Category Archives: Manufacturing

Crossing the “Valleys of Despair” in Advanced Planning and Scheduling

Last summer, the Supply Chain Management Review ran a good article on “How to Succeed with Supply Chain Planning” that is very timely now as smart companies acquire advanced software systems to help them save money in this downturn while their dumb counterparts cut the budget and stick their heads in the ground like ostriches waiting for this golden opportunity to just pass them by.

APS tools are not a new invention, having been around in one form or another for at least ten years. The difference is that today, you have on-demand best-of-breed options from companies like Kinaxis, MCA Solutions, and Servigistics in addition to the old standby solutions from the big ERP players like Oracle, SAP, and SSA Global. However, enterprise deployments are still time consuming, typically requiring three to six months for the on-demand options for mid-size manufacturers and nine to eighteen months for the on-premise options for large manufacturers. However, many implementations, especially on-premise installations on top of on-site ERP installations, still follow a well-defined pattern with periods of difficulty that the authors identify as “valleys of despair”.

APS tools are important, especially for organizations that manufacture or supply products to end-customers, because, as the article points out, they can significantly decrease operational costs and noticeably increase on-time delivery and customer responsiveness. For example, after implementing APS, one electronics company found that it could respond to demand changes in minutes, as opposed to weeks, and increase on-time delivery by 15%. However, the improvements are only realized if the tools are properly implemented. While proper implementations can save millions, improper implementations can cost millions and, if you’re really unlucky, cause bankruptcies. (Remember the Nike fiasco? Or the Aris Isotoner kerfuffle? Or the Foxmeyer implosion?)

So what are the valleys of despair and how do you react to them?

  1. The Solution Doesn’t Work
    The first crisis occurs right after the design phase when expectations collide with reality. When the solution is run for the first time with a production data set, the project team is likely to get an unwelcome surprise: seemingly unintelligible output, often accompanied by system performance problems. APS systems are complex pieces of software and it takes time to properly configure the solutions, to load all of the data, to tweak performance so that run times aren’t excessively long, and to work out the kinks. Even with the best efforts, it will take a few iterations before performance enters the expected range. The key is to remember the great advice given to us by The Hitchhiker’s Guide to the Galaxy and Don’t Panic.
  2. No One is Using the Solution
    The second crisis occurs right after the solution moves into production. The business users — the supply planners in the supply chain organization — find it difficult to interpret the output and are confused by the planning model and solution behavior. After a brief struggle, many users revert to the comfort of familiar spreadsheets and abandon the solution altogether. The key to success is to establish a comprehensive training program that starts before the design phase (allowing the supply planners to provide input into model formulation), continues through development (allowing the power users to perform user testing), and goes right up to deployment (ensuring that the planners will be able to fully, and properly, use the system).
  3. The Business Has Changed
    The final crisis occurs after one or more business conditions change and the models in the APS no longer reflect operational reality. If the planners don’t understand how the changes affect the APS model and outputs, they will “drift” away from the solution. The key to crossing this valley is to form a permanent support team and insure that they work with planning regularly to update and adjust the model as needed.

It’s a great article and I highly recommend you read it in its entirety.

The Sourcing Maniacs 2008 Vendor Tour Part 13: MFG.com

This post is a little lengthy, so it’s been broken down into Comedy and Community, which you can skip to if you’re short on time.

Comedy

Yakko Rapid Response Management. I don’t think we’d ever have thought of that at our old jobs!
  The maniacs just finished visiting with Kinaxis.
Dot It’s sure one cool concept! So Who’s Next?
Wakko Awesome album!

Pick up my guitar and play
Just like yesterday
Then I’ll get on my knees and pray
We don’t get fooled again
No, no!

