For manufacturers, digital transformation often comes down to a simple question: How do we get manual processes and data that isn’t easily accessible into one place?
Imagine you’re a plant manager on the shop floor. You have an Excel spreadsheet that you manage every day. You update it, print it, put it on a clipboard and walk around with it. After signing off on the work, you pass the clipboard to a colleague who enters the information into the ERP system by hand. That’s a lot of effort, and you aren’t even close to capturing transactions as they occur.
So how do you reduce the dependence on Excel, Word and printed paper and get the data into an ERP system where the business can use it in real time?
Lost in translation
I’ve worked for five different manufacturers in roles that included business operations, ERP administration and IT. The teams I led worked directly with shop floor employees. We needed to understand their challenges and then update the business’s system so the shop floor workers could capture useful operations data.
One of the biggest lessons I learned was how much could get lost between the shop floor and the people making strategic technology decisions. The shop floor often lacks a voice in the room. Strategic planning discussions rarely include anyone with boots-on-the-ground experience. Executives may know where they want technology to take the factory, but they don’t always understand where the workers are starting from.
Too often, manufacturers view digital transformation as a technology problem when they need to look at it as a people-and-process problem, starting with the humans instead of the technology. Executives should ask why their employees are still walking around with clipboards and pieces of paper. Why aren’t they entering completed-job information directly into the ERP system?
A good approach is to start at the bottom and build from the shop floor up. The workers who make the products and ship them out the door often have the clearest view of where processes and systems break down. If they aren’t putting data into the system to support broader business decisions, then it’s time to go back to the basics and ask them why.
The invisible wall
Many businesses have built an invisible wall between ERP and the shop floor. The back office routinely uses cloud storage and software while businesses assume shop floor systems must remain tied directly to the machines. If workers are touching machines and tools, the perception is that they can’t use cloud functionality or cloud software. That pushes shop floor systems further behind and forces workers back to their roots: paper and spreadsheets.
The technology is available to connect ERP with the shop floor. The challenge is getting the right people into the strategic planning process and implementing the solutions the factory needs.
Some of the divides go back to the transition from manufacturing resource planning (MRP) to ERP. When I began my career, factories used an MRP system to track time and materials on work orders. The back office used spreadsheets, QuickBooks and similar systems.
The move to ERP encouraged a more top-down approach. Manufacturers tried to bring factories into ERP without drawing enough on the years those factories had already spent using MRP. This is when the invisible wall between the factory and the rest of the business began to rise.
The cost of disconnect
Profit margins erode when employees spend a lot of time working in disparate systems and entering data manually. Manufacturers don’t know the true cost of completing a job. They also can’t improve the process to reduce that cost and improve margins.
The divide slows operators down, too. It forces them back to old habits: paper and pencil, spreadsheets and clipboards. They lose trust in the system and stop putting data into it. They fall back on their peers, relying on their tribal knowledge while the business misses out on that information being captured in the ERP system.
Manual work still consumes a surprising amount of paper. One customer I worked with as a consultant identified 80,000 pieces of paper used in just one of its processes. When we broke that down into reams, the paper alone cost thousands of dollars. But the bigger cost was the information trapped on those pages. Until someone manually entered it into the system, the business couldn’t use that data to make decisions.
In the ERP space, we say, “Tell ERP what you know, when you know it and how quickly you know it.” Then, people can begin making decisions based on real-time data.
The connected factory
Consider a factory with welding bays, ovens, paint booths and an assembly area for cable harnesses. In the old model, a paper card traveled with the parts from one station to the next. Someone signed off and sent it along. That might take five days. There was no clear way to track a job’s status in production or know when it would be ready for shipment.
Today, the physical production process doesn’t disappear when the systems are connected; someone still needs to move the parts. But employees can record the work at each station, while an RFID tag tracks the cart as it moves through the factory. Operators scan the job when work begins and again when it ends.
Managers no longer have to walk around the floor, counting work-in-process inventory. They can check the system and manage by exception instead of constantly running around looking for jobs. The production flow remains largely the same. What changes is the accuracy and timeliness of the information.
Better data also makes quality reports easier to manage. Newer equipment has Internet of Things (IoT) technology built into it. Manufacturers can also connect a PLC to an older machine, capture its operating data and see how well it’s running. They can then decide whether the machine needs to be upgraded to increase output or throughput, or whether the problem lies somewhere else.
Start with the metric
Manufacturers should start with the metrics they’re trying to measure. Then they can determine which systems will solve the problem. They can bring in the workers who use the machines to help decide what data should be captured and how quickly the business needs it.
If the key performance indicator is machine run rate, but the business isn’t capturing the data needed to calculate it, the system can’t provide the answer. Manufacturers first need to determine how to collect that data and then connect it to the systems that can put it to use. They must look at where they want the business to be in three years and build an architecture to support that direction.
I’ve seen this approach work at a manufacturer that has been around for almost 100 years. Everybody uses ERP on the shop floor. The business conducted a process-improvement project in which the workers participated in the design. Everyone who managed the system or entered data became part of the solution.
Over the next five years, the distinction between ERP and manufacturing execution systems may matter less as more real-time shop floor data flows directly into the ERP system. Hardware such as PLCs, barcode readers and RFID tags will play a larger role in capturing that data.
Manufacturers still make real things. The question is how they capture what is happening with those real things in a system. The manufacturers that close that gap will be the ones that start with the people doing the work and build the technology around what they need to know about that work.
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