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Posts Tagged ‘APICS’

Recently, in an article for APICS Magazine, Jonathan Thatcher, director of research for APICS (an organization long dedicated to supply chain operational excellence), listed a few tips for companies challenged by an ever-increasing number of SKUs (stock-keeping units, or inventory items) they are required to manage.  We thought we’d reprise a few key highlights here today.

Thatcher recommends starting at the top of the cycle: by developing greater “systemic visibility” in your organization using hard numbers and data to support a “systems concept,” which the APICS dictionary defines as “an attempt to create the most efficient complete system as opposed to the most efficient individual parts.”

To begin with then, you must identify the flow of many individual components while also reviewing the performance of the overall supply chain.  Each new SKU increases cost and complexity to the entire system.  As these costs grow, it gets harder to maintain an accurate “cause-and-effect vision” of expense and value for the entire system.  “Even if a new SKU does deliver some new net value,” he writes, “is it enough to profitably pay for the cost of the increasingly complex stocking options?”

Next, he advises, talk to your customers to figure out where to draw the line for SKU proliferation.  Ask them to identify the point where more SKUs become a burden instead of an asset.  This can help determine a potential SKU limit.

To gain executive support for your SKU reduction endeavor, Thatcher says you then need to explain a few things:

  • SKU innovation may be at war with Pareto’s 80/20 law that states that 20% of inventory items make up 80% of inventory value.
  • The right number of SKUs likely reflects the amount of variation and complexity sought by your customers.
  • The wrong number of SKUs squeezes resources and can divert them away from the products that deserve them.
  • Realize that it’s a complicated and often nuanced topic that requires ongoing, shared management effort to overcome these complexity costs.

And finally, Thatcher suggests, “develop a policy prohibiting a net increase in SKUs.  As new ones appear, retire old and low value SKUs to make room.”  Just be sure that these efforts form a part of your overall supply chain strategy that prioritizes innovation, customers service levels and reduced costs.

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We like highlighting and learning from stories about companies getting “lean” because helping manufacturing and distribution companies become more competitive through lean processes supported by good software is exactly where we live.

A recent article in the Mar/Apr issue of APICS Magazine about a lean transformation of an Agilent Technologies spinoff called Keysight Technologies highlights the efforts of that firm to transform its supply chain into a more responsive, flexible and efficient one.  The goal was nothing less than to adopt a “holistic approach to develop a comprehensive lean transformation strategy.”

We found a few key takeaways from APICS Magazine’s review of Keysight’s challenges, most notably what they called the three key pillars of their lean transformation.  It’s worth noting by the way that Keysight earned the 2016 APICS Corporate Award of Excellence in Innovation as a result of its lean transformation.  Those three key pillars:

  1. Develop Competency: Ensure all employees across all sites are well equipped with the necessary lean competencies.
  2. Deliver Value: Use lean methodologies to achieve breakthrough results in the areas of cost savings, lead-time reduction and customer satisfaction.
  3. Sustain a lean culture: To derive long-term value from the lean initiative, foster ongoing improvements through a shift in mind-set and the adoption of lean throughout the organization.

While the full article is too lengthy to detail here, we believe that the points above and the anecdote that follows provide some good “thinking points” as you consider your own lean initiatives.  Quoting directly from the APICS article…

“To achieve world-class manufacturing at Keysight, a program was launched that encompasses cycle-time, inventory reduction, greater efficiency and enhanced flexibility.  Entire product lines were scanned in order to identify stock keeping units that had high inventories and were not meeting customer-requested lead times.  These items were then examined based on revenue and cause-codes, and constraints and bottlenecks were identified.  Innovative solutions were implemented one by one to break the constraints.  For example, the component-washing process at Keysight had been a cycle time issue because the activity was shared among many different product lines and could only be conducted in batches.  However, contract manufacturers did not face such constraints, so component washing was moved to that site.”

We cite the above only to illustrate the style of lean thinking, and the measured steps, that we’ve found over time lead to the virtuous cycle of continuous improvement.  Redesigning work centers, optimizing vertical spaces and assembly motion, and implementing other modular concepts are among other efficiency improvements brought about through lean thinking.

Want to hear more?  You can learn more about APICS locally here.  Want to learn more about how to lean out your operation?  At the risk of being commercial here, as we always like to say: We’re here to help!  Contact us (reply to this post).