Wakko breaks into his best air guitar routine
Yakko & Dot Wakko!
Wakko What?
Yakko I believe Dot was asking a question!
Dot And I want to know what company we’ll be visiting next.
Wakko Oh.
So, onward where?
Yakko Are we done with the K’s?
Wakko I wonder what’s up with that little company down in the valley that we used to pretend didn’t exist?
Yakko Are you referring to Ketera?
Wakko That’s them!
Dot I’m not ready to go back to California.
Yakko I heard they have a new SaaS e-Sourcing offering! Maybe we can get a web-demo and research them online!
Dot That would be cool. I’ll give them a call.
Dot rings up Ketera.
Sales Voice You’ve reached Ketera! How can we help you?
Dot We’d like a demo of your new e-Sourcing offering.
Sales Voice Who are you with?
Dot The Media.
Sales Voice Well, we’re a little backed up right now … the platform is taking off much faster than we expected. Can you wait a few weeks?
Dot Well, uhm, okay.
Obviously not used to being asked to wait.
Sales Voice If you’ll give me your details …
  the maniacs trailed off here
Yakko Well, I guess we’ll have to catch up with them later.
Dot So where are we?
Yakko I guess we move on to the L’s.
Wakko Elle MacPherson … oh yeah … I could definitely …
Dot WAKKO!
Wakko looking confused
Yakko Lexington Analytics?
Dot Too Consulting.
Yakko Lexis Nexis?
Dot Too Data Focussed.
Yakko LlamaSoft?
Dot Too mathematical. And Wakko would spend the whole time tearing the place apart looking for llamas.
Yakko Log-Net?
Dot Too logistical.
Yakko LSC Consulting Group?
Dot Again, consulting.
Yakko Well, I’m out of L’s! On to the M’s!

Editor’s Note: Yakko wouldn’t be out of L’s if he’d check the resource site once in a while, which listed over 500 companies in the space, alphabetically sorted, and accessible by starting letter and major category.

Dot I seem to remember this company called Moai from years (and years) back. Think they’re still around?
Yakko I haven’t heard of them in years! Last time I saw a press release from them was … was … 2004! Not long after the Medebiz merger / acquisition. I thought they were as long gone as the Moai statues on Easter Island that they named themselves after!
Dot Maybe … but I thought I noticed that their web site was still there a few days ago.
Yakko Web site! That’s it! the doctor told us about a web-based operation that starts with M that we’re supposed to check out. Just a minute.

Yakko fetches his handy-dandy notebook.

MFG.
Wakko Are we going for Chinese food! I’m hungry!
Yakko M-F-G, not MSG!
Wakko Oh. Well, can we still go for Chinese food! I’m hungry!
Yakko You’re always hungry!
Dot So who’s this MFG?
Yakko According to the doctor, MFG, who bill themselves as the on-line manufacturing marketplace, is a SaaS-based marketplace where buyers and sellers can come together and do business.
Dot So where are they?
Yakko I believe they’re in Atlanta, Georgia …
Wakko Georgia, Georgia
The whole day through
Just an old sweet song
Keeps Georgia on my mind
Yakko ignoring Wakko
… but the doctor says that everything they offer, and everything we should care about, is on-line.
Dot Time for another trip to the cyber-cafe!
Wakko Look! Look! Here’s a Chinese Cafe!
jumping up and down
Can we go? Can we? Can we?
Yakko Yes, Wakko.

 

Community

Wakko I love Chinese food!
Dot Is there any food you don’t love?
Wakko thinking … despite the look of consternation on his face
Escargot and Cavier.
Dot That’s sophisticated food.
Wakko I’d rather baloney.
Yakko breaking out the MacBook
Shall we begin?
Dot Sure. Where do we start?
Yakko Let’s go to the blogs for background. the doctor appears to have two MFG-focussed posts: MFG: A Community in the Making and MFGX.com – Exploding onto the scene, which I found through his handy Annual Vendor Day master index post.

Starting as a “parts marketplace” that is free to buyers, it has, especially after its recent acquisition of SourcingParts.com, a large supplier community that you can search, and tap, for custom manufactured parts and products through its free on-line sourcing and collaboration tools. Furthermore, it goes beyond just simple supplier directories, as MFG verifies the listed capabilities of suppliers who use the site and allows buyers to post their feedback, which it compiles into supplier ratings.

On top of this, it has a real-time supplier matching capability that works on detailed part specifications which will automatically locate the suppliers who are capable of filling your order. Once you select one, you can work with them using the built-in tools to collaborate on, and refine, the design until you get a high quality design that is cost-effective to produce.

