ARC's Ralph Rio's Lean MES at ARC's 2008 Industry Forum

This presentation is copyrighted by ARC Advisory Group (ARC). The information is

proprietary to ARC and it may be not be reproduced without prior permission from ARC.

Intersection of Lean and MESBest Practices

Ralph RioResearch Director

ARC Advisory Group

[email protected]

Agenda

•Research Findings

•Recommendations

2© ARC Advisory Group

Where Lean & MES Intersect

Agenda:

Lean and MES Trends

Best Practice Study Process

Survey Results

Recommendations


Market TrendsIs there a connection?

Improvement Programs:

Lean Adoption Nearly Doubles

MES Market:

Visibility to Manage

• Agility

• Speed

„05 to „06 Market Grew 27.2%

0.0

0.5

1.0

1.5

2.0

'06 '07 '08 '09 '10 '11

Forecasted

CAGR = 14.5%

Billions

Source: ARC Advisory Group “CPM Systems Worldwide Outlook for Discrete Manufacturing”

0%

2%

52%

69%

0% 25% 50% 75%

TOC

TQM

Six Sigma

Lean Mfg.

Q1 2007 Survey

8%

18%

34%

35%

0% 25% 50% 75%

TOC

TQM

Six Sigma

Lean Mfg.

Q4 2005Q4 2005 Q1 2007


Lean and MESSurvey

21%

31%

18%

30%

0% 20% 40%

Under $25 million

$25 to $250 million

$250 million to $1 billion

Over $1 billion

Revenue

20%

21%

29%

38%

49%

0% 20% 40% 60%

Packaging

Job Shop

Continuous

Assembly Lines

Batch/Lot

Styles of Manufacturing

106 Survey Respondents

1%

12%

23%

64%

0% 20% 40% 60% 80%

Utilities

Process

Hybrid

Discrete

Primary Industry

2%

12%

11%

14%

22%

39%

0% 20% 40% 60%

No Program

Other

TQM

Six Sigma

Lean Six Sigma

Lean/TPS

Continuous Improvement Program

Lean61%

Primary Improvement Program

Sum = 100%

For these attributes, the Leaders, Competitors and Followers have similar profiles

RespondentProfile


Scope of ResearchLean and MES

Dimensions

• People

• Processes

• Technology

•Metrics

Categories

• Leader

•Competitor

• Follower

Production

Management

Maturity Matrix

People Processes Technology Metrics

Leader Best Practices

Competitor Common Practices

Follower Poor Practices


Best Practices Lean and MES

19%

21%

27%

25%

29%

32%

52%

59%

0% 20% 40% 60% 80%

Accounting & Finance

Sales & Marketing

CustomerSupport

IT

ProductDevelopment

Recv, Stock, & Shipping

Mfg. Support

Plant Floor

Fully: Over 75% Partially: 50 to 75%of people

19%

21%

27%

25%

29%

32%

52%

59%

0% 20% 40% 60% 80%


Sales & Marketing

CustomerSupport

IT

ProductDevelopment


Mfg. Support

Plant Floor


Leaders have Broad Involvement

36%

41%

50%

55%

59%

64%

68%

77%

0% 20% 40% 60% 80%



CustomerSupport

Sales & Marketing

ProductDevelopment

IT

Plant Floor

Mfg. Support

Leaders

9%

13%

16%

6%

9%

3%

41%

22%

0% 20% 40% 60% 80%



CustomerSupport

Sales & Marketing

ProductDevelopment

IT

Plant Floor

Mfg. Support

Followers

People

Who is Involved in the CI Program?Internal


PeopleBest Practices Lean and MES

64%

50%

59%

0% 20% 40% 60% 80%

Distribution to Customers

Outsourced Mfg. Operations

Suppliers

Leaders

3%

9%

13%

0% 20% 40% 60% 80%

Distribution to Customers

Outsourced Mfg. Operations

Suppliers

Followers

19%

21%

27%

25%

29%

32%

52%

59%

0% 20% 40% 60% 80%


Sales & Marketing

CustomerSupport

IT

ProductDevelopment


Mfg. Support

Plant Floor


25% or more

Who is Involved in the CI Program?External

Leaders have Broad Involvement


Best PracticesLean and MES

How are Business Processes Managed?(routing, procedures, setup, etc.)

