Insourcing and Competing With Advanced Manufacturing Techniques PowerPoint Presentation

Insourcing and Competing With Advanced Manufacturing Techniques

Sharon Ward May 14,2011

2

The following is intended to outline QAD’s general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, functional capabilities, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functional capabilities described for QAD’s products remains at the sole discretion of QAD.

Safe Harbor Statement

QAD Planning and Scheduling Workbenches

3

Manufacturing is essential to America’s economic well-being. It accounts for the bulk of United States exports, is key for innovation, and provides many high-wage jobs……

You All Know This

Competing With Advanced Manufacturing Techniques

Brookings Institute: Strengthening American Manufacturing: A New federal Approach by Susan Helper and Howard Wial

4

A Government Study Proves It.

Competing With Advanced Manufacturing Techniques

5

Between 2000 and 2009, The US lost 31% of its manufacturing jobsAlong with the jobs, the ability to innovate was compromised – manufacturing employs 36% of engineers

By exporting manufacturing expertise, the ability to compete in emerging industries like solar panels was jeopardized

Asleep At The Wheel

Competing With Advanced Manufacturing Techniques

Brookings Institute: Strengthening American Manufacturing: A New federal Approach by Susan Helper and Howard Wial

6

A focus on “core competencies” was perceived as the way to become world classSome companies decided their core competency was idea creation or marketing, not manufacturing

The assumption that outsourcing manufacturing always results in lower costs, making companies more competitive, became widely accepted

The Manufacturing Exodus

Competing With Advanced Manufacturing Techniques

7

Companies have ALWAYS outsourced some workLower wage regions start to develop manufacturing based economiesSome companies begin to off-shore

Competition and cost pressures increase

Rush to off-shoring in late 20th and early 21

st

century as a result of increased competition from emerging regions

How Did We Get Here?

Competing With Advanced Manufacturing Techniques

8

Difficult to evaluate all costs – additional inventories, communications, tracking, loss of control, longer lead times, quality, IP protection, customer satisfactionMeanwhile, our outsourcers took what they learned and used it to launch their own products/companies

Companies found that it’s easy to copy ideas and marketing but harder to develop process skills

Flies In The Ointment

Competing With Advanced Manufacturing Techniques

9

Understanding

The Basis Of Wealth

Competing With Advanced Manufacturing Techniques

10

It’s easy to copy ideas – even product featuresEngineering talent is no longer co-located with manufacturingReal innovation requires immersion in processes, products, and customers

It’s the manufacturing process that delivers real value and irreplaceable expertise

Ideas

and Services Don’t Lead To Wealth

Competing With Advanced Manufacturing Techniques

11

Activity

Your

Wealth

My Wealth

Starting wealth

$20

$20

I buy a shirt from you

$30

$10

We

both buy groceries

$20

$0

You buy a haircut from me

$10

$10

I buy another shirt from you

$20

$0

We both buy groceries

$10

I’m using plastic and hoping your hair grows really fast

Services Don’t Grow Wealth

Competing With Advanced Manufacturing Techniques

12

Activity

Your Wealth

My wealth

Starting wealth (includes finished goods)

$20

$20

We each manufacture and

buy

high quality goods and have a 10% margin

$21

$21

We each manufacture and

buy

high quality goods and have a 10% margin

$22

$22

We each manufacture and

buy

high quality goods and have a 10% margin

$23

$23

Manufacturing Grows Wealth

Competing With Advanced Manufacturing Techniques

13

Manufacturing Keeps the Economy Balanced

Competing With Advanced Manufacturing Techniques

14

Without Manufacturing There Is No Balance

Competing With Advanced Manufacturing Techniques

15

The United States is caught in the middle in international competition: Stuck between high-wage countries competing on the basis of new products and processes, and developing countries competing on the basis of low wages.