And then there’s the companion MFGX.com site, released about six months ago, open to all manufacturers, and buyers, in an on-line forum that allows them to come together, share information, ask questions, post classifieds, find work, take advantage of open-source machine tools, and keep up with the latest news and trends. It’s all based on “Web 2.0” technologies – forums, blogs, wikis, and networking tools.
Dot Anything else?
Yakko the doctor has also cross-indexed a number of Spend Matters posts on MFG as well. Let’s check them out.

In Going Global with a Unique Leader, JB of Spend Matters tells us about their CEO, Mich Free, and how he’s a b-school type — gritty, school of hard knocks, and personally knowledgeable about how a machine shop actually works — and how he used that knowledge to build a team that actually understood what manufacturing is and what it needs in an on-line platform.

In Smock Gets the Scoop, JB references a recent interview that notes that MFG.com is planning to offer an advanced sourcing solution to buyers, which goes beyond its basic platform that will remain free, that will include “the whole nine yards of sourcing capability plus supplier relationship management and contract management for a subscription price of less than $500 a quarter per buying company”.
Dot Wow! That’s bargain basement pricing! For sourcing!
Yakko In the Fusion posts (I and II), JB told us about some of the visionary insights of Mitch Free, MFG’s founder, and how he’s trying to open up the manufacturing space in ways not previously thought of, and in “MFG.com — Building a Textile Marketplace”, he tells us how MFG is creating a new marketplace for textiles, an industry that, like traditional manufacturing, has been traditionally underserved on the web.
Dot Wow! Sounds like MFG are one busy bunch of guys and gals!
Yakko And that’s not all! In “Surviving China’s Rapidly Changing Sourcing Tides” (I and II), the doctor mentions MFGChina.com, the MFG companion site … in Chinese … to serve the Chinese marketplace.
Wakko Gan Bei! More Tsingtao please!
Dot Busy, busy, busy!
Yakko Very! I think it’s time to check the MFG.com site out!

Wow! RFQs are sorted into standard, commodity parts, for open, public bid and custom parts — making it easy for suppliers to find the RFQs most appropriate to their orientation. Hundreds of categories, allowing everything to be precisely specified. There has to be over a thousand standardized parts and products here!

And the resource collection is awesome! Industry LInks to CAD & CAM Software, Consulting Srvices, and Machine Tool Builders to name a few. Links to over 20 relevant Manufacturing Publications. Over 15 relevant manufacturing industry associations. Information on the major certifications and standards. Even a collection of useful utilities.
Wakko That’s a collection that even the doctor, with the largest collection of useful resources (on the Sourcing Innovation Resource Site) in the space, would be proud of!
Yakko And the help, and online process guidance, is very extensive. Even you could use it Wakko!

And as far as I can tell, MFGChina.com is just as extensive!
Dot What about MFGx.com – The Global Manufacturing Community?
Yakko I see over 10 active communities – Buy and Sell, Employment, Open Source Machine Tools, General Manufacturing, Sourcing and Procurement, Marketing for Manufacturers, Metalworking and Machining, Textiles and Apparel, Design and Engineering, Software, Logistics, and Materials. And everything’s a wiki document, so you can log in and make it better. And then there’s the blogs. Led by their blog-master, former analyst extraordinaire, AJ Sweatt.
Dot Does Mitch blog?
Yakko Occassionally.
Dot Too bad he doesn’t blog more. the doctor says he’s one smart cookie.
Yakko I don’t think those were quite the words he used.
Dot Same Dif.
Yakko Anyway, this MFG.com looks like a great resource for manufacturing buyers and suppliers alike!

 

Broaden Your PLM Footprint for Kick-Ass ROI

A recent Industry Week article, that noted that “adoption of product lifecycle management (PLM) technology is reaching record levels” and that the PLM market experienced a stronger-than-expected 13.5% growth rate to reach an estimated 24.3 Billion in 2007, also reported that implementations can quickly develop returns on investment of 100% to 300%. Considering the needs for manufacturers to find every savings opportunity possible with record-high commodity costs and a global economic down-turn on the horizon, this is one opportunity your manufacturing organization should not miss.

