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The Coming of Age for Small to Mid-Sized Manufacturers

Ways to modernize your company and stay competitive

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Just recently, on a busy plant floor in Kentucky, a rapidly growing manufacturing company was on the verge of elevating its business to the next level and competing with major suppliers. Unfortunately, it was experiencing difficulties with its outdated manufacturing systems - so outdated that the company was still working out of antiquated material and inventory log books. At five cases of paper a month, that was too much of a paper trail. We have been around for a lot of years and a lot of the procedures we have in house have come from the early days, when we were manufacturing 30 years ago, said the owner. We just never moved and it was time for us to become more modern. This truthful tale is not unfamiliar to many small to mid-sized manufacturers still manually counting inventory with pen and paper each month and transferring data by hand into Excel. Like the growing company above, more and more manufacturers are realizing the need to become more sophisticated in order to compete in todays demand-driven global economy. With the pervasiveness of the Internet, small businesses are no longer immune to the threat of distant competition and there is a

Think you cant afford

to modernize? Can you afford not to?

great need to stay competitive in the face of increasing domestic and global competition, without going into huge debt. Think you cant afford to modernize? Can you afford not to? But what does it mean to become more modern? What changes should small to mid-sized manufacturers implement to bring their company to the next level? Read below for seven practical ways to make your business more sophisticated. No. 1: Real-Time Shop Floor Communication Every manufacturer is acutely aware that their money is made on the plant floor. So the ability to go the shop floor and understand exactly how your machines are performing, in real time, is perhaps the number one most important change a manufacturing company can make to become more modern. With real-time collection of work center information, manufacturers can prevent problems like downtime, poor machine performance and overruns that can quickly erode your profits.
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But simply collecting the information is not enough. Top of the line real-time machine monitoring programs will offer superior analytic options for proactive, rather than reactive, manufacturing that reveals hidden issues as they occur. Modern real-time tools give you the flexibility to automatically respond to changes in areas such as inventory, production status, customer requests and even compliance mandates. No. 2: Automation Many manufacturing companies still hold onto a do it the way its always been done mentality, but great technological strides have been made to automate shop floor functions. The concept of automation no longer means a robot moving a part from a conveyor to a box. Think about how your employees use shop floor equipment and ask if there is a way that readily defined, repetitive and easily programmed activities could be automated to decrease labor costs or re-allocate employees for increased productivity in other areas.

Become proactive, rather than


reactive, by revealing hidden issues as they occur.

Are your employees wasting valuable time searching for stored inventory or moving inventory multiple times around the warehouse? With automation, go beyond simple scanning to know the specific rack location to place inventory after production or the cross-dock shipping prep location when it is time to move products out the door. Automation has a multitude of uses, including weigh scale interfaces that convert weight into parts (saving hours of manual counting or improperly filled orders) and formulas that build pallets to a required specification for optimal shipping. No. 3: Electronic Data Interchange (EDI) Many large OEM companies, especially those in the automotive industry, require electronic data interchange capabilities (be it traditional EDI, XML or spreadsheets) from their suppliers in order to conduct business. In addition to opening doors to new relationships, a robust EDI program should reduce order entry time and increase customer service. Rather than your employees manually (and with potential data entry errors) updating orders, EDI can electronically enter orders and updates, track changes and send advanced shipping notices and invoices automatically, thus eliminating the labor hours required to do this manually.
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No. 4: Optimized Software Many small to mid-sized manufacturers are still running their shop floor schedules in Excel, their accounting tasks in QuickBooks and even their inventory control through log books. There is no integration of information across systems and there is great risk for redundant data entry and manual data entry errors. With essential business information spread out across many different programs, accurate inventory reporting, forecasting and other business intelligence tools are inaccessible, resulting in much wasted time, inventory and money. If you work with more advanced software, like a manufacturing execution system (MES) or warehouse management system (WMS), how do you tell if the software is optimized? Simply ask: Is there duplication of data through multiple databases? This happens when third-party systems for applications such as EDI, MES, quality, product lifecycle management (PLM) and customer relationship management (CRM) are bolted on. Optimized software should offer one version of the truth stored in a single database, allowing for information to be available to all applications required to run your enterprise. Optimized software should also continue to grow with the pace of technology and your company. How many updates have you been provided over the last few years? There is no need to outgrow software when it continues to remain on the cutting edge.

Optimized software should offer one version of the truth stored


in a single database, allowing for information to be available to all applications required to run your enterprise.

No. 5: Broader Offerings To stay competitive in todays demanding economy, manufacturers must bring products to market quickly, efficiently and cost effectively. No longer are manufacturers micro-focusing on only one element of the manufacturing process. Many companies are becoming more of a one-stop shop, from the cradle to the grave, including design and tool making to stamping, finishing, packing and shipping.