Leaders Use IT Systems for BPM

9%

23%

32%

59%

86%

0% 20% 40% 60% 80% 100%

Ad Hoc

Verbal Instruction

InstitutionalKnowledge

Written Documents

IT Systems

Leaders

16%

28%

53%

41%

16%

0% 20% 40% 60% 80% 100%

Ad Hoc

Verbal Instruction

InstitutionalKnowledge

Written Documents

IT Systems

Followers

16%

27%

86%

0% 25% 50% 75% 100%

Follower

Competitor

Leader

Business Process Mgt. in IT Systems

Primary

IT SystemsMore Detail

Process



If BPM is "Embedded in IT systems", which IT systems?

6%

22%

25%

31%

16%

0% 25% 50% 75% 100%

Separate BPM Application

Custom Application

Automation Systems

ERP System

Production Mgt. (MES)

Followers

27%

68%

77%

77%

82%

0% 25% 50% 75% 100%

Separate BPM Application

Custom Application

Automation Systems

ERP System

Production Mgt. (MES)

Leaders

Process

Leaders Use IT Systems for BPM



Portion of Employees who Access a Computer Daily

All have Good Access to a Computer

49%

68%

77%

0% 20% 40% 60% 80% 100%

Direct Labor Non-exempt

Indirect Non-exempt

Indirect Exempt

Leader

51%

77%

87%

0% 20% 40% 60% 80% 100%


Indirect Non-exempt

Indirect Exempt

Competitor

25%

41%

63%

0% 20% 40% 60% 80% 100%


Indirect Non-exempt

Indirect Exempt

Followers

Technology



Access to Information Needed to Perform their Job

67%

72%

69%

0% 25% 50% 75%

Indirect Non-exempt

Direct LaborNon-exempt

Indirect Exempt

Leaders

19%

35%

24%

0% 25% 50% 75%

Indirect Non-exempt


Indirect Exempt

Followers

Leaders Do Better Application Selection

47%

43%

47%

0% 25% 50% 75%

Indirect Non-exempt


Indirect Exempt

Competitors

Technology



What are Your MES Systems?

Leaders Use More MES

28%

28%

31%

25%

6%

6%

0%

6%

0% 20% 40% 60% 80% 100%

AutomationSystem

SandaloneApplication

ERP Module

CustomApplication

Followers

Current Future

64%

68%

68%

86%

9%

5%

5%

5%

0% 20% 40% 60% 80% 100%

AutomationSystem

StandaloneApplication

ERP Module

CustomApplication

Leaders

Current Future

Technology



Bottom line, is Technology an Impediment or Aid to your CI Program?

0%

0%

0%

18%

77%

0% 20% 40% 60% 80%

Major Impediment

Detraction

No effect

Helps

Accelerates

MES

Leaders

6%

3%

9%

19%

9%

0% 20% 40% 60% 80%

Major Impediment

Detraction

No effect

Helps

Accelerates

MES

Followers

Leaders SuccessfullyApply Technology

0%

0%

14%

41%

32%

0% 25% 50%

Major Impediment

Detraction

No effect

Helps

Accelerates

ERP

9%

19%

16%

25%

6%

0% 25% 50%

Major Impediment

Detraction

No effect

Helps

Accelerates

ERPLeaders Followers

0%

0%

5%

32%

59%

0% 20% 40% 60% 80%

Major Impediment

Detraction

No effect

Helps

Accelerates

Automation

3%

3%

9%

22%

9%

0% 20% 40% 60% 80%

Major Impediment

Detraction

No effect

Helps

Accelerates

AutomationLeaders Followers

Technology



How and When are Metrics Calculated?First Pass Yield

All Responses

0%

14%

5%

14%

14%

5%

23%

0% 20% 40%

Quarterly

Monthly

Weekly

Daily

By shift

Each hour

About 15 min.

