Bringing Order To Chaos On The Manufacturing Floor

Chet Harter

Solar Cell Manufacturing --- Image by © Lawrence Manning/CorbisA typical day in manufacturing starts out with a material requirements planning (MRP) process that usually runs for hours overnight – and all is good in that moment. But then there are changes that are unexpected, yet not unusual. A person needed in assembly may be out sick, a customer increases their order, a quality issue slows production, or there may be a shortage of key parts. So the day ends up a bit chaotic, but everything gets worked out in the end, right?

After all, it only took a whole bunch of phone calls, a few emergency meetings, some premium freight charges, a bit of overtime, and a flurry of people running all over the place. But despite all the unplanned-for occurrences, the customer orders did get shipped out.

On time – but at what cost?

Though this may be the reality on the manufacturing floor today, this kind of chaos is far from ideal – and it often costs manufacturers more than they realize. Yes, perhaps customer orders shipped on time, but at what cost? The reactive, manual, and knee-jerk way that unforeseen issues are managed today not only threatens the ability to make on-time customer shipments, but also, more importantly, significantly jeopardizes already thin margins.

Real-time issue resolution can bring order to chaos, and while the systems and technologies needed for this are available today, they are significantly underutilized in manufacturing environments.

When “real time” is not really “real time”

The concept of a real-time manufacturing system for planning and execution is not new. Many companies already have systems that can take a real-time snapshot of a manufacturing scenario and provide insights into critical elements such as inventory status and customer orders.

However, these systems are not being used in real time, and here’s why. If the system the technology runs on has not been upgraded, everything moves in slow motion. An MRP process can take three to five hours – or longer – to run, so it’s typically executed once a day, usually overnight, or over several days in more complex manufacturing environments. Meanwhile, because these supposedly real-time systems are pretty slow, it’s arduous to input receipts, production, shipment, inventory, and other related transactions. These transactions, therefore, are often recorded when it’s more convenient, in batch processes later in the day, rather than when they occur.

Consequently, as soon as the MRP processes are run, the plans are outdated and no longer a reflection of real time. And data that could impact important decisions in the moment when unplanned changes occur is still buried in a pile waiting for someone to enter it.

Without any real-time data and insights, unexpected issues that need to be resolved must be handled manually and often in ways that are complex, time-consuming, inaccurate, and costly.

It’s time for a new approach

If manufacturers truly want to increase their profits, it’s time to get real about real time. It’s time to power up manufacturing processes with evolving technologies, such as in-memory processing, that can enable innovative applications and solutions like Big Data, the Internet of Things, Industry 4.0, and machine-to-machine communications. With this kind of power running manufacturing, real-time issue resolution becomes not only possible but also practical and highly valuable.

Imagine if MRP plans could be put together in just minutes now instead of hours or days. Imagine if those plans could be instantly modified when the unplanned happens so that people, machines, and processes could respond instantaneously without delays. All this – and more – is possible right here and now.

With faster, more-powerful technology, transactions on the plant floor, on the receiving dock, or in the shipping department can be immediately updated in ERP, customer relationship management, inventory management, and other critical enterprise systems. It then becomes possible to continuously monitor key performance indicators and causal elements so that the appropriate individuals are immediately alerted when manufacturing is interrupted. The simulation of resolution options can help determine the probable impacts of unplanned issues and determine the quickest, most cost-effective plan of action.

And at any time, real-time inventory and material scheduling checks can provide updated statuses of inventories, customer orders, and supplier receipts to help avoid the unexpected. Real-time alerts can provide in-the-moment insights into current cost allocations and overruns, with drill-downs that identify any plant floor transaction that triggers an overrun. And at the same time, the appropriate people are immediately notified so they can take proactive actions to resolve issues quickly and minimize unplanned incremental costs.

These kinds of scenarios – in which data and insights can lead to informative, intelligent decision making in real time – are possible today. Isn’t it time to bring order to chaos and start taking advantage of the innovations that can help build up profit margins again?

For more on how simplifying business processes can boost your company’s bottom line, see The Time For Simplification Is Now: Why It’s Important And How You Can Get Started Today.


Chet Harter

About Chet Harter

Chet Harter is a member of SAP's Digital Innovation team. For over 15 years, he has helped many SAP automotive and manufacturing clients apply new technologies to address current business issues and opportunities. Prior to SAP, he spent 12 years in various positions in materials and production management for large tier 1 suppliers in the automotive industry. He can reached at chet.harter@sap.com.