Manufacturers across the globe are driving new initiatives to maximize productivity. Inevitably, the focus on supply chain has increased, thus calling for improved visibility into plant operations and other metrics tracked within the shop floor. Organizations want to improve the return on assets at plants and reduce operating cost by decreasing the cost of production using digital technologies. A digitized Manufacturing Performance Management solution with a consistent set of definitions and calculations and KPIs can help manufacturers drive performance.
Why Digitize Manufacturing Performance?
Manufacturers face varied performance management challenges stemming from a lack of standardized KPIs across sites, varied methods of performance and target area measurement, and non-availability of KPI baseline scores for comparison. Inconsistent data capture, absence of a financial perspective on operational performance, and difficulty in identifying the root cause of manufacturing system losses complicate matters further.
Enterprises can digitize manufacturing performance management by focusing on not only monitoring the performance of equipment, but other cost drivers such as materials, manpower, and utilities as well. As a manufacturer, this helps move away from the traditional method of monitoring only machine performance (overall equipment effectiveness) to checking performance across resources, thus enabling a more holistic assessment. Implementing a solution built on the World Class Manufacturing (WCM) principles of zero waste, zero breakdowns, zero defects, and zero stock can improve performances on the shop floor during manufacturing.
How digitization of performance management works
Digitizing manufacturing performance starts with making the data available from the control layer to the manufacturing operations management system, which analyzes the data to identify improvement areas (as shown in Figure 1). The performance management system should not only be able to monitor losses across resources, but also provide a way to compare losses across categories. For instance, manufacturers should be able to identify which incident will impact them considerably — a material loss of five pounds or a machine downtime of 15 minutes. This can be achieved by using the cost deployment pillar of WCM, wherein all losses across machines, materials, manpower, and utilities are converted to a common cost denominator for comparison. This not only brings parity across categories for ease of comparison but also helps in making the decision-making process easier. Digitizing manufacturing performance management will help manufacturers move away from standard allocation-based costing to activity based costing, thereby improving the accuracy of cost calculations.
Whats in it for Manufacturers?
Digitizing performance management helps manufacturers stay ahead of the game in a dynamic landscape. It enables them to compare the cost of conversion for an SKU across multiple geographical sites and make cost-based production decisions. Enterprises can also enhance decision-making related to promotional and other marketing activities, enabling better marketing decisions. Organizations can not only evaluate current production performance, and assess gaps with respect to defined baselines but also link manufacturing operations with financials, and identify target areas for improvement. This helps trigger a continuous improvement cycle. How do you plan to respond to this next wave in manufacturing? Please share your thoughts in the comments section below..