Old methods of production planning are no longer sufficient for responding to today’s dynamic, globally connected supply chain ecosystem.
Without question, Industry 4.0 is the wave of the future. The benefits of digitisation, encompassed in AI, an advanced generation of business analytic capabilities, or augmented reality systems, are slated to revolutionise the manufacturing industry. This Industrial Revolution is certainly a different beast from the ones portrayed in history books. However, where do SMBs (small and medium-sized businesses) fit into this business paradigm? More importantly, how can SMBs avoid being overshadowed in the race to the top?
Some key findings by Sapio Research may help inform our next steps:
- 65% of manufacturers do not possess real-time data about their suppliers’ manufacturing schedules.
- 68% do not possess real-time data about manufacturing volume across their organization.
- Only 30% have end-to-end visibility of their supply chain. This means that two-thirds of manufacturers have not yet implemented the tools to inject value generation into their supply chain.
- 55% believe that an aggregated view across the supply chain is necessary, but key constraints make it an unrealistic expectation.
Because 68% of manufacturers lack real-time visibility across the supply chain, they cannot provide decision-makers with the necessary data to make informed business decisions.
Today, a demand-driven global consumer base craves product differentiation at a cost savings, all without sacrificing quality and consistency in delivery. To remain competitive, a good production plan and at its heart, a comprehensive ERP system that provides a real-time, aggregated view of the supply chain, is a must.
Issues That A Good Production Plan Must Focus On
A good production plan is aimed at increasing throughput. Increased throughput (and by extension, shorter time-to-market intervals) is what generates increased revenues. An effective plan also increases real-time visibility into the manufacturing process, allowing SMBs to eliminate bottlenecks (inefficiencies), decrease excessive buffer stock holdings, optimize equipment deployment, and maximize worker productivity.
In the era of Industry 4.0, the traditional manual process of managing day-to-day operations is fast becoming unsustainable. Instead of wrestling with a confusing array of spreadsheets, production planners in resource-restricted manufacturing companies need a cost-effective solution for increasing business agility.
How An ERP System Can Help
An effective ERP (enterprise resource planning) system provides a visual depiction of production data. Production planners are necessarily focused on reducing time-to-market intervals and increasing throughput. Monitor’s revolutionary ERP software (developed over a 40-year span) gives production planners an advantage: it helps them identify dependencies in the current manufacturing process and in case of disruptions, plan for the deployment of alternative procedures. By providing this level of flexibility to production planners, SMBs can leverage a leaner manufacturing process to their advantage.
The concept of lean production is closely related to Dr. Eliyahu Goldratt’s Theory of Constraints. By reducing waste, lean manufacturing generates reduced lead times, improved throughput, and increased profits. To increase throughput and lower OPEX (operating expense) costs, however, production planners also need to identify bottlenecks or constraints within the manufacturing process. With the combination of old-fashioned floor-monitoring and Monitor’s ERP software, planners can identify whether the constraints are physical, policy-related, part of a company’s unique corporate culture, or market-driven in nature.
Using the Theory of Constraint’s five focusing steps, production planners will then be able to exploit the constraint and ensure that all parts of the process support the needs of the constraint. “Exploiting the constraint” refers to maximizing the constraint’s current utility, without making any expensive operational changes.
The Monitor ERP system’s 6 integrated modules give production planners a bird-eye view of the end-to-end supply chain. This is a crucial advantage in determining how constraints can be eliminated with minimal expenditure and upheaval. As the demand-driven economy fuels the rising relevance of Industry 4.0, Monitor Systems is slated to support the shift from traditional MRP (material requirements planning) to DDMRP (demand-driven materials requirement planning).
Where MRP is focused on anticipated supply generation, DDMRP relies on actual demand allocations to align with today’s supply chain complexities. With DDMRP, SMBs can avoid the dreaded bullwhip effect, where faulty supply forecasts lead to supply chain dysfunction.
As an enabler of Industry 4.0, we have the expertise and experience to help SMB production planners thrive in a demand-driven economy. Our product’s ability to pinpoint WIP inventory accumulations (which typically precede constraints) is a key feature of our software. Interested? Find out more here.
1) Sapio Research Market Report.
2) Monitor ERP website.