Category Archives: Manufacturing

To Survive in Electronics Manufacturing, You Need to Start 3R Design Now

The 2nd generation iPads are about to hit the shelves. The Android pads are coming. Blackberry’s PlayBook is almost here. And everyone and his dog are buying smartphones these days. This sounds great until you realize that this means that lots of people are going to be discarding their old phones and netbooks, of which only 10% are recycled each year (according to the EPA, as discussed in this Brighthand article that asks “why cell phone recycling rates [are] so low”).

And to make matters worse, lifecycles for these types of consumer electronics are growing shorter every month. People used to keep their phones for years. The current life-span is now estimated by most analysts to be between 18 and 24 months and some people are trading their phones in every year. When you consider that the average person now owns one or more computers, laptops, cell-phones, portable media players, GPS systems, etc., and that some estimates place the number of electronic devices per consumer as high as 10, you see a dangerous situation emerging. Adding the numbers up, we see that it won’t be long before there are 3 Billion consumer electronic devices being disposed of each year, with only 300 Million being recycled if current trends continue.

We’re at the point where we have to go beyond the standard reduce, reuse, recycle mantra that has been chanted for years, and design for recycle, as this blog first suggested to you three years ago. In addition, with certain natural resources becoming scarce, you also need to design for reduced resource utilization and reuse. Especially since many of these electronic devices still contain hazardous materials.

If design for recycle is done right, there will be a refurbishment phase which will allow for reuse as long as the device has a usable life. This has many benefits for manufacturers and retailers as the cost of refurbishment for phones, pads, and laptops can often be much less the cost of producing a new device (especially when the cost of energy is factored in as it takes huge amounts of energy to create these devices, but very little to have a human pop out a single defective component and pop in a new one). Plus, the market for refurbished devices is about to boom as there are millions of people in emerging countries who will be ready for smartphones when the next generation of mobile devices comes out in addition to millions of people in the developed world who have yet to switch to smartphones and pads.

Plus, with the cost of raw materials increasing as fast as energy, and the looming threat of end-of-life directives that would force all producers of electronics components to take their disposed products back, design for recycle just makes sense. Reducing raw materials and energy requirements will save a lot of money. Designing phones so that as many components as possible can be reused when the phone can no longer be refurbished reduces future production costs and waste. And minimizing or, better yet, completely eliminating hazardous materials can simplify and increase the effectiveness of recycling. All-in-all, designing for eventual recycling will not only save money and increase profits, but might be the only way an electronics manufacturer can survive in this tough economy if more regulations hit the industry.

Analytics is for Industrial Manufacturers Too

I’ve written dozens, sorry, dozens upon dozens of posts on Analysis and why every organization should be using it. So I’m not going to go into the details again in this post, but make it crystal clear for you business types who have yet to sign the cheque:

High-performance businesses — those that substantially outperform competitors over the long-term and across economic cycles — are five times more likely to use analytics strategically compared to their peers.
“Using More Analytics Can Help Industrial Manufacturers”, Industry Week.

Now, it’s true that correlation is not causation, as Pinky and the Brain skillfully informed you in their lesson in statistics, but a multiplier of five is very significant. It means that the use of advanced analytics tools is definitely a common trait of industry leaders and if you’re not sure how to become an industry leader, the best way to start is to emulate what the leaders do.

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Is It Really APS If It Uses EOQ?

While I’m not an expert in MPS, I am an expert in optimization, so, needless to say I was taken aback by a statement in this recent TEC bog post on “Sorting Through the ERP, Lean MFG, APS, and MES Clutter” that quoted experts as saying that ERP and APS systems force companies to make runners in EOQs. Now, while I am quite sure that your average ERP will apply EOQ to production scheduling, even though it’s often dead wrong to do so, I would think that a true APS would not be so foolish.

For those of you who aren’t manufacturing experts, here’s a brief guide to the terminology:

  • APS: Advanced Planning and Scheduling – a system or methodology designed to plan plant floor operations to maximize throughput and resource utilization
  • EOQ: Economic Order Quantity – the inventory level expected to minimize total inventory holding and ordering costs
  • ERP: Enterprise Resource Planning – a system used to coordinate all planning and production processes
  • Lean MFG: Lean Manufacturing – a production practice that attempts to eliminate all waste from the production process
  • MES: Manufacturing Execution Systems – a set of systems used to control the manufacturing process on the shop floor
  • MPS: Manufacturing Planning Systems – a set of systems used to plan the manufacturing process with the intent of creating a manageable schedule
  • runner: a product that accounts for the majority of manufacturing workload; on average, 6% of products create 50% of the work
  • WIP: Work in Process – refers to all (raw material) inventory that is currently in the production process

Given that so few products account for so much workload, you would think that these systems would recognize that

  • it’s a must that each production run produce enough of a runner product to meet the total demand for the production period, but
  • producing more runner product adds no relevant value unless enough product is produced to cover the next set of orders (as the line would need to be set up again anyway and it takes time to set up and tear down a production line) and
  • EOQ, which is a measure designed for buyers, is not guaranteed to produce a number anywhere close to an appropriate value, even when order costs are replaced with production-line set-up costs.

