Chapter 6
If You Build It: Project Manufacturing
In This Chapter
▶ Driving demand with MRP
▶ Getting to know your manufacturing system
▶ Maintaining products and services
▶ Getting information to the enterprise
▶ Executing by automating
companies that build things need a combination of highly specialized tools to track shop floor activities, statuses, and completions. They also need a strong, project-based ERP environment for invoicing, materials management, and finan- cial accounting. Project-manufacturing software is specifically designed to address the unique regulatory and operational needs of complex manufacturing firms. It’s a solution that provides significant advantages for running an agile and streamlined manufacturing operation. This chapter explores the attributes and advantages of project-manufacturing applications.
Examining the Benefits of Integration
Who or what doesn’t benefit from better communication? Here are some of the advantages your manufacturing opera- tion can gain by using an integrated project-based ERP and manufacturing system:
✓ Greater realized efficiency
✓ Decreased costs, more financial predictability, and improved profitability
✓ Increased quality and more consistent processes
✓ The seamless ability to meet critical government contract- ing compliance needs (if required), right “out of the box”
✓ The ability to deliver on Lean and paperless manufacturing objectives
✓ Traceability of every component produced
✓ Information flowing to all stakeholders
✓ Knowledge of the actual time each operation took and how much it cost
✓ Creation of an actual basis for future work and cost estimation
✓ Increased overall competitiveness
Lean manufacturing is a practice focused on controlling costs, increasing efficiencies, and creating value for the customer. The idea is to ferret out and eliminate extraneous activities
or wasteful expenses. Value is defined as any action or pro- cess the customer is willing to pay for, and the Lean concept strives to preserve value while reducing work. This concept was derived from the highly regarded Toyota Production System.
Understanding Materials
Requirement Planning
If your business is manufacturing, your daily challenges include ensuring that you have enough of the right parts in inventory. In an ideal world, you would manufacture a prod- uct just in time to meet the customer’s delivery dates and your revenue goals and objectives.
The problem is, any project, product, or task can be royally messed up if critical parts or materials aren’t planned and inserted into the manufacturing process at just the right time.
Your procurement system helps order and track the pur- chase of materials and services, and although that tracking is critical, it’s not enough. That’s why companies use materials requirements planning (MRP) capabilities to ensure that the right materials are on hand, in the right quantities, at the right time, and at the lowest-possible cost.
With MRP, messages are automatically generated so planners can find out what actions need to be taken to meet any new demands — or changes in existing demands. These action messages help planners make the right decisions to expedite, reschedule, order, or cancel supply to meet demand. MRP will help you answer the following questions:
✓ What is our demand?
✓ Do we have enough supply? What parts need to be procured or manufactured? What engineering changes are being proposed?
✓ How much supply is required?
✓ When is the supply required?
✓ What action needs to be taken?
Tracking Your Orders
Sales order entry (SOE) lets you track and monitor your cus- tomers’ orders for products and services while managing the shipment and invoicing process. Items on sales orders may
be recurring, drop-shipped, procured, or manufactured. Sales order entry creates demand in the MRP, which will ensure there is enough supply to meet customer deliverables.
Managing Your Inventory
Inventory offers the ability to track and manage asset inven- tories, project-owned inventories (these are expensed or work-in-process), and customer- or government-furnished
inventories. Rules established for each project determine how that inventory can be planned or used.
You can track lot numbers and serial numbers throughout each inventory transaction, giving full visibility. The inventory posting process generates the necessary general ledger jour- nal entries covering the inventory transactions.
Taking a Look at the
Manufacturing System
Manufacturing systems enable you to generate and process manufacturing orders or work orders to build parts. Using bills of materials and routings, manufacturing orders are cre- ated complete with requirements and routing operations to
perform the production process. The costs of materials, labor, subcontractors, and overhead are captured for valuation of each part manufactured.
The advanced features of a manufacturing system make it easy to propose, design, plan, purchase, track, and manufac- ture products. This type of system supplies everything from as-built and as-maintained records to systems compliance to cost reporting to the tracing of serial or lot numbers.
Watching Over Production
A manufacturing execution system (MES) provides online, real- time visibility onto the production floor. It streamlines the production process and eliminates waste using work plans, which include documentation, visualizations, work instruc- tions, and routing information. This type of system captures work order status throughout the manufacturing process
and supports quality control and nonconformance findings and results.
