A Guide to Leveraging Mes and Optimizing Wip Final0E93FD857AC8

8/10/2019 A Guide to Leveraging Mes and Optimizing Wip Final0E93FD857AC8

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A GUIDE TO LEVERAGING MESAND OPTIMIZING WIP

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TABLE OF CONTENTS

Section 1:Understanding WIP in Complex Discrete Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Section 2:A Narrow Approach is Just the Start . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Section 3:A Comprehensive Approach to MES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Quality Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Planning, Scheduling, and Dispatch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Production Execution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Section 4: Securing the Gains with Operational Excellence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

A GUIDE TO LEVERAGING MES

AND OPTIMIZING WIP
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SECTION 1

Understanding WIP in

Complex DiscreteManufacturing


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Understanding WIP in Complex Discrete Manufacturing

Improving Work in Process (WIP) inventory through real-time

visibility into shop work orders to increase throughput, production

velocity, and inventory has been an issue faced by complex discrete

manufacturers for many years. With the launch of lean methodolo-

gies and the adoption of software solutions that provide real-time

WIP insight, companies have allocated considerable resources to

continually improve performance over the past several decades.

This focus and effort is not surprising considering the scope of

the problem and potential benefits. In complex discrete manufac-

turing, there can be $10,000,000+ tied up in WIP inventory across

100+ plants, meaning even small improvements can generate sig-nificant benefits.

Unfortunately, as many companies can attest, improvements are

elusive and there is no silver bullet for success. When tackling a

challenge like WIP, many companies begin with an approach that

is narrow and focused but end up struggling. Luckily, as companies

experiment and learn, it becomes evident that a broader and more

comprehensive approach is best for driving benefits.

In this eBook we will examine why a narrow technology approach

often doesnt work for improving WIP and how a broader, more

comprehensive approach can drive significant benefits.

UNDERSTANDING WIP IMPROVEMENTS

What does it mean to improve WIP?

Increase Tact Time or number of WIP inventory turns per period.

How can the number of WIP inventory turns

per year be improved?

Reduce WIP inventory levels and/or

increase the velocity of WIP inventory.


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Understanding WIP in Complex Discrete Manufacturing

In an area of complex discrete manufacturing like WIP, where

many companies have been focused for many years, there are some

interesting new trends emerging.

First, WIP is an issue and challenge that impacts a broad majority

of complex discrete manufacturers. There is clearly a large portion

of companies that still struggle with manual processes and the need

for visibility.

In the most recent LNS Research Manufacturing Operations

Management survey, 100% of complex discrete manufacturers had

in place some type of Operational Excellence program and 75% of

these programs had some type of WIP focused initiative like Lean

Manufacturing or Six Sigma.Additionally, 80% of complex discrete manufacturing respondents

both measure WIP and know their companys current performance,

COMPLEX DISCRETE MANUFACTURERS:

80% measure WIP Average WIP improvement target: 33%

Potential Working Capital Savings: $10,000,000+

COLOR BY INDUSTRY COLOR BY HQ LOCATIONCOLOR BY COMPANY REVENUE

Discrete Manufacturing

F&B / CPG

Life Sciences

Asia / P acific

Europe

Large: $1BB+

Medium: $250MM - $1BB

Small: $0 - $250MM

indicating the importance so many companies place on WIP and

the belief in the well quoted axiom, you cant improve what you

dont measure.

Finally, and perhaps most surprisingly, companies that are

looking to improve WIP want to improve big. Of those companies

with a goal to improve WIP, the average improvement target is a

truly dramatic goal of 33%, highlighting how behind the 8-ball

companies can feel if they dont have a good handle on WIP.

Other

Process Manufacturing

North America

Rest of the World

Research Demographics: 303 Respondents


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A Narrow Approach

is Just the Start


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A Narrow Approach is Just the Start

When attempting to optimize WIP it is important to think bigger

than just inventory management

Narrow technology solutions like inventory management and

optimization typically focus only on the flow of WIP. Unfortunately

this narrow approach only impacts a few stages of the production

process and does little to better enable the work force to address

issues that impact inventory as production is occurring (2 and 3).

With such a limited approach, when there are issues with main-

tenance, customer orders, suppliers, quality, production, or more,

the plant is ill-equipped to deal with these dynamics effectively.

AVERAGE WIP INVENTORY TURNS PER YEAR

4.5 Currently Implemented

4.4 Not Implemented

Instead, these solutions should be thought of as foundational and

providing the ability to implement a more comprehensive solution.

Not surprisingly, the companies having adopted WIP inventorymanagement and optimization have seen very little

performance improvement:

1. RECEIVING

2. RAW MATERIAL INVENTORY

3. MATERIAL STAGING

4. SUB-ASSEMBLY

MANUFACTURING PROCESS

5. MACHINE OPERATOR

6. MAINTENANCE

7. SUPERVISOR

8. FINAL-ASSEMBLY


9. TEST EQUIPMENT

10. QUALIT Y ASSURANC E

11. FIN ISHED GOODS INVENTORY

12. SHIPPING

13. MANAG EMENT OFFICE


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A Comprehensive

Approach to MES


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A Comprehensive Approach to MES

With the ability to go well beyond just Inventory Management and

Optimization with a modern, full featured Manufacturing Execution

System (MES), complex discrete manufacturers have more options

than ever for optimizing WIP utilizing a comprehensive approach to

effectively managing operations.

