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Are Outdated Practices Anchoring Your Profits?

Written by CyFrame

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Are Outdated Practices Anchoring Your Profits?

Are you confirming orders, scheduling production and managing inventory the same way you always have just out of habit? Do you believe your competitors are also satisfied using the same old management practices?

Existing management controls and practices, although once successful, may not be sufficient to provide your enterprise with the agility, flexibility, and margins to obtain the results you need to be competitive.

The limitations of manually collected and managed information, the use of planning whiteboards/magnet boards and spreadsheet-based schedules that change constantly introduces a real risk of:

  • Running the wrong job at the wrong time
  • Unplanned and unnecessary changeovers
  • Late completions and constant  delivery extension
  • Material shortages and purchasing complexity
  • Loss of efficiency
  • Loss of profitability

 
Disruptions, duplication, and errors may reduce actual production by as much as 20% from your true capacity. Companies that are not managing their critical information in an integrated and simplified fashion are paying a high price and giving competitors a huge advantage.

Take it from folks who are in and out of molding and extrusion plants every day: if your production scheduling, materials planning or procurement people are writing things down with pencil and paper or keying information into spreadsheets, your company is losing out on a lot of opportunity along with real money and profit.

Of course, every company hopes that they are running production efficiently. But yesterday’s best practices may not be driving the business results you need to be competitive today.

Lack of real-time information means that production issues, rejects, downtime – or worse, quality problems – may not be detected until significant quantities of product are produced, costing valuable production time, raw materials, labor, and the opportunity to complete scheduled work and satisfy customer expectations.

Limited visibility

These limitations of manually collected and managed information include the use of planning whiteboards/magnet boards and spreadsheet-based schedules. Plans and schedules change constantly so manually maintained displays are always out of date. This introduces a real risk of running the work orders out of optimal sequence, misuse of allocated raw material and unplanned changeover and downtime.

In fact, disruptions and errors are likely reducing actual production by as much as 20% from what it could be with proper sharing of data and departmental synchronization.

Customer Service Improvement

Schedule boards and spreadsheets only exist in one place so they are not visible to customer service. In order to confirm an order, customer reps usually have to make multiple calls, speaking to planners, material managers, purchasing, and production control, such that they are unable to promptly provide the customer with a reliable estimate of when they can expect their order to be completed. The same is true with a status inquiry – customer service can’t answer that kind of question without having to poll multiple additional resources, these results in delays and additional burden on the organization.

Also, the lack of up-to-date information where it is needed can lead to costly surprises with respects to material consumption especially if rejects and production efficiency is not being reported live.

Holding extra raw material can cover some of these issues but not all, and the burden of excess inventory can weigh heavily on cash flow.  Best practice dictates a shared interactive production scheduling / MRP and production efficiency reporting to avoid unplanned disruption.

The solution

In the age of intelligent real-time manufacturing, leading plastic processors are leveraging enterprise-wide solutions to become laser-focused on reducing tasks to their simplest form while leveraging data gathered by integrated systems to enable the sharing and visibility of real-time actionable information, which is key to getting the most out of company resources and readily supporting excellence in customer service.

Integration throughout the enterprise and supply chain increases value through by the ability to detect trends, isolate problems take corrective actions and provide early warning of changing conditions.

An enterprise-wide solution provides you with control and efficiency so the communication between departments becomes transparent, for example:

  • Production and planning need to know and readily communicate changes in capacity along with knowing any changes in priority or demand
  • Materials managers and purchasing need to keep abreast of last-minute production change decisions and overruns
  • Many departments need to be abreast of production rates, quality issues, finished good inventory, and the sooner that information is available, the better the chances of managing proactively.

 
Enhanced enterprise visibility and a shift from after-the-fact reporting to proactive management can yield major value to a business bottom line and service levels especially when shop floor data collection is simplified and automated to drive live actionable data. Automated data collection provides managers with real-time information of materials, production, demand, inventory, and equipment status that lead to minimizing rejects and downtime.

Secondary downstream data entry also introduces enormous opportunities for error as manually captured data can be illegible, incorrect, late, lost, and often has to be duplicated wasting time and causing additional confusion when team members try to reconcile conflicting information.

Any manual recording of information on paper or in spreadsheets isolates vital data, making it unavailable to the rest of the organization, thus preventing any efforts to actually optimizing production capacity. These outdated practices steal resources ability to focus on adding value to the business by bogging them down in constant administrative activities. Margins could be easily 10% lower than expected due to mistakes, poor tracking and lack of real-time standard to actual cost control.

True enterprise efficiency is attained when real-time information, run rates, and job status information become accessible instantly, when complete actual costs are readily compared to accurate up to date standard costing, and when profitability can be measured and corrective measure put in place. This is especially important in competitive markets where margins are thin and small changes in efficiency or resin pricing can have a big impact on bottom line profitability. You don’t want to be quoting future work based on misleading and understated actual and standard costs!