As the article states, runners must be produced in optimal order quantities, as this is the only way to maximize the amount of time free to produce the remaining 94% of product. Other products can be scheduled based on a modified EOQ, as order quantities in any given period might not be sufficient to guarantee a profitable run otherwise, but runners and other high-volume runs must be treated differently. And if an “APS” system cannot differentiate between the two types of products, and optimize the run for each type appropriately, I’d argue it’s not an APS at all!

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Sustainable Manufacturing is the Future, But It’s Further Away Than You Think

A recent article in Industry Week on sustainable manufacturing indicated that there are “only a few bumps in the road before a smooth, green ride”. In fact, immediately after noting that while, as a concept, sustainability in manufacturing is easy to define, it is far harder to practically interpret and adopt, the article immediately diverges into how to design an effective sustainability roadmap.

While the advice is good, I think it does a great disservice by completely skipping over a discussion of the bumps in the road, how big they are, and how long it’s going to take to get around them, especially in North America. In North America, we’re facing the following bumps, and they are all biggies:

  • marketing
  • mindset
  • money

Specifically,

  • How do you market the benefits of sustainable manufacturing? Most people care about the end product, not the plant. And the last thing you want to do is be another greenwasher!
  • Most people are not of a sustainable mindset. They’re of a profit mindset, and they still see sustainable as a cost and not a savings.
  • Even those that understand that sustainable is not a cost but a benefit don’t want to spend the money it costs to upgrade production lines and factories to use more sustainable production methods. And this is the real kicker. Until this changes, it’s a long road ahead to sustainable manufacturing in North America.

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Does Your Supply Chain [Still] Have [A] Manufacturing Myopia

Manufacturing Myopia can be defined as a narrow vision of future potential, [generally] leading to formulaic cost-cutting, layoffs, loss of competence, and decline. It’s a state of affairs that is becoming more and more common in North American manufacturers, but it doesn’t have to be in your future.

The fundamental problem, as pointed out in a now classic Strategy + Business article on Manufacturing Myopia is that manufacturing strategies — decisions related to siting, designing, and running factories — are often the same as they were 10 or 20 years ago. Despite all of the so-called program advancements — such as “TQM” (Total Quality Management), “lean production”, and “Six Sigma” — manufacturing, for the most part, has not kept up with the times. Strategies have been contained to the functional or plant level, disjoint from the enterprise-wide strategy and cut-off from the executive decision makers, and, as a result, the manufacturing focus has narrowed over time to the point where competence has atrophied with respect to the rest of the business. This has compelled many companies to focus on cost cutting to the point of irresponsibility instead of (fundamental) process innovation.

So how do you prevent manufacturing myopia? According to the authors, you start by building awareness as the only “cure” is 20/20 vision that ties together an understanding of manufacturing costs and means. Companies have to sharpen their own ability to see their operations more clearly and redesign them more flexibly as they need to acquire the ability to produce higher-quality goods at lower prices in a flexible manner as this is a key component of their long-term competitive strategy and a central, dependable part of their identify.

In order to build this awareness, a company needs to master the following four dimensions:

  • technological distinctiveness
    a company that relies on machine builders and other vendors to fill the gap is simply buying solutions that are available to the mass-market; this will not give them a distinctive advantage over their competition
  • network sophistication
    the company has to progress to a global, flexible supply chain network that can be reconfigured anywhere in the world as market conditions change; plants have to be designed with “flexible footprints” so that they can be enlarged, shrunk, or reconfigured based on the business landscape because it can take two years to close down a factory — and that’s typically after several years of wavering over the decision
  • in-plant transformation across-the-board
    in order for plant processes to truly be transformed, an initiative has to be initiated at the executive decision making level as part of an overall strategy; otherwise, adoption of new processes will be haphazard and results will be across the board (and even include a loss of efficiency in some cases)
  • labor modernization
    even the shop-floor technicians have to become modern knowledge-workers (using the best tools and techniques for the job) who take pride in their job and strive to produce the best product they can; hours of work and compensation must also be modernized so that people are not driven to overtime (where they work themselves sick and lose productivity instead of gaining it)

And, most importantly, as per the article, the company needs to have patience. While the benefits of a manufacturing transformation should start to materialize within eighteen (18) to twenty-four (24) months, as the article indicates, after production technology is replaced it could take two-to-three (2-3) years before the capital investment bears fruit in the the semiconductor sector, five (5) years in major manufacturing, and as much as twenty (20) years in process industries such as petrochemicals and electricity production. Additionally, to improve processes, companies have to train entire plant communities in dozens of different tools and techniques and completely different ways of working. All of that consumes time and resources.

It’s a tall order when you think back to the classic Ford production line that most plants still work on — one path, one job, and one product — but it’s what is needed if plants are to truly enter the 21st century. I highly recommend that you check out the Strategy + Business article [again] on Manufacturing Myopia. I bet your supply chain could use it.

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