As we start the New Year, a focus of many operations will be setting goals to remain competitive. Today’s companies in the LBM/Component/Modular market are looking for ways to drive efficiencies throughout their manufacturing processes. Extending Lean Manufacturing principles and practices while establishing a platform for continuous improvement is key to improving efficiencies. Smart businesses know that tight cycle times and quick time-to-market with strong product quality helps drive market share and customer satisfaction. Unfortunately, a disconnect exists between high-level businesses and manufacturing systems, causing product variability and waste—which will only become more acute as product complexities increase.
A central focus of many companies is to reduce costs, but improvements in cycle time should never come at the expense of quality. Creating efficiency requires directed manufacturing that reduces production variability in cycle time, encourages/enforces best practices, and insists on reducing errors. Processes must be imposed and monitored to guarantee execution at the level of best practices. In addition, managers need a way to synchronize product volume and configuration with actual manufacturing capacity, so that it drives throughput and increases asset utilization while lowering inventory costs.
The bottom line is that our focus should be identifying and taking steps to increase manufacturing/distribution efficiency.
LBM operations and component/modular operations have more competition, more product variables, and more cost pressures than ever before. If we are to stay agile, we must improve flexibility, visibility, and operational performance across our operations. In addition, operations must seek ways to reduce costs associated with producing and distributing products. What is more, the bottom line depends on improving time-to-market and reducing cycle time by producing and bringing products to market faster. Today’s products can be very complex; manufacturing must be more agile and proactive to change management while scaling production volumes to meet demand. The ultimate victory on the competitive landscape is to win the customer’s loyalty. The first step on this path is to boost customer satisfaction. Efficiency, when implemented correctly, drives quality, which contributes to the customer’s experience, thereby creating opportunities to upsell the next generation of products.
Lean Processes are the Key for Driving Efficiency
To drive efficiency, we must transform our operations by automating, executing, and managing the performance of uniform business processes across the value chain. This means we have to tie together the integration of processes including our supply chain, production, maintenance, distribution, quality, and labor regardless of where these operations are physically located. The hard truth is that being reactive will not provide you with the efficiency you are looking for. We must be more proactive.
Strategies for Driving Efficiency
- Build and Maintain Good Lines of Communication. Efficient processes demand real-time visibility and flawless material movement driven by continuous, nonstop communication between warehouse management systems and production management. Within many operations in our industry, accurate information is not flowing in real time and remains siloed and inaccessible across disparate systems and environments. Most legacy applications are niche solutions that cannot meet today’s business requirements and tomorrow’s needs.
This siloed approach to information forms a knowledge gap that leads to several challenges. Therefore, businesses must confront these issues whenever they attempt to go to market with new products or build iterations of existing brands.
- Coordinate at All Levels and Departments. The siloing of information creates walls between different departments at the micro level, and between plants and geographies at the macro level. Time is the enemy when departments are not coordinating efficiently, and when information is not consistent. This has a direct impact on the time to build, on resolving a quality issue, on a stock outage, or on the amount of downtime due to equipment malfunction. Lack of collaborating and coordinating in real time creates inefficiencies that directly affect cycle time, costs, and quality. As a result, operations either carry higher inventory or increase the amount of WIP (work in process) thus losing time-to-market and eroding margins.
Instead, manufacturers must find a way to build a competitive “edge” into their core processes. Doing so demands a system for continuous improvement capable of identifying and sharing best practices for operational excellence. At the same time, this new system must also be flexible enough to manage the complexity of producing multiple products across geographically diverse facilities.
- Enable Repeatable Processes and Best Practices. The need for repeatable processes and the development of best practices is essential where the focus involves the lifecycle of products in the marketplace, efficient design-to-volume stages, engineering change orders, iterations of product variation, years of field service and upgrades, and eventual sun-setting strategies. To win in a highly competitive market, businesses must exceed customer expectations by offering a higher quality product with greater competitive focus on solving efficiency issues in your operation and in the field.
Solving the problem means implementing and propagating best practices in supply chain, production, and quality management, while driving operational excellence uniformly through the organization. When products require iteration, change orders should occur without major disruption of the supply chain or the production line. Achieving this goal requires uniform process changes and best practices at each location.
- Being Efficient Means Building It Right the First Time. True operational excellence means building products right the first time, even against rapidly changing demands. Businesses must contain and eliminate waste—in real time—removing process variability. The optimal solution drives efficiency by addressing the following seven forms of waste:
Inventory—Synchronize material and ensure the right product or inventory is at the right place at the right time.
Wait or Delay—Leverage a BPM-based system for manufacturing operations that contains a Unified Data Model (UDM), enabling visibility across the plant so management can proactively address issues.
Motion (Human)—Use directed manufacturing and material synchronization to help reduce excess inventory moves and unnecessary worker activity, and to direct activity to eliminate errors.
Transport (Goods)—Reduce excess transportation expense (expediting) by providing visibility to actual inventory and part consumption rates across the value chain.
Overproduction—Support pull-based production and real-time KPI monitoring to lower overproduction, while KPI monitoring ensures equipment activity and manufacturing activity follows tighter tolerances.
Defects—Integrate quality-directed manufacturing, interlocking traceability, and containment management for reduced scrap rates, rework, human error, and equipment-related quality defects.
Extra Processing—Identify and eliminate any processing that does not add value to the product or is the result of inadequate technology, sensitive materials, or quality prevention as waste.
- Improve Profitability and Protect the Brand. Implementing a unified manufacturing operations system can improve profitability, protect the brand for unmatched customer satisfaction, and accelerate cash flow. The results are real-time visibility of all operations, including WIP, inventory location, and quality issues. Breaking down the silos of information allows operations to focus on true operational efficiency. A unified solution for transforming manufacturing is not an unachievable “we hope it works” vision, but a reality today.
In 2019, are you going to drive efficiency and continuous improvement deep into your company’s operations? If you do, by the end of the year you will find that you have a solid foundation and a nimbleness that is necessary to capture new markets, or expand your operation through new products or services while enjoying increased profitability. The 4Ward Consulting team has helped several hundred operations increase efficiency and profitability. If we can be of assistance to you and your team, please give us a call.
Ben Hershey is CEO of 4Ward Consulting Group, LLC. When the industry needs an actual expert, they turn to 4Ward Consulting Group. 4Ward Consulting Group is the leading provider of Management and Manufacturing Consulting to the Structural Component and Lumber Industry. A Past President of SBCA, Ben has owned and managed several manufacturing and distribution companies and is Six Sigma Black Belt Certified. Ben has provided consulting to hundreds of Component Manufacturers, Lumber Dealers, and Millwork Operations in the past seven years. You can reach Ben at ben@4WardConsult.com or 623-512-6770.
© 2019 4Ward Consulting Group, LLC