An MES will help you answer the following questions:
✓ What are the production schedule priorities?
✓ Who is working on what?
✓ How close is the work to being completed?
✓ What corrective actions need to be made? When are they required?
The MES is tightly integrated with the manufacturing system. The manufacturing system tracks bills of materials, supply and demand, inventory, and manufacturing order costs. As orders are planned and firmed up through MRP and then released to the shop floor, the MES begins tracking the prog- ress with real-time updates to the manufacturing system.
This integration is often a back-and-forth between manufactur- ing orders and router steps.
If you hear people in your manufacturing operation asking about MOM, odds are good that they’re not inquiring about their mother. MOM also happens to stand for manufacturing operations management. It’s the overall manufacturing process viewed holistically, with the goal of optimizing efficiency.
This concept encompasses Lean manufacturing practices for effective planning, scheduling, and control of a manufacturing organization.
A work order or a manufacturing order (MO) tells the factory what it must make. The MO also defines when the product is needed, and it can be generated manually or automatically from a sales order entry. Router steps tell the shop floor the name of the operation, who does the work, and the budget for the work. The details of the process are housed in the MES.
Keeping Time on the Floor
A shop floor time system (SFT) allows you to capture start and stop times for shop floor activities by each manufacturing order as well as each operation step. The system must support complex pay, overtime, and union rules, as well as be able to handle multiple shifts and schedules. Employee self-service allows workers to make scheduling requests and get manager approval. Tracking labor time for government contractors is
a compliance requirement, plus capturing labor at the manu- facturing order and operation level helps with future bids and opportunities because it helps you to cost each part accurately.
Collecting the time spent by workers on the factory floor can be time-consuming and costly. One way to reduce direct labor costs is to link your MES and SFT solutions together so that operations are automatically clocked into the time collection system. This is a low-touch or no-touch solution for tracking labor costs, and it eliminates one of the systems with which factory floor workers have to interact.
Sharing Information with Everybody
In manufacturing, all systems should work together to ensure on-time and quality delivery. From procurement through the shop floor, these systems must interact seamlessly and pro- vide real-time status and information about manufacturing activities. If parts are late or production is slowed, your cus- tomers will not get what they need when they want it.
Information from all the systems mentioned so far must inter- act so that all teams within your manufacturing operations can be updated. For example, production scheduling needs timely information from the factory floor regarding current task status in order to build accurate schedules for future production. That same information needs to be available to procurement to ensure that materials and components will be available when needed.
Keeping Things Running
Maintenance, repair, and overhaul — better known as MRO — include any actions with the objective of keeping an item func- tioning or restoring it to a state in which it can perform its required function. These activities include all technical work as well as corresponding administrative, managerial, and supervisory actions.
Because the systems in the field today are so complex, you’ll need to manage these operations with software. You can get an MES system that will support the management of MRO.
Executing by Automating
Production managers require real-time visibility of the day- to-day operations on their production floors. Maintaining spreadsheets and reporting operational details after the fact won’t prevent problems and delays or quickly solve them should they occur.
Similarly, shop floor employees’ manual transactions don’t allow managers to easily and accurately monitor labor cost and time utilization reports. If managers must manually ensure their production workers are performing tasks as planned, that can affect product cost, quality, and timely delivery.
Beyond that, a manual process can cost valuable production time waiting on material, machines, or personnel. If parts, people, or equipment aren’t readily available when they’re needed, production comes to a standstill. Quality issues, machinery downtime, and shop floor personnel searching for work plans or documentation can also stall production.
If your manufacturing is aerospace- or defense-related, you may also face industry traceability requirements that cause shop floor employees to manually enter transactions into multiple systems. That, of course, reduces your labor utiliza- tion and slows production. Sounds like a great place for some automation.
A more automated solution not only increases efficiency, but it also helps manufacturers deal with change. Successful pro- duction management requires the ability to monitor and react quickly to constant change in demand-driven manufacturing environments. These changes can include customer requests, engineering changes, machinery downtime, absentee employ- ees, and many other uncontrollable situations that can result in shop floor bottlenecks. It’s imperative that production man- agers be able to view these events and reschedule and repri- oritize in a timely manner.