As I noted last year in my post on PLM for trends based industries, a PLM systems, which enables the process of managing the entire life-cycle of a product from its conception, through design and manufacture, to service and disposal, will provide:

  • complete process visibility compared to the limited process visibility that is the norm without a PLM solution
  • a centralized, usually web-based, point of control compared to a lack of control point without a solution
  • one version of the product status and truth
  • workflow management
  • unparalleled control over the product life-cycle
  • an integration point for the various systems used in the various stages of product design, development, and merchandising

In addition, as per the Industry Week article, the broader scope of today’s PLM solutions enables manufacturing managers to collaboratively reach upstream into the early stages of portfolio management as well as downstream into the integration with manufacturing. In other words, enhanced productivity of existing resources is the result of PLM’s ability to integrate the various value chains. This is because, with PLM, multiple views of the product can be quickly and easily shared among different people of the organization in real time and the collaboration features allow people to communicate, share ideas and interact dynamically around a particular product.

Furthermore, PLM is not just for manufacturers — it’s for any organization that buys a lot of manufactured parts, especially if a good percentage of those parts are custom. The best results often come from innovation that arises as a result of collaboration between the buying organization that has the expertise in new product design and the custom manufacturer that has the expertise in product manufacturing. So where should you look for these solutions? I’d start with some of the companies I covered here on this blog in the past, which include Akoya, Apriori, Arena, Co-exprise, and MFG.com. Each of their solutions can help you identify and realize cost-savings opportunities when properly applied in your product life-cycle. And a couple of them can even help you manage your product life-cycle – so check them out, move forward, and see if you can’t get yourself some of that 100% to 300% ROI!

Is Private Equity the Manufacturing Cure for the Credit Crisis?

I found a recent Industry Week article that discussed how “private equity [is] helping mid-size manufacturers thrive in [an] increasingly competitive global marketplace” quite interesting. The article, which noted that help from the right private equity firms can allow mid-sized manufacturers to bring more efficient and productive systems into the organization that are designed to facilitate operational improvements such as reducing waste and improving throughput, also noted that a recent Ernst & Young study found that companies sold by private equity firms increased in enterprise value at an annual compounded rate of 24% during the time they were in a PE firm’s portfolio — double the rate of comparably publicly traded companies. In addition, buyout firms also increased the earnings before interest, taxes, depreciation and amortization (EBITDA) of these portfolio companies 33% faster than their publicly traded counterparts did. Finally, these companies had productivity levels 33% higher than publicly traded company benchmarks.

The article then put forward five benefits of private equity investment that mid-market manufacturing businesses can expect from the right private equity firm.

  • Sparked Business Growth
    A good private equity firm brings efficient systems into a company, narrows the focus, identifies new markets and integrates value-added processes. This gives a company a solid foundation for growth.
  • Strategic Planning Partnership
    A good private equity firm will have a network of resources, including a board of directors with experience in the manufacturing industry, that they will use to assist management teams in setting and achieving strategic objectives.
  • Long-term Growth Plan
    Private equity, not subject to the whims of Wall Street, can allow for steadier, longer-term growth. It gives the company the flexibility to make decisions that will pay-off in the long run as the company doesn’t always have to worry about quarterly earnings statements.
  • Global Competitiveness
    A good private equity firm has the resources to help a manufacturer enter new markets and serve global customers.
  • Liquidity
    Private equity provides liquidity that allows owners to cash out or diversity assets.

So is it the answer to the credit-crisis? For some firms, I think the answer is yes, especially if they have solid people, solid products, and a history of satisfying solid customers and really need a cash infusion to stay competitive. With good foundations, the right PE firm will be able to take their operation from shaky to stable and take their performance from good to great.

The Sourcing Maniacs 2008 Vendor Tour Part V: Co-exprise

When we left the Sourcing Maniacs, they had just finished learning about BIQ (acquired by Opera Solutions, rebranded ElectrifAI) and the true meaning of spend analysis. We join them wandering the streets of Southborough, MA.

