Executive Briefings

The 'New Lean' and Real-Time, Automated Supply Chain Collaboration

Some customers in the manufacturing industry talk about a "New Lean," in which information is part of the order. Yet it's more than that. It's a highly accurate understanding of the status of that order, even the future of that order. And, the customer does not want to pay for that information.

That makes perfect sense. Why should Boeing (or General Motors, Walmart or Johnson & Johnson) pay a premium for information that helps them plan their work schedules or delivery dates?

It often takes enormous time for suppliers to make the rounds and check on production and communicate the information manually. It also takes time for the customer to receive the information and process it. But all of that is unnecessary, in an age of remote sensors, forecasting applications and the internet. Collaboration can be automated-it rarely is, but it can be.

The aerospace and defense industry comes closest to the kind of automation discussed here. Boeing has come to require that degree of information from key suppliers. It must, because its enormously intricate supply chain is impossible to manage manually. If Boeing sells 20 Dreamliner 787s, it will require 20 pilot and co-pilot seats from one vendor; 20 landing assemblies from a second vendor; perhaps 80 self-inflating life raft/escape hatch assemblies from a third vendor, and so on. Boeing cannot simply place thousands of orders and await delivery. It requires far greater collaboration with its vendors. 

Collaboration is Lean

"Yeah, but we do collaborate!" most companies claim. You do, but manually. You don't have truly automated collaboration.

Manual data entry (including order status and delivery dates) has about a 7-percent rate of inaccuracy, according to the Six Sigma experts. I believe the number's far higher. Nevertheless, a 7-percent defect in any business process is a disaster; a percentage of late deliveries that high delays an entire project.

In the New Lean, the customer wants what SAP's CEO Claus Heinrich called "real-world awareness." Never mind buffers, excuses, or margins of error; what is?

"But isn't this just a transaction-based supply chain?" No. Transaction-based business relies upon one event to generate another, like a sale generating an invoice. Most of those transactions still require manual entry, and the transactions are not connected into the extended supply chains of a Boeing or a GM, and include no forecasting.

The only way to provide that degree of collaboration is with automated data collection on a shop floor, and automated alerts to both management and the customer-forward-looking alerts, which tell you of a threat to delivery a week ahead of the due date.

Boeing recognized this, which is why they demand automated shop-floor visibility from some of their vendors. If a sub-assembly is at risk of running behind schedule, it in essence "raises its hand" and declares itself late via an email or some other alert to Boeing. The shop-floor "talks", saying in effect that "all is well" or "I see trouble coming." This way, Boeing knows in advance if something threatens its own schedules.

Boeing is not alone in its demands. The Department of Defense, even Walmart, are coming to require the same degree of collaboration, which is only feasible by making the shop-floor speak for itself-realistically, constantly and automatically.

Source: Omnitrol Networks

Some customers in the manufacturing industry talk about a "New Lean," in which information is part of the order. Yet it's more than that. It's a highly accurate understanding of the status of that order, even the future of that order. And, the customer does not want to pay for that information.

That makes perfect sense. Why should Boeing (or General Motors, Walmart or Johnson & Johnson) pay a premium for information that helps them plan their work schedules or delivery dates?

It often takes enormous time for suppliers to make the rounds and check on production and communicate the information manually. It also takes time for the customer to receive the information and process it. But all of that is unnecessary, in an age of remote sensors, forecasting applications and the internet. Collaboration can be automated-it rarely is, but it can be.

The aerospace and defense industry comes closest to the kind of automation discussed here. Boeing has come to require that degree of information from key suppliers. It must, because its enormously intricate supply chain is impossible to manage manually. If Boeing sells 20 Dreamliner 787s, it will require 20 pilot and co-pilot seats from one vendor; 20 landing assemblies from a second vendor; perhaps 80 self-inflating life raft/escape hatch assemblies from a third vendor, and so on. Boeing cannot simply place thousands of orders and await delivery. It requires far greater collaboration with its vendors. 

Collaboration is Lean

"Yeah, but we do collaborate!" most companies claim. You do, but manually. You don't have truly automated collaboration.

Manual data entry (including order status and delivery dates) has about a 7-percent rate of inaccuracy, according to the Six Sigma experts. I believe the number's far higher. Nevertheless, a 7-percent defect in any business process is a disaster; a percentage of late deliveries that high delays an entire project.

In the New Lean, the customer wants what SAP's CEO Claus Heinrich called "real-world awareness." Never mind buffers, excuses, or margins of error; what is?

"But isn't this just a transaction-based supply chain?" No. Transaction-based business relies upon one event to generate another, like a sale generating an invoice. Most of those transactions still require manual entry, and the transactions are not connected into the extended supply chains of a Boeing or a GM, and include no forecasting.

The only way to provide that degree of collaboration is with automated data collection on a shop floor, and automated alerts to both management and the customer-forward-looking alerts, which tell you of a threat to delivery a week ahead of the due date.

Boeing recognized this, which is why they demand automated shop-floor visibility from some of their vendors. If a sub-assembly is at risk of running behind schedule, it in essence "raises its hand" and declares itself late via an email or some other alert to Boeing. The shop-floor "talks", saying in effect that "all is well" or "I see trouble coming." This way, Boeing knows in advance if something threatens its own schedules.

Boeing is not alone in its demands. The Department of Defense, even Walmart, are coming to require the same degree of collaboration, which is only feasible by making the shop-floor speak for itself-realistically, constantly and automatically.

Source: Omnitrol Networks