-and-defense-industry-navigating-global-f-9187
[3] “Hype Cycle for Discrete Manufacturing and PLM, 2014”, Gartner, Halpern/Jacobson/Suleski, 2014
https://www.gartner.com/doc/2808322/hype-cycle-discrete-manufacturing-plm
[4] “Profitable Projects Webinar: Transforming Project-based Operations”, IYNO and Deltek,
Fraser/Kestel/Leiva/White, 2014
http://more.deltek.com/LP=3958?sourceid=49&utm_source=deltek-com-generic&utm_medium=deltek- com&utm_campaign=generic-Deltek-com&cmp=deltek-com_deltek-com-generic_generic-Deltek-com
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