A Rock and A Hard Place

Competing With Advanced Manufacturing Techniques

Brookings Institute: Strengthening American Manufacturing: A New federal Approach by Susan Helper and Howard Wial

16

The recent political/economic situation has led to a more fervent patriotismThe realization that marketing skill or service skills alone are not a sound basis for competition finally sank in

Companies increasingly turn to lean/six sigma and similar programs to compete

Why Manufacturing Will Come Back

Competing With Advanced Manufacturing Techniques

17

Emerging areas have started with a “clean slate” so they could set up production in the most efficient waysMore developed nations had aging infrastructures with inherent inefficiencies

How can we level the playing field?

Established Companies Need To Compete

Competing With Advanced Manufacturing Techniques

18

Significantly less than half of small U.S. manufacturers (those with less than $10 million revenues) rate themselves at or near world-class status in each of the NGM strategies, with the highest percentage for superior process improvement (38% of small firms.)

It’s Not Easy In The Middle

Competing With Advanced Manufacturing Techniques

19

World class companies achieve better results than their competitorsWorld class companies invariably utilize one or more advanced manufacturing techniques (Lean, six sigma, TQM, etc.)

Surprise….It doesn’t matter which technique they use

What matters is that the company is committed to an improvement methodology

Advanced Manufacturing

Competing With Advanced Manufacturing Techniques

20

When whole-heartedly embraced, these programs allow companies to compete on COST and quality, gave more flexibility, lower inventory, shorter lead times

Lean Gets Results

Competing With Advanced Manufacturing Techniques

21

A Simple View Of Lean

Competing With Advanced Manufacturing Techniques

22

A More Complex House of Lean

Competing With Advanced Manufacturing Techniques

23

Layers Of Complexity

Competing With Advanced Manufacturing Techniques

24

Seven out of 10 U.S. manufacturers report that their facilities follow a lean manufacturing methodology and/or the Toyota Production System (TPS).

Embracing Lean

Competing With Advanced Manufacturing Techniques

Source:

George Taninecz, VP of Research, The MPI Group 2

010 MPI Manufacturing Study

25

Only about half have a majority of their employees involved in lean initiativesOnly about 70% had applied lean to the majority of their production processes

Only ¾ had an initiative to eliminate waste from processes

Only 34% use PDCA (plan, do, check, act)

Fewer than half include strategy deployment in their lean initiatives

Only 10% practice value-stream mappingOnly 8% use Kaizen events and blitzes

However….. Not Really

Competing With Advanced Manufacturing Techniques

Source:

George Taninecz, VP of Research, The MPI Group 2

010 MPI Manufacturing Study

26

So Who’s REALLY Using Lean?

Competing With Advanced Manufacturing Techniques

>16%

Source:

George Taninecz, VP of Research, The MPI Group 2

010 MPI Manufacturing Study

27

constantly striving to align all business processes, to work at peak efficiency, and to deliver the strategic goals of the organization

The Effective Enterprise Is…

Competing With Advanced Manufacturing Techniques

28

Companies began rebuilding manufacturing facilities and expertiseBegan as a trickle, but now reaching a stream, will soon become a torrent

Manufacturing Pride Re-Emerges

Competing With Advanced Manufacturing Techniques

29

Management supportStart slowPersevereExamine ALL costs, including hidden costs

Embracing Lean To Compete

Competing With Advanced Manufacturing Techniques

30

Achieving Management Support

31

Research the results similar companies have achieved with Lean/six sigmaMPIIndustry Week, Managing Automation

Industry Analysts

APICS

Do Your Research

Competing With Advanced Manufacturing Techniques

32

Lean Gets Results

Competing With Advanced Manufacturing Techniques

Metric

Lean Companies

Not Lean

Companies

Sales per employee

$176,000

$37,000 to $54,000

On time delivery

95.6%

85% - 90%

Inventory

turns

66% increased

36% increase

33

How Can QAD Help?

