Informed decision making is key to keeping up with increasing competition and tougher operational challenges that are prevalent in today’s manufacturing world. Why? Because informed decisions lead to substantial improvements in your manufacturing processes across the dimensions of cost, value, and risk.
Cost encompasses the entire cost base of your manufacturing operations and is largely influenced by factors such as waste, rework, efficiency, productivity, and yield .
- Value refers to the quality of your products and also the value of your manufacturing operations—such as the ability to become increasingly agile and responsive, supporting product innovation, and even driving market innovation.
- Risk mitigation focuses on both operational and strategic risks. You mitigate operational risk by addressing issues that occur daily or weekly within your manufacturing operations, such as quality or production issues or machine breakdowns. You mitigate strategic risk by avoiding major quality events (like food safety) that may impact the organization’s brand or reputation and responding to changes in competition and market demand.
Not only do we need to minimize cost, maximize value, and mitigate risk, but we must also strike the right balance between them. For example, we can cut costs until quality is impacted, but then we increase risk. Or we can continually increase the quality of the product to the point that it becomes uneconomical. Or we can become so risk-averse that the organization becomes rigid and inflexible.
Therefore, we need to finely balance these dimensions in the most optimal way possible. And that is what I refer to as manufacturing optimization.
Efficiency and Productivity
Optimizing your manufacturing processes requires you to look closely at efficiency and productivity. We often use these words interchangeably, but they really mean two different things.
Efficiency is achieving a given level of output or performance, but with fewer inputs. Generally, if we can increase efficiency, we simultaneously reduce costs.
Productivity is the flip side of that coin, enabling a greater level of output or performance using the same level of inputs—labor, materials, and other resources. The result is more revenue and ultimately cost savings to the business.
Increases in efficiency and productivity not only reduce costs (which tends to be our main focus) but also increase the overall value of manufacturing operations and help to mitigate risks as we have previously outlined. But how do we get to those new levels of efficiency and productivity that most of us continually strive to achieve?
The Key Ingredient Is Operational Visibility
Operational visibility is when we can identify processes that are performing well (or optimally). When we can see the details in those processes, we can use them as benchmarks and compare them to other processes not performing as well. Likewise, we can identify processes that are underperforming and prioritize addressing their underlying or root causes. If we can do that, if we can bring the level of processes up across manufacturing operations, then our efficiency and productivity both increase as a result.
It is an ongoing iterative cycle of continuous improvement that depends on a key fundamental element: It must be done proactively with access to real-time, enterprise-wide operational data.
Manufacturers collect plenty of data, but then—unfortunately—don’t do anything with it until something has happened. That’s reactive operation.
We might do all the things that we want to do to increase efficiency and productivity, but if a lot of time lapses between identifying an issue and actually correcting it, the result is a lot of inefficiency and less-productive output.
So, the more quickly we can identify an issue and respond to it—or even predict where an issue might occur—and put remedial action in place, then the better our chances to increase efficiency and ultimately reduce costs across the manufacturing operations.
Start with Digital Transformation—for Operators, Supervisors, and Managers
Sometimes, when the discussion turns towards a manufacturing company becoming more proactive, the operator side of the equation is overlooked. We know that these important employees are often-times overworked and time-starved.
Manufacturers can have high levels of automation in place within the actual manufacturing process itself—with things like automated production lines, filling lines, packaging lines, and mixing processes—but when those automated pieces are flanked by very manual processes in which human operators must take time to monitor machine parameters, perform quality checks, or carry out quality-related or administrative tasks—and document them on paper or in spreadsheets—then efficiency and productivity improvements (no matter how you’d like to measure them) are held back.
We therefore need to bring operators into the efficiency and productivity equation. But not just by automating some of their repetitive and mundane tasks (which is important) but also giving them the tools to enable them to be more effective in performing their roles.
Likewise, the best intentions of supervisors and managers get derailed when they spend all their time manually collecting data, preparing that data for reporting analysis, and then distributing that data. That's highly inefficient—and prevents you from achieving the proactive, agile responses that today’s manufacturing environment demands.
So, what do we mean by agility? Well, we simply mean the ability for your manufacturing operations to change or adapt to different requirements. And those requirements can come from different places. It may be that they come from the business planning side of things—meaning we might need to be nimble in changing the mix or the specifications of products that we're producing.
It may be that we need to more quickly respond to market dynamics. We've seen that need during the current health crisis. All of a sudden, certain sectors like food and beverage, consumer packaged goods, healthcare, and medical supplies, experienced a ramp-up in demand. Other products were simply deemed inessential and no longer needed to be produced.
How quickly can your production process be adapted to different products, perhaps even smaller runs? Being agile means responding to those needs and potentially exploiting those opportunities in the market.
Typically, not being agile can have an impact on cost—for example, lost revenue associated with missed opportunities or lower client satisfaction because we weren't able to respond to a change in demand or get products out when we needed to. Obviously, being agile is very important.
Most manufacturers agree that digital solutions add a lot of value to addressing some of these issues on the plant floor. But we still rely on on-premises, legacy, or monolithic applications that are costly to purchase, implement, and maintain.
The best way to become more agile is to switch to a more cost-effective and flexible Software-as-a-Service (SaaS) solution. Moving to a cloud-based model allows us to achieve the cost efficiency, productivity, and agility we are looking for.
Efficiency and productivity are constant aims for manufacturing. And most manufacturers have moved forward through automation of many aspects of their processes and equipment. But automation doesn't necessarily mean optimized. Automation can still retain a lot of variability and uncertainty.
Automated or not, processes can have problems, break down, and be quite volatile. Just because a process is automated does not mean it’s inherently efficient or agile. What’s been missing until now is the discussion around automating the ancillary processes in production—things like data collection, analysis, and decision making.
The low-hanging fruit of automation has been picked. We’re going to find the improvements we’re looking for—in efficiency, productivity, cost, and agility—in those ancillary processes.
InfinityQS® Enact® is the perfect tool to help bring manufacturing to the next level in its evolution. Visit our website to learn more about how Enact can help you address your most pressing manufacturing challenges.