Yakko, Wakko, & Dot We’re the sourcing-maniacs
We’re zany to the max
We lost our pay-to-play contracts
Without a job we can’t relax
We’re sourcing-maniacs!
Wakko & Yakko Come join the ‘Riba Brothers
Dot And the ‘Riba Sister, Dot
Wakko, Yakko, & Dot Just for fun we ran around the corp’rate parking lot
They locked us in the boardroom whenever we got caught
But let us loose from the caboose
And now you know the plot!
Wakko So where are we going next, Yakko?
Yakko I don’t know, but I think we should move onto the C’s.
Dot Any cool C companies nearby?
Yakko None that I know of. I think they’re all in Pennsylvania, Illinois, or California.
Dot Well, we’re from California.
Wakko And I always thought Illinois was a railroad!
Yakko So Pennsylvania it is!
Wakko Pennsylvania is a railroad, too!
Dot So who’s in Pennsylvania?
Yakko If I recall correctly, CombineNet and Co-exprise.
Wakko CombineNet? I don’t think we’re smart enough to work for them. I still have problems with double-digit multiplication, I couldn’t do com-bin-a-tore-e-ul op-ti-my-za-shun!
Dot I guess it’s Co-exprise. What do they do?
Yakko Something called SLM.
Wakko Sea Level Measurement? In Pennsylvania? Cool! Do they have any yellow submarines?
Yakko I think it stands for Sourcing Lifecycle Management.
Wakko Oh. Well, maybe they have some baloney sandwiches. I’m hungry!
Dot You just ate two servings of Boston Baked Beans, drank enough tea for a party, and finished it off with an entire Boston Cream Pie!
Wakko I know … but I’m always hungry for baloney sandwiches.
Dot So which way to Pennsylvania?
Yakko Yakko licks his finger, sticks it in the air, and pauses.
This way!
Dot Let’s go!
  As per their nature, they start to sing.
Yakko, Wakko, & Dot We’re off to see Co-exprise
We’re gonna get our exercise
As it’s 600 miles away
But we’ll learn about SLM
And if it has a hidden gem
And how it can help you save
  The song goes on for a few hundred more versus which somehow manage to include references to roman aqueducts, visitors from Beetlegeuse Seven, South-going Zax, and something called PffT, which I always thought was the sound my cat made when she was cross. Including it herein would be almost as bad as subjecting you to Vogon poetry, so we’ll skip ahead to when the Sourcing Maniacs land in Wexford, PA.
Yakko, Wakko, & Dot We’re the sourcing-maniacs
…
Wakko Brooktree Road! I think we’re almost there!
Dot I see lots of office buildings!
Yakko This must be the place!
Dot Do you think they’ll talk to us?
Yakko Why wouldn’t they?
Dot They’ve been in stealth mode, hardly talking to anyone in the media besides the doctor and …
Wakko And?
Dot It looks like this place is access-controlled.
Yakko Well, rumor has it that a number of big companies that have DoD contracts are considering using Co-exprise’s solution. Companies that do military projects have to insure their suppliers have a basic level of data security in place, at least SAS 70!
Wakko Do you think anyone from the military could be in there now?
Yakko Relax, Wakko. I’m sure the military has forgotton all about that little incident where you mistakenly procured a real Tomahawk missile instead of the model rocket you were coveting.
Wakko But I almost blew up the valley!
Yakko But you can’t aim. It harmlessly exploded in the ocean. No harm done.
Wakko But the General said …
Yakko Look, someone’s coming out. Maybe we can talk to them out here. Would that be okay with you?
Wakko Ok …
Yakko Hi, I’m Yakko. Do you work for Co-exprise?
Man-in-Black Yes, I do. Yakko … Yakko … why do I know that name?
Dot I’m Dot.
Man-in-Black Dot. Hmmm. Wait a minute, you’re the Sourcing Maniacs!
Yakko & Dot That’s us!
Man-in-Black I heard you were let go from Ariba a while back. Sorry to hear.
Yakko & Dot Well, can you at least tell us about SLM and what you do?
Man-in-Black Man-in-Black pauses and thinks for a bit.
Well, we have been slowly spreading the SLM message, which we believe is the first major revolution to hit the direct sourcing space since one of our founders co-invented the reverse auction at GE, and we do want to get the Co-exprise message out when the time is right, so I’ll make you a deal. You promise to keep things under your hats for a couple of months, and I’ll tell you about the future of direct sourcing. Deal?
Yakko & Dot Deal.
Man-in-Black Wakko?
Wakko Wakko, who has somehow developed a fear of all men dressed in black, looks out from behind Yakko.
Yes, sir?
Man-in-Black Is it a deal?
Wakko Yes, sir!
Man-in-Black OK, follow me.
Dot Where are we going?
Man-in-Black The coffee shop on the corner. The most discreet place is a public place.
Man-in-Black So, do you know what Sourcing Lifecycle Management is all about?
Dot Managing the e-RFX and e-Auction process?
Man-in-Black Well, that’s what many people think, but it’s much more than that.

