Tag: industrial internet of things

How the Internet of Things Can Shorten Lead Times

A new study in Modern Materials Handling reports that 86% of industrial organizations are currently adopting IoT (Internet of Things) solutions, and 84% believe those solutions are very or extremely effective. Manufacturers lagged behind the industrial segment as a whole, with only 77% of manufacturers implementing IoT in their facilities.

So, what is holding manufacturers back? Anecdotally, I can share that many of the manufacturers I talk to intend to implement the IoT in their facilities or have already started a project. But, they are less sure about their results than the respondents to the study.

In this series of posts, our goal is to break through the hype and the uncertainty around the IIoT (Industrial Internet of Things) by focusing on projects you can execute and for which you can achieve a measurable ROI in 2018.

In the first post, we looked at how the IIoT can help manufacturers lower inventory levels. (Read the full post here.) We also shared how one of our customers was able to reduce inventory by as much as 55% in one factory, while at the same time reducing lead times from twelve weeks to two.

Some of the customers I talk to are initially skeptical that they can both reduce inventory AND reduce lead times. Achieving these results at the same time seems counter-intuitive because they think they need to keep high levels of inventory on hand and in process to meet customer demand. In today’s post, I want to unpack that by focusing on how the IIoT and Demand-Driven Manufacturing (DDM) can help you achieve both objectives in your facility by implementing one specific manufacturing philosophy.

The IIoT in action: TOC

Today’s IIoT project leverages the Theory of Constraints (TOC) or constraints management principles. Like the Kanban project we talked about (see How the IoT Can Help You Lower Inventory Levels), TOC isn’t inherently an IIoT project. You can implement TOC manually, but when IIoT data-sharing technologies are leveraged, your TOC efforts are turbocharged for even greater benefit to your bottom line.

Many of you are, no doubt, familiar with TOC, but let’s quickly cover what it is so we’re all on the same page. TOC says that, in any given manufacturing environment, there are a small number of constraints that limit the throughput of the factory. Increasing productivity at any other point in the system will not increase overall productivity because the constraint cannot keep up.

For more details on the four types of constraints, refer to my recent post: It’s Time to Revisit Your Constraints.

In the Demand-Driven Manufacturing environments we work in, we apply constraints management technology (based on TOC) to constraints in the system. By understanding the constraints – and their capacity – we can set the optimal rate of flow to that constraint (see CONLOAD™ Scheduling Methodology: Set the Right Pace for Production). This reduces congestion and keeps work flowing throughout production. Real-time, IIoT data allows for automated adjustments based on changes in demand, priorities, etc.

So how does synchronizing the pace of production to the constraint in real time lower both lead times and inventory levels? In a traditional make-to-stock manufacturing environment, as much as 90% of cycle time is queue time, that is, a part waiting for its turn on the machine or in the work center. By synchronizing the flow of material to the constraint in the system, material spends less time in queue and cycle times are shorter. And, because less material is in queue, WIP drops as well.

Related Post: It’s Time to Revisit Vendor Managed Inventory

Some of you may be thinking, “Ok, that explains how cycle times and WIP inventory drop, but how does constraints management affect lead times? We measure lead time from the time an order is taken until it is shipped. I still can’t manufacture anything faster than my constraint, and it doesn’t lower lead times if I can’t start the order any faster.”

Good point. But, what we’ve found is that lead time typically drops as well for a variety of reasons such as better prioritization of projects at the constraint and increased capacity. When all work throughout the facility is synchronized to the pace of the constraint, everyone knows what they need to do next, and no time is wasted running orders through the system that aren’t a priority. This is especially impactful in facilities where changeovers take time either because of retooling or a paradigm constraint, such as a focus on productivity at every workstation that slows the overall factory down.

In my last post, I shared the example of Dynisco, a leading manufacturer of materials-testing and extrusion-control instruments that reduced inventory levels by 55% in one of its facilities while at the same time reducing lead time from 12 weeks to 2. Today, I want to tell you about another Synchrono customer that addressed a lead time issue with Demand-Driven Manufacturing.

Rex Materials Group (RMG) manufactures custom vacuum-formed ceramic-fiber products. In the late 1990s, the company implemented TOC and modified its home-grown systems to apply drum-buffer-rope principles. That system worked for a while, but eventually, the company decided they needed something better to feed their continuous improvement efforts.

