July 1997, Volume 3, No. 7 Production Management Systems

Manufacturers using production management systems are finding that these systems lead to improvements in production quality, reduced cycles, increased labor productivity and improved yields, among other benefits. These systems provide data that can be used to trace quality problems back to events such as: production line, machines, operators, suppliers and process variables (temperature, pressure, etc.). According to Automation Research Corp. (ARC) (Dedham, Mass.; http://www.arcweb.com), an industry research firm, its recent poll of manufacturers found that companies took different approaches (sometimes multiple) toward using production management systems to speed production cycles. One approach survey respondents spoke of was to track down-time in real-time and send in "SWAT" teams to solve the problem. Another approach was to track down-time and maintenance issues, and to record the causes of problems (or even record the "best guess" as to the source of the problem). The biggest, or most common, problems were solved first. Production management systems assist in this process by helping to eliminate paper and allowing the data to be easily assembled electronically. These systems can also be used to help optimize factory floor scheduling. Improvements in labor productivity resulted from either producing a greater amount of goods with the same number of people, or from producing about the same amount of goods with fewer people. One manufacturer, who had developed a custom solution, has been able to eliminate over 30 highly paid process control engineers, according to ARC. Those manufacturers who experienced improved production yields were more likely to have developed custom solutions using an optimization product, or used neural network technology to develop an advanced solution, than to have installed off-the-shelf manufacturing execution systems (MES). Other benefits cited by manufacturers included improved inventory accuracy, reduced inventory, reduced capital expenditures, quicker delivery capabilities and improved order accuracy. Standard production management systems are designed to track, in real time, work-in-process activities and inventories. Reduced inventory levels result in lower inventory carrying costs. Improved inventory accuracy leads to savings because inventory is less likely to become outdated and have to be marked down or written off. Production management systems were also seen as being linked to customer service (quicker deliveries, improved order accuracy) for some users. Two respondents to the ARC survey had built integrated production management/warehouse management or production management/logistics solutions; one used Wonderware software to do this, while the other heavily customized Interlink's warehouse management system. In some industries, the final production step occurs in the warehouse. For example, one manufacturer reported that the final step of computer system production occurs in the distribution center. This is where software, modems, sound cards, speakers, etc., are added to meet customer specifications. Some survey respondents linked reduced inventory with customer service issues such as speedy delivery and order accuracy. The faster a manufacturer is able to respond to an order, the less inventory they need to carry. One manufacturer reported that the reduced production cycles that came with the production management system had helped them move from a build-to-forecast to a build-to-order production methodology. This move allowed them to eliminate over 90% of their inventory. Reduced capital expenditures was also cited by some users as a benefit. When a manufacturer's sales are growing, they eventually reach a point where they need to buy more equipment and factory floor space. These expenditures can be deferred if the company can increase their production cycle speeds or yields. In some cases, the deferred expenditures can be substantial.

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