How to Become a World Class Manufacturer

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.

Tracking from start to finish



To remain competitive, shop floor managers need not do anything special to

their processes. Apart from cutting costs, they need to deliver optimum quality

at all periods of time. One solution is to keep a check on what's happening in

front of them and at their backs (on the floor) and see how efficient those

processes can be made. Tracking raw materials and components used in finished

goods is one way of keeping a check on processes. We see an increasing use of

bar coding across all manufacturing companies. Bar codes provide a fast, easy,

and accurate method of keeping track of critical components from raw material

procurement to the delivery of finished products. The use of bar codes reduces

the need for supervisors to keep a physical check on costly parts that go into

the assembly of a product, an enormous task in itself, one that saves employee

time and increases productivity. An organization typically needs to track

receipts of goods and raw materials, they need to track the movement of these

raw materials or components through different stages of assembly lines, amongst

different factory locations, the sale and dispatch of goods across various

locations and the status of goods in inventory at any point in time.

Heavy work this, sometimes even unnecessary, but scanning of information at

different stages helps update your ERP systems and ensures your wares are at the

right places.

Once your raw material has been tagged and is ready to process, you need to

follow best work order processing practices to ensure that your inventories

don't pile up and your customers are not deprived of timely deliveries. There

are quite a few manufacturing theories in place. Lean manufacturing is one of

them.

lineInformation Technology @ Maruti Suzuki

What does it take to become the no. 1 compact car manufacturer in a 1.1 billion strong nation? Amongst others, a lot of technology, a lot of capital to implement that technology and best practices in manufacturing. We visited the company's plant at Gurgaon to get a first hand account of how Information Technology is driving their compact car assembly lines, to churn out a car every 22 secs! According to Rajesh Uppal, CGM-IT, the company was amongst the Rajesh Uppal, CGM-IT, Maruti Suzuki first in the business to adopt IT, way back in 1985. Oracle Apps forms the ERP backbone and applications at all stages are neatly integrated with this backbone. Information related to critical components such as chassis, engine, fuel tank, head lamps, battery, etc is uploaded on the system and tagged to car movement along an assembly line. Without blinking an eye with each other, supervisors at different stages know the status of each and every car being rolled out. All of company's branch offices and 750 dealer locations form part of this backbone and there's a continuous data interchange right from order processing to car assembling to warehouse management and car delivery. Uppal further adds, 'The company was one of the first in the country to introduce online information access through Internet for vendors and suppliers.' Supply schedules are communicated automatically to vendors every two hours for supplies throughout the day. Maruti has also implemented a GPS and GPRS based tracking system for outbound car carriers transporting finished vehicles from the factory to dealers. A mobile device is installed inside the truck which has an antenna to communicate to the GPS satellite for location information. The device sends the location information through GPRS. The tracking software displays the vehicle on the map, which can be viewed by various end users through web based interface. It also helps reach out the trailer struck in any kind of crisis like flood, terrorist attack or riots. And the overall impact-the company was able to ramp up production from some 300,000 cars in the year 2000 to about 800,000 at present. Some 18,000 consignments from different suppliers reach Maruti everyday, still the average domestic inventory remains lean. In effect this means cars worth Rs. 550-660 million are sold every day, all at the click of a mouse!

Shed flab, go Lean



Yes, Lean is the way to go if you want to roll out a product not just every

month, a day or even a minute, but every second. Lean manufacturing incorporates

best practices in every possible quarter during manufacturing processes, and

eliminates waste (non-value added activities) that increase unnecessary costs,

lead times and inventory storage. Most ERP systems today include processes that

might not be required for your specific manufacturing setup. The reason being

they are based on rigid modules and even though you customize them, they still

dictate processes that prevent changes based on business dynamics. By

incorporating lean manufacturing practices, you would actually schedule your raw

material procurement and production based on actual orders received and schedule

manufacturing activities based on daily capacities. In fact, goods can be

produced in any sequence based on availability of machinery and not necessarily

in sequence. The same applies to storage, packaging and delivery. We've seen how

production can be scheduled based on raw material availability, similarly, time

of delivery would dictate the order in which they are delivered. All this

information can be routed and processed through a work order processing module,

which ensures the number of goods produced is directly linked to shipment

schedules.

Job scheduling: Ignore to your peril!



You have raw material in place, you know the time of delivery and your

production capacity. But still the product needs to be finished before it can be

delivered. For this, you need to streamline your work order processing from the

initial request from a customer to completion of the product. Workers need to be

assigned tasks and orders regularly and the staff should be able to check

on-line to see what work has been assigned. Through a work order processing

module they can update information about different jobs being processed on the

assembly and their status. The staff also gets relevant information on job

requirements, such as expected due date/time, job status and costs involved. A

production supervisor can issue work orders, develop schedules and track

production costs. It suits those companies more that are engaged in

assemble-to-order, engineer-to-order or make-to-order processing. When used in

conjunction with software to generate bills of materials, you can identify the

materials required to produce a product by looking at the appropriate bill. Such

modules help in reducing the paperwork associated with the movement of jobs

through the shop floor across various stages. Through such modules, a supervisor

can also evaluate costs of components that have not been accounted for, examine

variance from standards, check for material shortages, shop floor capacities and

confirm tool requirements. Users can also pull out reports showing actual value

and amounts of product shipped over a period.