RMG implemented SyncManufacturing™ synchronized planning, scheduling and execution software from Synchrono® across three separate facilities. The first facility went live in 90 days and the second and third in 45 days each. By accelerating their TOC efforts, RMG went from lead times of three to four weeks, on average, to delivering 30-40% of products within five days of receiving the order. They can even ship some overnight. Read the full case study.

Want to learn more? Here are some related resources that can help you get started on your next IIoT project in 2018:

Video: What is Demand-Driven Manufacturing?

White Paper: Three Key Strategies of Modern Demand-Driven Manufacturing (Watch the video here.)

Video: Manage Manufacturing Constraints and Optimize Production Flow with CONLOAD

February 12, 2018
How the Internet of Things Can Help You Lower Inventory Levels
McKinsey Global Institute predicts the Industrial Internet of Things (IIoT) will have an economic impact of up to $11 billion by 2025. As much as $3.7 billion of that is expected to come from manufacturing improvements in things like operations management and predictive maintenance.

The word seems to have gotten out. In a 2016 study conducted by Morgan Stanley and Automation World, 70% of respondents said it was important for their company to adopt an IoT strategy within the next five years. In fact, Morgan Stanley expects IIoT-related CapEx spending to increase from approximately 8% to 185 over the next five years.

Predictions like these leave many manufacturers with questions such as: How can the IIoT help my business? How can we get our share of that $3.7 billion pie? If I’m going to increase my CapEx spending on the IIoT, where should I focus those dollars? And, what kind of ROI can I expect?

In a series of posts, we’re going to focus on IIoT projects that meet several criteria:
- They don’t require a major overhaul of processes or retooling the factory floor.
- Capital outlay is often minimal.
- They support key manufacturing philosophies like Lean, Theory of Constraints, and Six Sigma.
- The ROI is real and measurable.
- They can be executed relatively quickly, often providing an ROI in less than two months.
The High Cost of Excess Inventory

Lowering costs will probably always be a top goal for manufacturers, so we’re going to begin our series by tackling this challenge. One of the best (but not always the easiest) ways to lower costs is to lower inventory levels. Here’s a quick way to see how much your excess inventory is costing you:

The commonly accepted carrying cost for inventory is around 20%. (Different industries might have a higher percentage, such as when the inventory requires special handling or is perishable.) If a manufacturer has an annual inventory value of $1 million, lowering that by 10% could save $20,000. If the manufacturer has $100 million in inventory, a 10% reduction in inventory levels could save $2 million. ($100,000,000 * .10 * .20 = $2,000,000)

There are more complicated ways to calculate the cost of excess inventory. Go ahead and use them if you are comfortable with the math, but this simple calculation works well for most accountants. Regardless of which method you use, the bottom line is always this: Excess inventory is costly!

But how much of my current inventory is “excess”?

That question encapsulates the challenge for manufacturing. Manufacturers often feel they need to keep a certain number of weeks’ supply on hand to meet lead times and deal with variability. That may be warranted in some cases, but when we talk to manufacturers about lowering costs, we find that many over-apply this principle by treating all inventory the same way and overestimating how much they actually need to keep on hand to meet service levels.

Implementing a pull strategy for manufacturing, where inventory replenishment signals are based on consumption, can lower both raw material and WIP inventory levels throughout the enterprise

Related Resource: White Paper – Gaining Control: Exploring Push v. Pull Manufacturing

A common way to implement pull-based replenishment signals is to implement Kanban. But, there are a couple of inherent challenges to implementing Kanban manually. The first is that manual Kanban requires workers to do certain things, such as to manage physical Kanban cards which are prone to error or getting lost. The second challenge to manual Kanban is in determining container sizes. How large should they be, and how many should you use?

eKanban is the IIoT in action

eKanban can resolve both of those challenges. The signals are electronic, so there isn’t a card that can get lost, damaged, sent to the wrong place, etc. Applications like SyncKanban (the Snynchrono eKanban solution) also responds instantly to changes in demand, resizing containers and adjusting K-loops.

A K-Loop (Kanban-Loop) is the number of Kanban Cards in the replenishment and usage cycle of an item. The K-Loop is created as a closed loop of activity between all involved in the use and supply of materials.

eKanban is the IIoT in action, using technology to connect people, data and processes for improved operational performance. But, at the beginning of this post, I promised to focus only on IIoT projects where the ROI is real and measurable. That demands an example:

Dynisco is a leading manufacturer of materials-testing and extrusion-control instruments, and they take continuous improvement seriously. They implemented a manual Kanban system in several factories but found it was too prone to disruption to help them achieve their goal of a 30% reduction in inventory levels. After replacing the manual system with eKanban software across four factories, they achieved inventory reductions of 51%, 55%, 43% and 29%. The factory that reduced inventory by 55% also reduced lead times from 12 weeks to 2. Read the full case study.