First Pass Yield

0%

3%

9%

16%

6%

3%

0%

0% 20% 40%

Quarterly

Monthly

Weekly

Daily

By shift

Each hour

About 15 min.

First Pass Yield

When is First Pass Yield Calculated?

Leaders Followers

How is First Pass Yield Calculated?

Leaders Followers

5%

14%

45%

9%

14%

0% 20% 40%

Automation System

ERP

MES

Manually Calculated

Spreadsheet Software

First Pass Yield

Sum = 87% 0%

3%

0%

28%

16%

0% 20% 40%

Automation System

ERP

MES

Manually Calculated


First Pass Yield

Sum = 47%

Leaders use More Metrics More Often

Metrics



How and When are Metrics Calculated?Overall Equipment Effectiveness - OEE

0%

18%

27%

14%

5%

5%

23%

0% 20% 40%

Quarterly

Monthly

Weekly

Daily

By shift

Each hour

About 15 min.

OEE

0%

9%

6%

3%

3%

3%

0%

0% 20% 40%

Quarterly

Monthly

Weekly

Daily

By shift

Each hour

About 15 min.

OEE

When is OEE Calculated?

Leaders Followers

9%

0%

59%

9%

23%

0% 20% 40% 60%

Automation System

ERP

MES

Manually Calculated


OEE

0%

3%

6%

13%

16%

0% 20% 40% 60%

Automation System

ERP

MES

Manually Calculated


OEE

Sum = 38%Sum = 100%

How is OEE Calculated?

Leaders Followers


Metrics



How and When are Metrics Calculated?Scrap and Rework

0%

23%

18%

18%

23%

0%

9%

0% 20% 40%

Quarterly

Monthly

Weekly

Daily

By shift

Each hour

About 15 min.

Scrap and Rework

0%

28%

9%

19%

3%

3%

0%

0% 20% 40%

Quarterly

Monthly

Weekly

Daily

By shift

Each hour

About 15 min.

Scrap and Rework

When is Scrap & Rework Calculated?

Leaders Followers

3%

6%

0%

25%

31%

0% 20% 40%

Automation System

ERP

MES

Manually Calculated


Scrap and Rework

Sum = 65%5%

18%

45%

0%

23%

0% 20% 40%

Automation System

ERP

MES

Manually Calculated


Scrap and Rework

Sum = 81%

How is Scrap & Rework Calculated?

Leaders Followers


Metrics


ConclusionsEmbed BPM in Your MES & IT systems

Automate Business Processes

Consistency

Change Sticks

ManualBusiness Process

Embedded Business Process

Begin Analysis

Identify Improvement

Change Complete

Performance

Time

Make Improvement Continuous

What are the impediments to your continuous improvement program?

All 106 Survey Respondents

Source: Lean Institute Survey of Members 2/04

Primary Obstacle: 36% “Sliding back to old ways”


ConclusionsEmpower the People who do the Work

Involve people throughout the enterprise‟s value stream

Provide real-time visibility and metrics

Value Stream Map“Order to Cash”

Identify in real-timewhen and where to

“Go and See”

25%

26%

31%

34%

39%

59%

0% 20% 40% 60%

Functions for Lean Six Sigma

Quality/SafetyEnforcement

Build Based on Consumption

Historical Data

Flexibility for Changing Demand

Real-time Visibility

Primary Reasons for MES

Primary

Why did you buy a MES?All 106 Survey Respondents

This presentation is copyrighted by ARC Advisory Group (ARC). The information is

proprietary to ARC and it may be not be reproduced without prior permission from ARC.

Intersection of Lean and MESBest Practices

Ralph RioResearch Director

ARC Advisory Group

[email protected]

Agenda

•Research Findings

•Recommendations

ARC's Ralph Rio's Lean MES at ARC's 2008 Industry Forum

Technology

Transcript of ARC's Ralph Rio's Lean MES at ARC's 2008 Industry Forum