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cycle-countIn our prior article we discussed the method behind inventory cycle counting as a way to improve your company’s inventory accuracy.  There we briefly touched upon the most common cycle counting method, known as the “ABC” method.

But it’s worth noting that these cycle counts can be performed in several different ways, depending on things like location preferences or special criteria, as we are reminded in the Sep/Oct 2016 issue of APICS Magazine.  We’ll offer some of their other cycle counting method examples here today:

  1. The Zone Method: Particularly good for items with fixed locations. The count schedule starts with the first location in a zone and continues daily until the last location is reached.  Then, the count begins again at the first location.
  2. The Location-Audit Method: Best used when items are stored randomly. Here, a set number of locations is counted and their inventory counts are validated each day.
  3. The Special-Counts Method: Items are selected to be counted based on criteria such as negative or zero balances, shipment or receipt of items, fill shortages, etc.

These methods are among those suggested by David F. Ross in his article for APICS Magazine entitled Cycle Counting by the Probabilities, in the Sep/Oct 2016 issue now available to APICS members.

Inventory is one of the costliest items a business possesses.  We present this information as a service to our many manufacturing and distribution ERP clients because we know that inventory cost saved is ROI regained.  We’re happy to help others with inventory dilemmas, and are strong believers in the principles espoused by APICS in helping to improve our clients’ inventory and production capabilities, methods, profitability and overall success.

 

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tech investThe editors of APICS Magazine recently provided some sound advice worth heeding when it comes to your technology investments, and we thought the outside affirmation worth sharing.

As the article states at the outset: “The task of evaluating and selecting the right technology for your business can be daunting.”  To ensure you’re approaching your mission properly, doing your due diligence and “considering the right aspects of the problem and available solutions” they make the following basic and simple, but critical, suggestions.

  • Start my mapping out your processes.
  • Look at your current state, and what your future state is going to be, and figure out how you’re going to get there.
  • At a high level, consider your company’s environment – how your industry is changing, what competitors are doing, and how the economy (here and abroad) is changing – and how these will influence your processes.
  • During evaluation, consider the ROI of your purchase. Some tech investments (like ERP) can take years to deliver returns, depending on your economies of scale.  Make sure the ROI is reasonable for your purposes.
  • Be sure your new technology “speaks the same language” as the other solutions your company uses. Sometimes a new piece of technology may be very attractive based on its performance, but you have to know that you can integrate it into all your other systems.  If you have to rewrite routines or add operations to what you’re doing, then maybe you’re not accomplishing the efficiencies you envisioned.

The steps are simple and should be intuitive, but you’d be surprised at how many companies neglect to pay attention to these cautions, or skip some steps, when looking to implement new technology solutions.  Don’t burn yourself.

 

 

 

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keysThe May/June issue of APICS Magazine features an article by Gary Smith, a VP with New York City Transit with over 35 years of supply chain, process improvement consulting and team-management experience.  Smith’s insights about what makes a successful project – and the challenges that brings – are worth reprising here today.

First, to quote him directly from his APICS Magazine article (“Change from All Sides”):

“A successful project implementation demands that the people who are affected by it understand the benefits, are full owners, and participate from the beginning.  When the benefits of a project are clearly seen by all in terms of how these advantages align with the organization’s vision, mission and purpose, then acceptance, buy-in and ownership are possible.”

He goes on however to note the most important consideration, too often missed in projects:

“When a company implements projects both large and small, it is introducing change.  The nature of global competition requires businesses to adapt and transform in order for it to remain relevant… There are two types of change – mechanistic and organic.”

Smith describes how the two types of change differ.  Mechanistic change is often revolutionary, coming in the form of new ideas from management or consultants.  He gives the example of a new receiving process which is put in place, with employees trained – but in some cases receiving department staff were not involved and, even though all agreed a past system was outdated, the ideas they had for improvement were seemingly ignored.  Or worse still, they were done without giving proper credit.  When the consultant leaves, it’s no surprised if the new process is abandoned quickly.

Then there is the organic form of change, which is more evolutionary in nature.  It’s a change that becomes a part of an organization’s culture.  It tends to permeate from the bottom up.  Often, it’s taught by experienced employees to new hires.

And therein, emphasizes Smith, lies the secret:  “In order for change to become permanent, it must successfully transition from mechanistic to organic.  That is quite literally the only way to create sustainable change within an organization.”