If you’re ready to reduce inventory levels in your organization, you can schedule a demo of eKanban here or reach out to speak to one of our representatives at info@synchrono.com.

Related Resources:

White Paper: Going eKanban: Moving from a manual to an eKanban system

Brochure: SyncKanban

Guest Blog: Real-World Advice for Getting Started on eKanban
January 29, 2018
Five Key Elements that Drive Manufacturing Flow
If you follow the Demand-Driven Matters blog, you know we specialize in Demand-Driven Manufacturing and have identified the two key components of this method as synchronization and flow. At an enterprise level, synchronization is all about fully connecting your organization to aggregate and share information in real-time. Data from machines, tools, applications, enterprise systems – any data source – is synchronized to drive decision-making (In our view, this also enables the Industrial Internet of Things – IIoT.)

Synchronization is also an enabler of flow. In this post, I want to introduce a discussion around what we’ve identified as the Five Key Elements that Drive Flow in manufacturing production. They are:
1. Control the release – create “Pull” by gating the release of work into production.
2. Synchronize activities – align upstream operations to downstream needs, paying attention to convergence points and final assembly.
3. Continuous improvement – use the first two Elements as a baseline for defining areas for continuous improvement – and never get complacent.
4. Extend to the supply chain – synchronize activities beyond the factory to the extended supply chain.
5. Align metrics – 6 metric categories to monitor for driving action in Demand-Driven Manufacturing environments.
On their own, each of these Elements would likely improve production flow. Our position is that by working these Elements together, you take a demand-driven leap in overall flow improvement. An episode of the podcast, Demand-Driven Matters, explains this in greater detail – along with data points on actual improvements manufacturers have gained:

Recently, we’ve been hearing from more manufacturers who want to do more with what they have. That is, drive flow to the point that they’ve increased capacity to take on more work – or enter new markets. One client we worked with saw the Demand-Driven method – and its ability to drive flow – as a means to expand one of their business units without dramatically increasing headcount. Another client was able to use this method to free capacity to enter a new market – and doubled revenue in 2.5 years.

In upcoming posts, we’ll review each Element in greater detail – you can also learn more about them through the Demand-Driven Matters podcast. In the meantime, let us know if you’ve worked through any or all of these Elements – and what your results were.
November 5, 2015
Manufacturing + Technology = A More Unique You

Communicating your distinct value

Manufacturing and technology are merging like never before. We’ve all read about how manufacturing will transform through concepts that include Industry 4.0, the Factory of the Future, Smart Manufacturing and the Industrial Internet of Things (IIoT) – all of which are enabled through technology. These concepts are big. They’re exciting. And they offer great opportunities for manufacturers to differentiate in the service realm.

When it comes down to it, the concepts of IIoT and the like are all about connecting your enterprise and communicating meaningful information. When machines and systems talk to each other, manufacturers are more informed and work smarter. Production flows, downtime is reduced and on-time delivery rates increase. It may also translate into the ability to greatly differentiate by offering customers more options for customization (and thereby enabling customers to differentiate). The World Economic Forum, in collaboration with Accenture, produced the Industrial Internet of Things: Unleashing the Potential of Connected Products and Services earlier this year. The report contains a lot of interesting information – along with several examples of how transformative the IIoT can be to different industries and to specific manufacturing environments. One example is how ThyssenKrupp AG, who manufactures and maintains elevators, has incorporated networked sensors for predictive maintenance. These sensors transmit data to the Cloud where analytics software looks for issues that require immediate service versus those that can wait for regularly scheduled maintenance. In doing so, the company is better able to prioritize and dispatch service personnel for elevator repair and reduce customer downtime – a service differentiator I’m sure many clients appreciate.

In marketing, we’re always looking for those points of differentiation – the capabilities that make our company and/or product unique in the competitive field. Today and in the future, manufacturers will find those points of differentiation through technology. In another example, a Synchrono customer attributed their competitive advantage to the planning, scheduling and execution system they implemented. As a result of this software technology, the client was able to greatly improve their lead times – to the extent that their competitors couldn’t even come close to achieving. (The sorry thing for me in this story is that the customer saw this as such an advantage they didn’t want me to do a case study for fear of tipping off competitors to their secret weapon.)