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When creating a new product, clients do not want the hassle of coordinating multiple vendors to get their creation from idea to finished product. Expanding your product offerings allows greater flexibility, a potentially lower price point and better customer service for your customers. Additionally, the ability to tightly control the entire production process allows manufacturers to reduce development time and costs while ensuring customer satisfaction. No. 6: Mobility According to The Nielson Company, Smartphones will overtake feature phones by the end of 2011.* Whether employee purchased or company provided, mobile devices have entered the workplace and are redefining the way businesses are run. Today, being on the road and connected is essential to conducting business. Implemented correctly, mobility can redefine the way manufacturing companies run their businesses and increase their competitive edge while also cutting costs. But dont sell yourself

Mobile devices have entered the workplace and are redefining the way businesses are run.

short. While most programs boast that they offer a mobile customer relationship management (CRM) program, some innovative programs have taken it many steps further and offer a complex mobile package (for both Smartphones and tablets) including warehouse management, enterprise manufacturing intelligence, quality control and real-time machine monitoring information. As mobile technology continues to transfuse itself into the shop floor, manufacturers are beginning to rely on hand-held tablets for nearly everything from workflow alerts to document control. Clipboards with checklists and binders full of instructions are going by the wayside as more accurate, paperless options are taking over. With large screens for easy viewing and the ability to have the most current documents at your fingertips at all times, expect to see a surge of tablets on the shop floor. No. 7: A State-of-the-Art Quality System Quality management can be a sensitive subject, especially if your quality system is outdated or not up to par. But with the right interconnected quality system, manufacturers can loudly boast about their lot traceability, quality analysis and stringent compliance capabilities.
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A modern quality system should track everything from corrective actions (CAR/CAPA) to engineering change orders (ECO), as well as provide thorough failure mode and effects analysis (FMEA), product lifecycle management (PLM)/device history records (DHR) and statistical process control (SPC). It should have an automatic electronic workflow system for secure and traceable work approvals. Lot traceability should be detailed and visible through every step of the process for easy TS, FDA and ISO compliance. But most importantly, a modern quality system should be interconnected through every aspect of your manufacturing plant to alert all departments if something is out of specification. For example, when a part lot fails to conform, shipping receives an automatic alert to hold the shipment, inventory receives an alert for more raw materials and customer service receives an alert to contact the client, all with the push of a button.

While the seven suggestions listed above to modernize will offer manufacturing companies a necessary competitive advantage, if brought into a manufacturing facility in a non-cohesive or haphazard way, manufacturing operations could be adversely affected. Alternatively, if not implemented correctly or utilized to the fullest, the above seven changes could easily waste the precious dollars you have invested. Fortunately, there are invaluable resources out there to bring together the modern improvements suggested above, specifically enterprise resource planning (ERP) software. But not all manufacturing ERP software is created equal. Do your research and find an ERP provider that will offer: Minimal Third-Party Logistics: Many ERP providers do not offer complete systems. Their disparate software offers some basic services and they simply contract with other third-parties to offer other necessary services (EDI, CRM, quality, accounting, etc.). Best-of-breed, they boast. But contracting with other third-parties and still maintaining a workable interface can be expensive, difficult to maintain and require a dedicated IT staff.
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You are familiar with the companies that experience third-party logistics nightmares on a daily basis: They have hung up giant white boards to coordinate all their different programs that require maintenance, complete with dates for upgrades, individual contract terms and various pricing packages. When they need technical support, these companies go down an extensive vendor list and spend hours on the phone with different companies, each one accusing the other of being the root of the problem. It doesnt have to be that way. Innovative ERP software providers offer an all-in-one option a single-source database, one-stop shop for everything your business needs, including support, training, implementation, sales, programming and development. Integration costs are eliminated, there is a lower overall cost of investment and companies see a quicker return on investment (ROI). Additionally, integration of information across modules means transactions are updated instantly throughout the entire system in real time, with no delays. Industry-Specific: Every manufacturing industry has special requirements. The medical industry requires secure electronic signature workflows and document control to comply with 21 CFR Part 11, while the automotive industry requires tools supporting ISO 9001 and product lifecycle management. Unfortunately, many companies

Innovative ERP software providers offer an

do not seek out industry-specific solutions when choosing an ERP system they settle for less. But why should they? Why

all-in-one optiona single-source database, one-stop shop for all your business needs.

should an extruder measure in parts rather than feet and an assembly or fabrication company use finite scheduling rather than dispatch lists? You should not have to drastically change your organization to fit your ERP software, your ERP software should come built to fit your organization and simply enhance processes and procedures. An Open Door to Improvements: When you make the big decision to invest in an ERP system, you are not just a customer; you are a development partner. ERP software should meet the practical needs of its clients and that
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information should come from the client. Do you want the ERP provider with thousands of employees and a 100:1 ratio of clients to developers, or do you want a company that makes the specific changes you request to fit your unique business requirements in a timely fashion? Dont be just a sales number. Find the company with a community, a road map and an open door to making changes necessary to keep you both competitive.

About IQMS Since 1989, IQMS has been designing and developing manufacturing ERP software for the repetitive, process and discrete industries. Today, IQMS provides leading real-time manufacturing, accounting, production monitoring, quality control, supply chain, CRM and eBusiness solutions to the automotive, medical, packaging, consumer goods and other manufacturing markets. The innovative, single-database enterprise software solution, EnterpriseIQ, offers complete functionality and scalable solutions designed to adeptly grow with the client. With offices across North America, Europe and Asia, IQMS serves manufacturers around the world.

*http://blog.nielsen.com/nielsenwire/consumer/smartphones-to-overtake-feature-phones-in-u-s-by-2011/

Trademark and Copyright Acknowledgement Copyright IQMS 2011. IQMS is a registered trademark of IQMS. All other trademarks acknowledged.

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