Supply Chain Management and SOA



Ever since the rage for ERP implementation in manufacturing industry picked

up dust, Supply Chain Management (SCM) has been a favorite area of reform for IT

decision makers. The emergence of the Internet, demanding customers and the

pressure to pump up the movement of raw materials and finished goods across the

entire supply chain are pushing the boundaries of supply chain automation. The

business volumes are increasing and so is the ecosystem for IT architectures to

evolve and address the tremendous opportunities. Lean manufacturing including

Just-in-time (JIT) manufacturing principles, and vendor-managed inventory are

some of the examples of manufacturing theories that drive automated

collaboration, and therefore increased integration across a company. SCM helps

you reduce inventory and cycle-time costs, improve transportation of goods and

materials across the factory branches and vendor locations, thereby improving

operational efficiency. To add further bite to your SCM system, lean over to

Service Oriented Architecture or SOA, for short. More so because manufacturing

and logistics go hand in hand. One can't do without the other. The need to

integrate internal applications with those outside the company (with your

customers and business partners) is the the primary driver for SOA adoption.

As the cost of procuring raw materials for production is increasing, so is

the cost of transporting and storage of both raw materials and finished goods.

Therefore, the manufacturing company as well as the logistics provider (be it an

outside vendor or a dept within the company) need real time information to get

things moving at the right pace. Nobody wants an inventory overload in

warehouses or delayed shipments. So, one of the core applications that needs to

be exposed is online tracking of consignments. Through interlinked applications,

all stakeholders-shop floor managers, warehouse managers and logistics

providers, can be provided real time information about inbound, outbound and

third party shipments. Such a move would also improve production efficiency as a

manufacturing company that imports raw materials can benefit from information

regarding the delivery date and time of raw materials and streamline their

production cycles accordingly.

Keep your customers glued



The pre-liberalization era, with the dominance of PSUs, meant endless

waiting lists for customers, desirous of the latest machines, was in stark

contrast to the 'customer is the king' mantra of modern times. To ensure highest

levels of customer satisfaction, you need to maintain a well-knit continuous

loop of feedback between the customer and delivery systems. The ability to

extract intelligent information from customer interfaces and providing a quick

response to opportunities and feedback holds the key to remaining competitive.

Needless to add, companies have invested neck-deep into Customer Relationship

Management (CRM) systems that track and analysis wide ranging info related to

customers, from order forecasting and forward-looking applications to

maintaining databases of prospective customers to generating leads in actually

acquiring new customers, besides bringing down customer acquisition costs. As we

look around leading CRM solutions, we'll notice that even though user interfaces

of order management systems are getting simpler and simpler, their back end

complexity is increasing to make them juicier and meatier.

Let's recollect what you would like a typical CRM system to have:

1. Order management applications that are integrated with supply chain
   
   networks.
2. A separate database for customer requests, with a clear distinction
   
   between regular, priority customers and casual buyers.
3. Provision to facilitate entries by all stakeholders, such as wholesalers,
   
   sales agents, priority customers and even general public.
4. Wireless and mobile applications for PDAs, notebooks and other mobile
   
   gadgets used by the sales force.
   
    

A good company would keep a record of priority customers and their

transactions. A database of such transactions would show track record of the
customer in terms of order placement, demands, payment history and the volume of

business transacted. Such a CRM solution would keep a record of each sale made

to a customer and also a scope for sales order revision. By tracking customer

sales volumes, one can offer special discounts and price packages. Your

experience with customer requirements would help you to align your product lines

and equipments accordingly.

Keeping employees in the loop



Labor unrest has since time immemorial been the biggest bane of the

manufacturing sector. Union strikes, factory lockups, factory gheraos, violent

protests and clashes between security staff and laborers have been witnessed

umpteen times in history. Singur in West Bengal comes to the mind instantly.

Ironically, all this at the time when economy is nearly touching a double digit

growth rate and with more and more companies moving on from proprietorship to

the 'limited' category. Having touched on the various processes of manufacturing

and how we have implemented IT based ERP solutions for each process, let's also

look at what kind of innovation companies have brought in for their employees.

There are two ways at looking at this issue. One, is the compulsory

guidelines from the government and the regulatory bodies that entail the

security and working conditions for employees on a shop floor and other, issues

that are outside the ambit of law and have been done voluntarily by companies to

not only address employee concerns but also to make employee related processes

more efficient. Samsung Electronics has come up with LCD kiosks with a touch

screen interface across its factory floor for employees. These kiosks provide

interaction with the management on all issues of employee importance, such as

salary, leaves, incentives, awards and recognition, transportation and other

admin issues. Moreover, information on all production related issues is

instantly relayed across the entire factory in a few minutes. Conveniently

placed scanners let employees submit almost all kinds of documents to the

management without having to leave their workspace.

Similarly, car giant, Maruti has come up with an online processing

system-Oasis-that has brought all business processes within a single network so

that employees can satiate their needs online. These services vary from placing

online leave applications, to accessing salary details, procurement of goods and

services and so on. Oasis also acts as a knowledge repository for all employees

and can be used to disseminate business updates across all divisions and study

global trends in automobile industry.

Adeesh Sharma, Jasmine Desai and Vishnu Anand