How to Become a World Class Manufacturer

Friday, February 01, 2008

The jump from a single digit growth in economy to double digit is not happening for the past few years. Causes could vary from a global economic slowdown to manufacturing work being outsourced to cheaper destinations, competition from global giants and so on. While you'll have to live with a majority of them, the rest could be alleviated to some extent by inducing IT in manufacturing processes. A lot is already happening in this vertical. Let's take a look

Nothing impacts our lifestyle more than the quality of goods we consume. From clothes, automobiles, consumer electronics, food and beverages and so on. The consumer demands change each year as people crave for the latest and the best and it's up to the industry to keep up with the latest trends. And this constitutes the biggest challenge that the manufacturing industry faces. If we sieve through the annals of history and analyze how civilizations have evolved, we'll find a common phenomenon across all regions and ages-change. No matter how well humans have evolved through various ages, the quest for making good better, and better, best would never end. Making a great product isn't enough anymore. What matters eventually is not only how well we stave off competition but how we maintain an edge over it.

To satiate this appetite and to attain world-class standards, companies need to look at their processes from scratch. They face labor problems, rising raw material procurement costs, a large variety and volumes to generate, numerous suppliers to negotiate with, extensive inventories to track and transport, a high quality of standards to adhere to and so on. And this is just the inside part of the story. Outside, they have an ever-increasing need to acquire, satisfy and retain additional customers to remain profitable. So, to keep the machinery well-oiled and running, it is imperative that all pegs in the supply chain are managed efficiently.

From the period just after independence till the late 1980s, the manufacturing industry in India was state-controlled. In the absence of competition, companies were unwilling to innovate or go for aggressive brand building. Thankfully, post economic liberalization in the 1990s, computerization of legacy manufacturing processes took off in a big way.

Initially, IT was restricted to core applications- sales order processing, finance, stock control, warehouse management and production scheduling, using in-house software or customized packages. After the initial automation in departmental processes, came the next hurrah! Integration of silos of information segregated across different branches, spawning not just cities or regions or countries but across the globe. In came the next big wave in terms of enterprise wide task management modules, popularly known as Enterprise Resource Planning (ERP) systems. Toward the end of the 90s, most companies had adopted one ERP package or the other.

A leaf out of Henkel's book

Henkel CAC is in the flexible laminating adhesives business and has offered solvent-based adhesives since 1985 and solvent-free adhesives since 2002. According to Manikkam Subramaniam, AGM-IT, formidable challenges await tomorrow's manufacturing industry. He feels next generation factories must be able to manufacture many different products in small quantities, customize them according to strict client requirements or market demands, and deliver them quickly-all without major factory reconfigurations. Looking at what Henkel has done, he recalled, 'Earlier solvent adhesives were manufactured wherein the water increases along with adhesives. Presently, we manufacture solvent-less adhesives, which are used for lamination packaging industry. This has reduced the drying process from the eight to ten hours previously. Now the product can be used immediately. Similarly, we manufacture lot of products, which suit customer requirement. The challenge lies in fulfilling novel ideas of customers and delivering them quality products.' Manikkam Subramaniam, AGM-IT, Henkel How does one counter such challenges? Henkel CAC is exploring new ways of organizing factories. For one, they use distributed layouts, where they create products of different quality and quantity at dispersed manufacturing workstations, and link those manufacturing cells. Each cell manufactures a specific brand and when production ends, leaves the workstations free to join new or existing cells. This model promotes an efficient flow of materials, regardless of the product manufacturing sequence. The company is also looking at ways to make the process quick and economical.

Deploying ERP was a challenge during the initial periods when new implementation setups disrupted production lines, warehouses and supply chains. Today ERP systems are not only cheaper and quicker to implement, but the latest implementation methodologies ensure that large scale IT projects in future don't suffer from the same notoriety as their preceding legacy systems. So, you have an ERP module for just about any process you can name. Let's look at the key processes and resources in large manufacturing setups and see how IT solutions help.

Beware: This resource is precious
What good is machinery that does not get the right feed at the right time? For overall efficiency, it is imperative that your raw material procurement, handling and processing is taken care of in as efficient a manner as possible. A large enterprise typically has multiple sources of raw materials and components. Therefore, timely and safe deliveries of the same go a long way in maintaining efficiency at later stages. Gone are days when raw material was stored in warehouses for months or even days. Automation at all stages has brought this down to a few hours or even minutes.

Information about customer orders, raw material procurement and process scheduling is so well linked that different stages virtually feed and push each other. No more waiting for bills, signing acknowledgements or issuing instructions for job processing. All these are uploaded to the ERP backbone for all stakeholders. Once this is done, you need to ensure their safe transit across different stations on an assembly line. This is important 'cause apart from traversing large distances within the same shop floor, a company would have multiple assembly lines across different cities and even countries.

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