What distinct value will your factory of the future deliver? Real-time quality data for your customers? Same day turnaround on orders? Or maybe you’ll gain the data and capacity to innovate so that you’ll be able to offer customers the ability to differentiate through unique solutions.

In any case, I welcome the digitally connected age – and your thoughts on how manufacturers (and their marketers) will translate technology-enabled information into a distinct competitive advantage.

October 7, 2015
The Industrial Internet of Things (IIoT) and the Modern Marketer

For your customers, it’s more than just connectivity

I was recently reading about the Industrial Internet of Things as it relates to my business—manufacturing software. It’s exciting that technologies are now available that will liberate manufacturers from the rigid systems and processes of the past. For today’s manufacturer, the IIoT boils down to the ability to capture and connect data from multiple sources to attain truly meaningful information.

An interesting outcome of all of this is that it’s driving manufacturers to a more service-driven model to effectively compete. Manufacturing.net noted that 77% of manufacturers polled view improvements in services as a key competitive factor. (FYI – Interesting article.) They also described this movement in a blog entry:

“In this new era, manufacturers need to look beyond the single product sale transaction into a new relationship between themselves and the consumer—characterized by an ongoing delivery of value—exchanged over a platform in the form of a smart, connected product.”

Similarly, I have found that marketing manufacturing software requires me to position our services as a differentiator. Yes, most of our products can be purchased on a Cloud-based software-as-a-service model. Today’s manufacturers, however, need more than agile software, they need long-term business partners to help them navigate the changes brought on by digitization and connectivity (e.g, the Industrial Internet of Things, the Factory of the Future and Industry 4.0).

On Board Early

It’s interesting to see manufacturers really collaborate with us during the early part of the sales cycle. Long before we get to software implementation, we work with clients to address their goals and plot a course to achieve their vision. (The Orbital ATK case study is a good example.) We draw from various tools – Lean Manufacturing, Theory of Constraints and Six Sigma – to drive a demand-driven change. (Where demand equals actual customer need.)

Our prospective clients are not looking for us to just install software and leave. They need assurance that we will be true partners; always available to not only help them get the most out of their system, but to help use their new found digitization and connectivity to best manage constraints, drive ongoing continuous improvements and make informed decisions. Francis daCosta describes this perfectly in his book, Rethinking the Internet of Things:

“With the increasing automation of the factory floor, the autonomous or semi-autonomous lower–level control and feedback loops made possible through distributed intelligence within the Internet of Things may allow for higher production and better use of human resources. If integrator functions can handle lower-level adjustments and controls of operating machinery, human eyes and minds may be freed for longer-term analysis and optimization, based on exception and historical data collected at a higher level. (p. 135).”

So, with the factory floor more digitized and your machines and systems connected, you suddenly have access to an incredible amount of data. The question then becomes how do you turn that data into meaningful information? Information that will improve workflow, pre-empt issues, lend focus to continuous improvement efforts and more? This is the service component – and where experience really counts. In many cases, we become trusted advisors to our client’s in-house teams, not just because we know the software inside-out, but because we’ve been successful with a variety of similar manufacturing environments.

Selling Consultative Value

With the rate of change brought on by the Industrial Internet of Things, connected factories will look completely different in a decade. Because our clients know that Synchrono has always been ahead of the curve, they know we are not just selling them software—we’re selling them tools to better service their customers and better compete. And we’ll be there to help them realize it.

If you are a marketer engaged in classic features-benefits selling, I would urge you to move beyond that discussion. Practically speaking, of course, these matters are extremely valuable to clients because they can check off all of the boxes on their functional requirements list – but you don’t distinguish yourself. Communicate how you will help them win in a competitive market through stellar service enabled by a more informed workforce.

Case studies provide a great vehicle for communicating service value. For example, we have service plans that build continuous improvement processes into the implementation plan. We have ROI numbers from other clients that show how much they realized in waste reduction—and also, about the time they saved through our standard integrations into their ERP.

We can plot a compelling graph that shows cost-avoidance numbers because we have helped put an end to expensive expediting in their production environment. We have testimonials from our clients’ suppliers about how their new, end-to-end eKanban inventory replenishment software repaired adversarial relationships and helped them become more responsive to customer needs.

These are just a few of the stories we tell that were a result of the added services we provide. Clearly integrating services (and their results) into your value proposition helps differentiate your company in a cluttered market.

Customers need to know they can trust us—their supply chain depends on it. Building this trust requires sharing our strong record of success with other clients. Are there unique ways that you have done that? Let me know, I’d love to hear from you.

July 8, 2015

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