Competing With Advanced Manufacturing Techniques

34

KanbanEvery Part Every Item calculationsBar code and RFID supportAverage demand and safety stock calculations

New MSW/PSW workbenches

Lean Manufacturing

Competing With Advanced Manufacturing Techniques

35

Supply Chain PortalSpeeds communicationProcess maps

Simplify and eliminate steps

Search for non-value add

Simplify Business Processes

Competing With Advanced Manufacturing Techniques

36

Bar code and RFID supportPLM supportQuality management support

QAD Partners Contribute

Competing With Advanced Manufacturing Techniques

37

Capture true total costsExtra inventory to cover transit times(beyond standard safety stock)

Extra inventory to meet short term demand fluctuations

Business loss due to longer lead times/ lack of schedule flexibility

Communications and travel costs

Increased shrinkage and errorsQuality issues and rework

Training

Translation delays/costs

Enlist Your Accounting Team

Competing With Advanced Manufacturing Techniques

38

Landed costsLogistics costMultiple cost setsCost simulations

Accounting Support

Competing With Advanced Manufacturing Techniques

39

Project typical industry results on in-house numbersBe conservative – the numbers can look too good to be trueCover all your bases – include inventory, quality, on-time delivery

Be equally rigorous for both alternatives

Unbiased Analysis

Competing With Advanced Manufacturing Techniques

40

Be prepared for initial resistance or disbelief if management strongly embraced off shoringPetition for a pilot parallel production trialStart with one line, one product, one step

Make sure it works flawlessly

Suggest using similar techniques in non―manufacturing processes to demonstrate benefits

Take Baby Steps

Competing With Advanced Manufacturing Techniques

41

23 % use lean in finance and accounting26 % in customer relations29 % in administration.

Only 60% of overall processes have been addressed with lean

Lean Can Get Results Everywhere

Competing With Advanced Manufacturing Techniques

42

And Now..A Little Good News

43

From Managing Automation

Competing With Advanced Manufacturing Techniques

44

ISM Agrees

Competing With Advanced Manufacturing Techniques

6 Months and Counting!

SUGAR LAND--January 13, 2011--Researched by Industrial Info Resources (Sugar Land, Texas)--Cold storage specialist Preferred Freezer Services (Elizabeth, New Jersey) has begun site work for a new cold storage facility. The building will be adjacent to the company's headquarters and existing facilities, which were opened in 2008 in Elizabeth, New Jersey.

45

More Manufacturing Good News

Competing With Advanced Manufacturing Techniques

May 11, 2011: GM Chairman Dan

Akerson

said in addition to the investment in the Toledo plant, the automaker in the coming months will invest $2 billion for upgrades at 17 factories that will create or preserve 4,000 U.S. jobs.

As many as 2,000 jobs reportedly could be added at the Detroit-Hamtramck plant, where the Chevy Volt is built.

Ford Motor Co. will increase factory production 13 percent in the first quarter because of higher demand for Ford and Lincoln brand cars and trucks, and further increases are likely through the year, company executives said Sunday.

Intel plans new US factory, upgrading others to 22nm tech

46

Metrics Affected

Competing With Advanced Manufacturing Techniques

Process

Benefit

Value

Supermarket management with multiple methods for calculating and setting supermarket quantities using a variety of flexible, user-defined parameters

Inventory reduction

Improve data integrity

Reduce operating costs

30% - 50%

99%

10% to 20%

Kanban

workbench for recalculating EPEI, safety stock, buffer,

Kanban

&

Kanban

loop sizes using historical and projected supermarket performance with simulations.

Reduce inventory

Improve demand accuracy

30% to 50%

10% to 20%

Single ‘click’ transactions to record purchase receipts, item movement and production receipts of

Kanban

-controlled items

Transact

Kanban

cards via barcode scanners or direct entry

Reduce admin burden

40% – 70%

47

Sharon Ward sw7@qad.com

Questions?

48

www.qad.com

© 2010 QAD Inc