It also quickly becomes apparent that the majority of manufac-

turers are looking to fully utilize their MES systems wherever possi-

ble, leveraging the extended functionality of these systems beyond

Production Execution into functional areas of Quality, Planning,

Scheduling and Dispatching, etc. In some cases, companies have

deployed separate systems and applications for these functions and

have integrated them with smaller scope MES systems.However, it is clear that this comprehensive set of capabilities in

the chart below are required to address todays manufacturing oper-

ations challenges.

The latest research is now showing the majority of manufacturers

are adopting multiple application areas - with over 50% of manufac-

turers having the top 3, and nearly one-third adopting the top 6.

As opposed to narrow Inventory Management or Tracking appli-

cations, these more adopted applications like Quality Management,

and Planning, Scheduling, and Dispatch span a much broader set of

processes in complex discrete manufacturing environments, and as

each application is examined more deeply it becomes apparent how

this broader approach drives more benefits in WIP performance

than Inventory Tracking or Optimization alone.

Top Software Applications Used by Companies That Effectively Manage Their Manufacturing Operations

Quality Management

Planning, Scheduling, & Dispatching

Production Execution

Document Management

Manufacturing Process Management/Workflow/Electronic Work Instructions

Operations Intelligence/Manufacturing Intelligence


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Quality Management

Quality Management touches almost every area of discrete man-

ufacturing including almost all aspects of the factory floor (1, 4, 5, 6,

7, 8, 9, 10, 13).

In particular, Quality Management can help reduce WIP levels and

increase WIP velocity by:

Early detection and reduction of supplier defects

Improve design for quality and manufacturing

Reducing scrap and rework

More efficient quality sampling and testing

Higher finished product quality



3.5 Not Implemented

Companies with Quality Management software enjoy a

37% fasterTact Time

1. RECEIVING


3. MATERIAL STAGING

4. SUB-ASSEMBLY


5. MACHINE OPERATOR

6. MAINTENANCE

7. SUPERVISOR

8. FINAL-ASSEMBLY


9. TEST EQUIPMENT



12. SHIPPING


TACT TIME PERFORMANCE


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Planning, Scheduling, and Dispatch

Planning, Scheduling, and Dispatch enables a complex discrete man-

ufacturer to allocate demand to the optimal production assets. It also

connects the shop floor with what the rest of the business and enables

responding to supply and demand change on the fly. (1~8, 11~13 ).

In particular, Planning, Scheduling, and Dispatch can help reduce

WIP levels and increase WIP velocity by:

Balancing demand across production assets

Responding to changes in supply, demand, and capacity

Adapting to changes in asset and labor availability

Coordinating production across business and

manufacturing processes



3.3 Not Implemented

Companies with Planning, Scheduling, and Dispatch soft-ware enjoy a 61% fasterTact Time

1. RECEIVING


3. MATERIAL STAGING

4. SUB-ASSEMBLY


5. MACHINE OPERATOR

6. MAINTENANCE

7. SUPERVISOR

8. FINAL-ASSEMBLY


9. TEST EQUIPMENT



12. SHIPPING




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Production Execution

Production Execution is the core application functionality of MES

and can help complex discrete manufactures move to a paper-less

shop floor environment, make connections with other enterprise

applications like PLM or ERP, establish a detailed manufacturing

data model, and enabling track and trace of products and product

components. (1~13).

In particular, effective Production Execution can help reduce WIP

levels and increase WIP velocity by:

Enforcing established manufacturing procedures

Dynamically adapting to changes in supply, demand,

and capacity

Responding to changes in demand and capacity



3.5 Not Implemented

Coordinating production across business and

manufacturing processes

Companies with Planning, Scheduling, and Dispatch software

enjoy a 49% fasterTact Time

1. RECEIVING


3. MATERIAL STAGING

4. SUB-ASSEMBLY


5. MACHINE OPERATOR

6. MAINTENANCE

7. SUPERVISOR

8. FINAL-ASSEMBLY


9. TEST EQUIPMENT



12. SHIPPING




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Securing the Gains with

Operational Excellence


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Securing the Gains with Operational Excellence

Many complex discrete manufacturers are investing heavily in

improving WIP performance and the heat is on to achieve dramatic

and timely improvements.

Based on this new research, narrowly focused WIP Inventory Man-

agement and Optimization applications have not been shown to be

effective in improving performance. Instead, complex discrete manu-

facturers will be better served by taking a comprehensive approach to

MES solutions that are more broadly focused on improving multiple

areas of their manufacturing operations including WIP. A great place

to start are the three most broadly adopted application areas:

Quality Management

Planning, Scheduling, and Dispatch, Manufacturing Execution Systems (MES)

The effective, integrated combination of the above applications

has been directly linked to companies being more effective at man-

aging their production operations at the plant, business unit and

enterprise levels.

Finally, even though this eBook is focused on technology, technol-

ogy is never as effective as it can be if it isnt supported with the right

leadership and business process capabilities. To learn more about how

leading manufacturers are effectively combing leadership, business

process, and technology in a comprehensive Operational Excellence

program, please see these other LNS Research publications:

Manufacturing Operations Management Best Practices Guide

Accelerating Operational Excellence for Global and

Regional Manufacturers

Authors:

Matthew Littlefield

President and Principal Analyst

[email protected]

Mark Davidson

Principal Analyst

[email protected]

Presented by:

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Connect:

LNS Research, 2014. All Rights Reserved.
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