When manufacturing execution system (MES) applications became popular in CPG plants and factories around the globe, manufacturing executives thought they were getting systems that would help them monitor the equipment and production on the factory floor.
For most, that's exactly what an MES delivered. However, because few executives failed to challenge the assumption that an MES would also translate to improved profitability, these applications failed to deliver what consumer packaged goods (CPG) companies actually needed.
A recent AMR Research survey of 100 CPG and food/beverage manufacturers revealed that although the use of an MES often leads to tactical operational gains through improved data measurement and collection, it has failed to make a significant impact on operational efficiency, overall profitability and executives' confidence in the accuracy of their plant KPIs -- a lack of confidence that continues to hamper decision making and performance improvement.
As global capital markets remain constrained and consumers continue to trade down to the value end of the product mix, CPG executives are increasingly looking at the plant network as a primary source of margin protection across their product mix. Through this process, many are finding that MES applications simply cannot provide answers to critical questions like "What actions on the production lines will generate savings" "What SKUs can we relocate?" or "How do we reduce changeover times?"
As a result, a growing number of manufacturers have been making a shift from MES applications to manufacturing operations management (MOM). MOM is a new alternative to managing and improving factory operations and execution in real time -- one that is entirely focused around the specific actions that deliver improved profitability.
Let's take a look at the top five reasons companies continue to head in this new direction.
#1: MOM Goes Far Beyond Mere Data Collection and Business Processes Automation
A byproduct of the "if you can't measure it, you can't fix it" era, MES applications have been deployed under the assumption that when you have more data, you can uncover and capitalize on more improvement opportunities.
But what many executives are now realizing is that an MES, although an excellent tool for data collection from machinery, does not in any way improve a process or fix an inefficiency problem. It simply automates the collection of the data related to the problem -- or in other words, it reveals the result of the problem's existence.
Simply collecting data does not create a framework where the workforce can take immediate action to resolve the problem or to improve the outcome. A manufacturer already knows when there are problems; an MES simply helps them recognize this faster. It does not actually help solve the problem.
Proponents of MES applications point to examples of specific improvements in the performance of a specific piece of equipment or a specific line. But what is often left out of the story is the real, material impact such measures have had on increased production, lower cost per case or the output of the factory as a whole -- factors that have now become critical for margin protection.
Many CPG manufacturers now realize that they already possess the assembled internal knowledge to solve these problems. What they lack is a framework to apply that knowledge for tangible and repeatable business improvement. That's where MOM comes in.
#2: MOM Helps CPG Companies Process and Act on Metrics
Instead of first collecting massive amounts of data in order to further analyze what operators and supervisors already know MOM approaches the issue from the opposite end.
MOM rightly assumes that plant workers and management already have the collective experience and intelligence to know the best ways to improve their own performance, as long as they also have access to some straightforward and structured tools and techniques. MOM builds these proven best practices and real-time capabilities directly into the software, thereby providing workers with the tools and framework they need to take appropriate and timely action.
MOM systems enable this timely action by providing constant visual communication to operators and supervisors of performance trends and targets. They also enable productive short-interval control meetings where metrics such as OEE, uptime and yield are evaluated and acted upon. And they remove the traditional paper-based reporting system that only serves to overwhelm the shop floor workers.
Just as important, MOM systems can provide this functionality pre-packaged to fit a specific industry sector. This prevents the manufacturer from having to research, design, build and then "pilot" the application to make it work for their specific situation.
#3: In Plant Performance, MES Has No Statistical Impact
Another interesting finding from the AMR survey was that companies surveyed that had implemented MES applications still faced the same operational challenges as those that had no MES in place.
In fact, companies using MES applications had not seen a significant impact on their ability to identify unused capacity, cut labor costs or effectively diagnose operational or in-plant problems -- factors that directly drive productivity, profitability and responsiveness.
Although using an MES clearly has an advantage for automating business processes and data capture, the survey results revealed that employing an MES does not, by itself, prompt the kind of action that drives improvement.
#4: MOM Employs a Feedback Loop That Makes Action Unavoidable on the Shop Floor
Instead of collecting massive amounts of data that are difficult to communicate and digest and that yield minimal practical feedback to the shop floor, MOM provides operators with a means to help solve problems on their line as they are actually running it.
The reason is simple: MOM recognizes that there is little value in knowing after the fact that you lost an hour of production that could have been avoided. Instead of dwelling on what can't be fixed, MOM empowers the workforce to avoid such losses before they happen. For instance, when workers can self-monitor and respond faster, what would have been a wasted hour is now a 10-minute loss, which means that more product can be produced with little management intervention.
Easy-to-use touch screens allow operators to add key intelligence, such as root causes for stoppages and rejects, all in real time. They help ensure that changeovers are performed on time, by setting expectations and tracking actual changeover time. And they provide a fast and accurate means for the shop floor to report hidden defects and downtime as they occur.
Manufacturers using MOM have found that when problems are suddenly visible and within workers' immediate sphere of influence, the workers can't help but take immediate action to solve them. In essence, action becomes "unavoidable."
#5: MOM Considers the Whole Plant Picture
Finally, unlike MES applications, which focus strictly on plant and equipment measures, MOM looks at the whole plant picture, including the impact of the human factor on overall financial performance.
How important is the people factor? A recent study carried out by CDC Software on more than 100 food and beverage plants and more than 700 production lines revealed that only 18% of improvement opportunities were plant and equipment-related.
Yet 81% of the opportunities revolved around instituting or improving basic people-related issues and processes -- practices such as disciplined day-to-day review points, strict adherence to procedures and appropriate basic skills training -- all of which MOM helps facilitate by providing a simple, highly-visible real-time framework.
Tough Times Call for a Different Approach
As economic conditions continue to deteriorate, CPG companies must find opportunities not only to preserve and uncover profits, but to do so without major capital expenditures. To accomplish this, they must begin to migrate away from meaningless data capture and go back to the basics of running efficient plants.
MOM is a critical step to achieving this vision. For hundreds of CPG manufacturers worldwide, MOM provides the framework to avert small losses as they happen, manage runs more efficiently, instill confidence in the information being gathered and enable workers at every level to act decisively and positively on that information.
Mark Sutcliffe is the president of CDC Factory, a division of CDC Software --- an enterprise software company. www.cdcsoftware.com.
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