A Starter’s Guide to Achieving Performance Excellence in Manufacturing

June 16, 2014
Optimizing and leveraging existing resources are key focuses for most businesses. An operational excellence strategy can be the difference between mediocrity and market leadership.

At a high level there are two areas that most every business is focused on: optimizing existing human, capital, time and technological resources to (at the very least) meet performance expectations; and finding new and better ways to leverage those resources to continuously improve existing products, services, market share and operating margins.

As any experienced executive knows, executing on these two areas requires a sound approach to continually driving operational excellence. An operational excellence strategy can be the difference between mediocrity and market leadership. Unfortunately, instituting and sustaining this with effective programs and technology is easier said than done. It takes strategic and bold thinking, rapid adaptations, reactions and decisions, and fully informed and engaged teams.

Business objectives

Strategic objectives drive operational excellence strategies because you need to understand them to know where to allocate resources and make investments. And when developing your strategy, it’s helpful to have a grasp of what your peers are saying (look at the benchmark data).

For our latest manufacturing operations management (MOM) research study, manufacturers were asked to choose three top objectives. Topping the chart, 66 percent said ensuring consistent quality was the No. 1 strategic objective in 2013. Not far behind, 56 percent chose responsiveness to customer demands, 49 percent increasing production capacity and capabilities, and 42 percent getting new products to market faster.

Take note that these responses come from all industries, which could account for some disparities. For instance, ensuring regulatory compliance and improving EH&S performance rank relatively low at 33 and 32 percent, but are undoubtedly top-of-mind issues for manufacturers in risk-prone industries.

People and leadership

People can be one of the hardest resources to leverage, but they can also provide incredible returns when managed effectively and given the process and technology resources to execute on goals.

Our research has shown that 26 percent of manufacturers point to a lack of collaboration across departments as a top challenge. People—manufacturers, suppliers, engineers, etc.—face informational and cultural silos that are often doing more harm than good.

From our experience, companies that create an environment of shared vision and collaboration can more easily excel in performance. The survey data sheds some light on what’s being done in this area. Consider the following data points:

  • 61 percent have or plan to establish a continuous improvement/lean group within a year.
  • 53 percent have or plan to establish better ways for line of business, IT, engineering and manufacturing operations to collaborate within a year.
  • 46 percent have or plan to establish a strategic operational group within a year.

Company culture comes out of the examples set by management and the actions of all employees. Problems and issues continuously arise, but are always best resolved with a team effort, with all relevant stakeholders educated on available information and facts on hand. It’s clear from the data points above: Operational excellence is on everyone’s mind, and the role of people and leadership is not being discounted.

Manufacturing software and IT

Most companies are accelerating operational excellence initiatives by institutionalizing best practice processes into software. More than 60 percent have already implemented or are planning to implement processes supported by a combination of enterprise, MOM and automation software/systems.

We continue to see that leading companies are harmonizing business and manufacturing processes to ensure consistency and efficiency, while also ensuring that every plant can be agile and responsive to customer demands.

When we look at the process and software capabilities that are either in place or planned across a broad set of industries, we can see a clear journey that companies are on. However, we can also see that there are more companies that have the ability to manage single plants with both processes and software (45 percent) than at the line of business (38 percent) or enterprise level (31 percent).

Looking at manufacturers that said they could effectively manage manufacturing operations at either the plant, line of business, or enterprise levels, we explored which MOM software applications those companies had deployed. The results line up well with other data we saw earlier on top strategic objectives and challenges. We can see that quality management applications (58 percent) are most deployed in support of the top strategic objective of ensuring consistent quality.

Planning, scheduling and dispatching (53 percent) and MES (50 percent) software were the next most popular, and these have been proven to assist companies with being more responsive to customer demands and helping companies increase production capacity and capabilities—which are the next highest top strategic objectives in our survey.

Putting it all together

The recommendations above are a great start to understanding your company’s needs and path on your particular operational excellence journey. For a much more in-depth guide on accelerating toward operational excellence, download your free copy of the LNS Research eBook, Accelerating Operational Excellence for Global and Regional Manufacturers.

>> Mike Roberts is a Research Associate for LNS Research (http://www.lnsresearch.com) in the areas of EQMS, MOM, asset performance management, sustainability, and Industrial Automation 2.0.

Companies in this Article