Many providers, particularly those that only service the indirect sourcing space, believe that sourcing starts with an e-RFX or auction for a commodity, results in a contract, and ends with order delivery. But things aren’t so simple in the direct space.

In the direct space, the lifecycle starts way back at new product design as you are sourcing not a pre-defined commodity part, but a custom-made part. You have to insure that the design is appropriate with respect to the capabilities of your potential supply base; you have to insure that the raw materials are available, in the requisite quantities, at the appropriate times, in the manufacturing regions; and you have to make sure that the projected cost does not exceed the maximum cost that would make the end product viable for sale in your target market. You also need to collaborate with your supply base in the design, as needed, to optimize the design for production.

Once you have the design, you need to go through a negotiation and collaboration intensive sourcing process to select one, maybe two, suppliers who will manufacture the part for you. This involves the sharing of confidential information, which needs to be done in a secure manner, as well as collaboration on forecasts and target delivery dates.

Once you have an award, you have to manage the procurement, which usually has to coincide with the procurement of other custom parts, which have to hit a single location at the same time for integration into the final end-product, which then has to be packaged and shipped to the end customer. This involves coordination between manufacturers, 3PLs, assemblers, and end retailers. Plus, you still have to insure prices are contract prices, charges are valid charges, and that the i’s are dotted and the t’s crossed, as you would in indirect procurement.

As you can see, whereas indirect sourcing can often be accomplished with just e-RFX, e-Auction, and Contract Management — with Spend Analysis and Decision Optimization for higher-value projects — direct sourcing requires extensive integrated project management capabilities, product lifecycle management, collaboration capabilities, Bill-of-Material management, and the ability to easily integrate with third party platforms.
Yakko, Wakko, & Dot We … we … never knew.
Dot We always thought it was just e-RFX, e-Auction, and good data management.
Yakko & Dot So how do you do all that?
Man-in-Black With a great code-base, of course! Although I have to be really careful with what I say now, especially until our next release hits beta later this year and hits full release late this year or early next year, I can tell you a few things that are already more-or-less public knowledge.

First of all, our platform is entirely new, built from the ground up to handle the direct sourcing process, which our senior management and developers are intimately familiar with. This allows us to do things that retrofitted indirect sourcing platforms can’t do.

Second, we have our own universal data model that underlies our application and it can integrate with data in over 1500 different formats.

Third, we have PLM built in at the core, and this allows us to enable direct sourcing professionals to track a project from beginning to end and always access the most recent data, regardless of which module they are in.

Fourth, we have fine-grained security that allows us to assign access permissions down at the data element level that indicates who can see the data, where (by IP), when, and how they can access it (read-only, view-only, etc.).

Fifth, we’ve integrated a compliance tracking module that allows companies to track regulatory requirements such as REACH, ITAR, etc. from product inception to product end-of-life, and insure that such requirements are met at every stage of the sourcing process.

Sixth, we’ve re-invented “spend analysis” for direct sourcing. Although I can’t say anything yet … we’re still finalizing the initial product offering and working on getting our first beta projects under way, I can say that our founders and developers have been involved with spend analysis since the days of FreeMarkets, and know why traditional “spend analysis”, developed in the indirect world, just doesn’t cut it in the direct world.
Dot Can we see it?
Man-in-Black Definitely not.
Yakko & Dot Can you tell us more about it?
Man-in-Black Not yet. But you’ll be able to read all about it soon enough.
Dot When?
Man-in-Black When the story hits the blogs. We’ll show the right people at the right time. Right now we’re totally focussed on getting the next release of the product out and pleasing our current customers, who include some of the bigger names in manufacturing, and getting beta projects underway at some of the biggest names in manufacturing.
Yakko & Dot Until then?
Man-in-Black You go on your merry way. Have a nice day.
The man in black gets up and walks away, leaving the Sourcing Maniacs speechless, again, as their view of the Sourcing World broadens with each vendor they talk to.