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