Managing Production Operations Performance

In the last few weeks, we’ve been looking at plant level
business systems that empower people, by providing the timely
information needed for each individual job function and department
to improve decision-making and take action that can improve the
overall level of customer service and profitability of the
business.
We’ve reviewed Customer Sales and Production Planning and
Scheduling already, so let’s move to Production Operations
next, for a closer look at the different types of information
needs. From the plant manager, line supervisors, to individual
production work centers/cell operators, we will explore the types
of improvements that can result from the right person having timely
access to the information they need, on an ongoing real-time
basis.
Over the next few weeks, my blog colleagues (would that be
“blolleagues”?) will take an closer look at
Manufacturing Operations Management and specifically, how real-time
information at the production operator level can deliver a
significant return on investment for manufacturers. So for now,
I’ll touch on Production Operations as it relates to other
departments within the plant, and how this same information can
support better decision making based on improved supply/demand
matching, planning and scheduling, costing, sales, transportation
execution, etc.

Example #3: Production Operations
Let’s follow a typical Monday morning on the plant floor of
any food manufacturing plant.
The Sales Forecasts, Sales contracts, and Sales order delivery
commitments have been used to plan and schedule the assets of the
business for the week, the day, or maybe even just first production
shift on Monday. In a perfect world, this means that ingredients,
labor, production equipment, and packaging are staged, set up,
sequenced, and ready to go. This is where the vast majority of the
value-add effort for products and services are performed for the
entire company, and let me tell you - these folks know their
business. 

Whether the plant utilizes an automated enterprise business system
that includes bar coding, integrated scales, counters and user data
terminals, or depends on paper-based controls and record keeping,
everyone from warehouse workers and plant production operators and
supervisors, quality assurance personnel and maintenance teams -
all are trained to follow two levels of control. Both of these
levels of control are equally critical to the efficient and
successful manufacturing of products sold by the company, and
include: a) following the guidelines of their production schedules,
formulas, and quality testing specifications – to know what
and how to make and move what they produce today, as well as b)
depending on their own experience and instincts, regarding how they
have always performed the tasks at hand. 

There is a true collective knowledge base that pervades plant floor
teams on every shift, that goes beyond all the best practices and
business processes that could ever be documented about how to
consistently manufacture high quality products for sale. This
team-based experience and value is often hidden within the
fragmented statistical record-keeping books of production batch
sheets, testing samples and quality results, performance yield
results, and volume throughput. So it’s pretty easy to see
that being able to recognize and harness superior performance by
shift, product, line, and process step, is key to consistently
improving products and processes, for the improvement of the
overall performance of every shift, product, and line. 

But how can manufacturers accomplish this? At a most basic level,
the path to performance improvement depends on quickly being able
to tell which teams of people by shift, product, production line,
and process step are excelling, in order to use this information to
the company’s advantage. And you can’t see performance
that isn’t being measured. So having measurements in place,
based on a meaningful collection of metrics and targets, is key.
Providing this feedback to production operations personnel, in a
timely manner, is just as important. It’s how best practices,
product quality, yield, and production volumes keep getting better
– by allowing the experience of people to educate
standards. 

Remember, I started this discussion around the ideal daily
operating environment of production and warehouse operations.
Wouldn’t it be great if the only thing production and
warehouse operations had to worry about was efficiently supplying
the greatest volume possible of the highest quality products they
had scheduled at the start of each shift? After all, it’s
what these teams get measured on and rewarded for. But don’t
underestimate the outliers, the unexpected surprises and
interruptions, the constant influence of change from both the
demand and supply sides of the business that directly impacts
operational performance and ultimately, the quantity, quality, and
yield of the products manufactured and delivered for sale. These
“factors of change” are outside
production operations’ control, and can (and do) strike at
any time. 

Like what? Like a cancelled or changed sales order that’s in
today’s production queue, but now needs more or less
quantity, or whose ship date has moved in or out. Like a new sales
order from a premium service customer, one who pays for expedited
delivery on short notice. Like the latest purchase receipt of an
important ingredient for today’s production, fails to meet
quantity or quality targets for use by production, for which there
may or may not be available and allowable substitutes. Like the
packaging machinery failing in the middle of containerizing the
intermediate bulk product that just came from another plant work
center, and is sent to another packing line because it has a very
short window of time when it’s quality is still acceptable to
package up for sale. 
These demons of perfect production performance aren’t
factored into the traditional metrics of OEE (Overall Equipment
Effectiveness – or as I like to call it,
“Overall Employee Effectiveness”). The
reality of missing or poor quality ingredients and replacement
substitutions, unscheduled equipment clean-up and changeovers due
to changes in demand or failure of equipment on other production
lines – this is the reality of variability in production
processing. Although it shouldn’t be allowed to distort the
performance results of operations, these kinds of exceptions
can’t easily be isolated from those factors that production
operations can and does control.
Let’s face it - there can never be enough
“memo-only” reason codes in enterprise business systems
to quantify the cost of change to the overall
profitability of the business. Exception management is an art form;
it’s where the experience of people reaches into perfect
target metrics and standard operational processes, to pull out a
winning solution to an undeniable interrupting event. Standardizing
these kinds of best practices and re-routing a perfect production
schedule in real time, to prevent loss of valuable time and
resources, is a daily requirement for production
operations  

And let’s not forget the value of being able to see the
impact of real-time exception decisions and changes in supply, for
the other demand-driven departments in the manufacturer’s
enterprise business. For the customer service representative
that’s taking the next new sales order, or is responsible for
contacting customers when their deliveries are delayed, being able
to go to an enterprise business system that accurately reflects the
most current time-phased picture of demand and supply, can
influence the next order promising commitment.
It’s really about not just having a way to promise demand,
plan and schedule material and production, and to be able to view a
financial and historical audit trail of results. With the
competitive and accelerated rate of business today, it’s
about being able to accurately promise AND
re-promise, plan AND re-plan, schedule
AND re-schedule, as often as change requires, and
with the same goals of satisfying customers, while protecting the
profitability of the business.

My next entry will continue along the topics of production
operations and performance, as we take a look at a performance
metric that’s my personal favorite – product
costing.