What plant managers should know about information technology | Automation.com

What plant managers should know about information technology

August 032009
August 3, 2009
By: Christopher Eckert & Attilio Bellman, Siemens IT Solutions & Services

Traditional plants are typified by process silos within massive manufacturing frameworks. However, lean manufacturing requires that plant managers are involved in many areas, including planning, forecasting, distribution, and customer satisfaction. Manufacturing can no longer be an island within the global supply chain process. Automation and integration are increasingly critical to success.

Plant managers must be keenly aware of the entire ERP process. It can be difficult to reduce the complexity of the supply chain, but intelligent Information Technology (IT) can make it more transparent and manageable.

Here is what every plant manager should know about IT and how it can meaningfully change—if not revolutionize—their competitive positions.

Utilize Technology for Complete Transparency
Transparency is not the norm in today’s manufacturing environment. There is a profound systematic communication gap between the shop floor and the executive floor…or even within the shop floor itself.

All too often multiple, disparate systems do not electronically communicate. Some may be legacy systems while others may not be fully integrated. Without transparency between each position on the line and the rest of the system, it is impossible to accurately summarize what is happening throughout the line. It is also impossible to share those data to people downstream or upstream. This formation gap impacts quality control, inventory management, and a host of other important manufacturing elements.

A plant manager can gain this transparency by looking into an enterprise resource planning (ERP) information system that can provide complete transparency – like SAP - that supports the plant or the entire enterprise.

Transparency Benefits include:
  • Reduced inventory within a plant or across the supply chain
  • Fewer returns and failures by taking localized transparency from plant floor to shop floor
  • Engaged support of senior management by providing them with data and information
  • Transparency also presents challenges. More transparency means more people can inject themselves into the manufacturing process. There is some potential for loss of control by the plant manager.
  • Cost may also be a factor. A very robust system costing $2 million may not make it past the CFO. In this case, consider phasing it in by process or site over a one to two year period to ultimately improve long-term implementation.

    Understand and react to the ever-changing dynamics of the entire supply chain
    Raw materials and commodities are extremely volatile and there is little chance of that changing in a global trade environment. Improved visibility and forecasting help plant managers better manage inventories and costs.

    Additionally, visibility and forecasting help focus on key performance indicators. It is important to create visibility throughout the supply chain and to capture and utilize that information. A business intelligence solution can go a long way to solving this problem.

    Be a Critical Information Source and Advisor to Corporate
    Again, it’s imperative that the plant manager has full knowledge of the entire supply chain. It requires stepping off of the shop floor and establishing a formal network of feedback with people from sales, marketing, distribution, fulfillment, and other departments.. Here too, an ERP information system will help to establish the framework for that network.

    Establishing the human and technological frameworks for becoming an information hub is not easy. But economic trends indicate that if this challenge is not assumed by the organization, it will be forced upon it by external forces. A good example of such technological nudging is WalMart’s movement into RFID and its requirement that all suppliers (or at least suppliers to Sam’s Club) use it or pay a “pallet tax” for anything shipped without RFID tags. As costs drop and others look to technology giants like WalMart for guidance, it is likely that mandates or cost incentives like this will spread.

    Such changes certainly require a financial and operational investment. But they also represent an opportunity to improve processes. Successful managers will realize that they play an important role in these transformations and will look for ways to implement them in their facilities.

    By being an information hub, managers can raise their organizational profiles, not simply their role in the an operational silo. To do so, it is important to offer measurements and incentives —in part—by metrics reflecting the totality of the organization. Variables such as order fulfillment success, the percentage of perfect orders and metrics of inventory management would be appropriate.

    Make Decisions Based On Market Data
    It is imperative that plant managers have information access and usability that allows them to make intelligent decisions based on data over a frequency of time. For instance, market data on raw materials like petroleum, steel, chemicals and plastics can be tracked and, with a little market research, used to make predictive assumptions. Such assumptions could be crucial to net profit on a quarterly or annual basis.

    A robust system is crucial to systematically capturing those data in a usable and understandable format. It also provides transparency for the board room, thereby enabling more accurate cost and revenue projections. In today’s environment, creating a culture of no surprises is of immeasurable value.

    Bottom Line
    Better sharing of information from shop floor to top floor can bear considerable ROI. Plant managers require transforming IT solutions that support production lines, just-in-time scheduling and demand planning drawn from the sales environment. However, forecasting and demand planning is not standard in today’s IT and manufacturing environments.

    Transforming the manufacturing and supply chain network holds unlimited potential for U.S. and global manufacturing. It is time for iron and steel to merge with silicon and lasers to revitalize manufacturing. Taking these steps would certainly move manufacturing well down that path.
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