How does this happen?  The key, in a word notes Smith, is ownership.  People have an innate desire to succeed.  They desire a stake in providing solution to problems.  Intrinsic motivation – the internal gratification derived from solving a problem – can be more satisfying and lead to better results than any external reward.  And, those intrinsic motivators can provide lasting change.  When intrinsic change is recognized by leaders who inspire action through change, people feel like part of the process.  It takes time and patience, but it is possible, and the results can be, as Smith puts it, “staggeringly successful.”

True ownership, then, is the “surest way to build a successful project, avoid failure, and create lasting organizational change.”

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apics changeA recent article by Brian Dominguez, CPIM, a change consultant and General Manager at MDMOTO Group, in the Jan/Feb 2016 issue of APICS Magazine reminds us of just how hard change can be.  As John Kotter noted twenty years ago in the Harvard Business Review, 70 percent of change attempts fail outright.  Studies point to human resistance and company culture as key reasons.

Software implementation projects are a great example, and with their very dynamic designs, it’s no surprise that the Standish Group’s 2014 “Chaos Report” found that only one in six such projects finish on time and on budget, and that only one in eleven large businesses reach their implementation targets.

As Dominguez points out in his article, “Clearly change is difficult [and]… does not occur without conscientious planning and support from the top down.”  Too often, he notes, change projects are driven by quantitative, empirical and rational approaches to a problem – when in fact those methods “fail to take into account that change is driven by a qualitative environment and may require a different technique to gain buy-in.”

Kotter therefore advises business leaders to follow 8 guidelines that he says are essential for fostering change:

  1. Create a sense of urgency
  2. Establish a powerful guiding coalition
  3. Create a vision
  4. Communicate a vision
  5. Empower others to act on the vision
  6. Plan for and create short-term wins
  7. Consolidate improvements and produce still more change
  8. Institutionalize the new approach.

There’s a lot more to the article than that (like how small wins are important because they reduce anxiety and resistance to change while building a sense of self control), but as you can see, if the emphasis is not on the human elements of the change at hand, and the careful communication and handling of those elements, then the chance for failure is pretty high.

It’s worth five minutes of every manager’s time to review Kotter’s 8 points, and keep the human side of change foremost in one’s mind for any change initiative you may be contemplating.  And that most assuredly includes software implementations.

(APICS Magazine can be found here.)

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RFIDIn an APICS Magazine article entitled “RFID at Work” three PhD’s who serve day jobs as computer professors and consultants detail many of the requirements for implementing Radio Frequency ID systems in manufacturing.  While you can find the full article (if you’re an APICS member) in the Sep/Oct 2015 issue, we thought we’d reprise for our readers here the key steps to implementation.  What follows assumes that you’ve already parsed through the thought process about whether RFID is right for you when it comes to having more accurate and timely information to improve your business processes.

The basic element of any RFID system is the data point – the location where the RFID ‘tag’ is read.  It can be used to receive goods and follow work in process along its route according to the ERP system, tracking progress across all work centers or locations.

The key initial step then is simply to identify the key issues and goals of the system, and follow those with a set of design principles.  Look for the logical and technical process requirements that must be logged or acted upon, as well any constraints.  From these, a prototype can be implemented.

In a typical manufacturing environment, the tag will contain fields including the order number, the finished good ID or product number and the route step identifiers that establish the sequence of work center operations.

Most low-cost tags have relatively limited memory (512 bits), minimal enough at these price points that it requires that the data is produced while moving the tag from one station to the next in the route while interactively obtaining deeper data from a traveler, route ticket or work order already in the ERP system.

Each work center is monitored by data readers with antenna(s) mounted above the shop floor.  Typically, the reader will read any RFID tag that comes within about a ten foot radius of itself.

In such a setting, data points would be equipped with touch screen monitors displaying WIP tags in the queue.  At the exit point from production, a tag bearing the product ID number is attached to the product before being moved to inventory, shipping or secondary operation areas.  The tag is read at this point and that information can be transferred back into the ERP system, thus completing the loop.

The info provided above is intended of course only as a general outline of RFID.  A system requires all the “layers” to work together in order to make the tracking of goods more efficient.  Those layers include the physical RFID network consisting of tags, antennas, readers, touch screens, and the shop floor network.  The second layer is usually the ‘middleware,’ responsible for producing your tag ID numbers, reading and writing to the tags, and managing data transfer from data point to reader and then to the network’s control system.  The point is: there is a fair amount of work involved, as one might expect.

Hopefully, our comments here today, courtesy of our friends at APICS, will get you started in your thinking down the road to RFID.

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