Companies require more than just the implementation of IIoT to maintain a competitive advantage over low-cost countries that produce high-quality products.
One of the biggest challenges U.S. companies face today is the outsourcing of manufacturing jobs to low-cost countries such as China, India, Vietnam, and Bangladesh. As one strategy to create a competitive advantage over low-cost countries, some businesses have invested in and implemented connected networks known as the Industrial Internet of Things, or IIoT, in an attempt to provide more value and serve customers more effectively.
These advanced technology systems provide manufacturers with real-time, end-to-end operational information that enables quick response times and adaptability to changing market conditions. However, most companies are unable to respond quickly to the real-time data because they are structured around traditional mass production techniques.
Mass Production to Mass Customization
Customers have access to a plethora of information on the products and services they need because of connected networks and mobile devices. As a result, they are demanding top quality, custom-engineered products at faster delivery rates and lower costs.
An MPI Group Internet of Things study found that manufacturers who have, or are considering to, adopt IIoT want to improve their product quality, speed of operations, machine maintenance and uptime, and information for business analytics while decreasing their manufacturing costs so they can quickly respond to today’s customer requirements.
According to Rajan Suri, Professor and Director of the Center for Quick Response Manufacturing at the University of Wisconsin-Madison, companies require more than just the implementation of IIoT to maintain a competitive advantage over low-cost countries that produce high-quality products. They need to shift their strategic thinking away from mass production towards “mass customization”—providing individually tailored products with short lead times.
“Implementing Quick Response Manufacturing (QRM) is a critical prerequisite for mass customization and the journey towards IIoT technologies,” says Suri. QRM is “a company-wide strategy aimed to reduce lead times to enable quick response, improve quality, and reduce costs for manufacturers of low-volume, high-variety or customized products.”
Realizing the Power of Time
Traditionally, manufacturers have focused on scale and cost management strategies based on the division of specialized labor and hierarchical department structures.
“When you make the same thing at high volumes, it is best to have specialized workers do that one job to increase efficiency,” says Suri. “There is also top-down control so that the people meant to do the work can focus on the work and somebody higher up, such as managers and supervisors, can make the business decisions.”
However, hierarchical structures lengthen lead times, and long lead times contribute to various overhead and indirect costs including excessive forecasting, planning, expediting, warehousing, lost sales, obsolescence, work in progress (WIP), finished goods, research and development, raw materials, purchased parts, etc.–lowering an organization’s overall competitiveness.
As IIoT systems track evolving market changes, companies that do not consider QRM lack the flexibility and agility to serve the customer as changes are observed through the data coming in. Quick decisions are delayed as they pass through the various levels of the hierarchy and lead time continues to increase.
Rethinking Organization Structure
When it comes to traditional structures, Suri questions where the data goes and who is responsible for making the final decisions on what to do with it. “If [data] goes to all the different departments simultaneously, are the people in each department going to be making decisions independently without talking to each other and creating uncoordinated (and possibly incoherent) responses? Or conversely, will they wait for information to go up the hierarchy and across and down, back-and-forth, and hence create long delays?”
QRM enables businesses to rethink their organizational structure across the entire enterprise. It transforms traditional functional departments into “QRM cells”. Each cell is designed around a Focused Target Market Segment (FTMS) and includes workers that are cross-trained in different areas and disciplines.
“Having employees who are crossed-trained in five different areas as opposed to five different departments being involved provides manufacturers the flexibility needed to deal with various issues that span across the traditional boundaries of mass production,” says Suri. “QRM teams are more efficient in managing all of the data from IIoT and holistically decide what purpose and value it offers customers,” says Suri.
Understanding and Exploiting System Dynamics
For QRM cells to be successful, manufacturers need to shift their efficiency and utilization goals to response times goals.
“With mass production you have economies of scale, placing emphasis on increased efficiency and the highest utilization of people and machines to minimize costs. However, when manufacturers focus on efficiency and utilization, they lose track of time. As resources get busier, wait times for certain projects increase, preventing companies to quickly respond to changes,” says Suri.
Manufacturers of high-variety, low-volume production should strategically invest in spare capacity. In his book, It’s About Time, Suri explains that while it may cost more to operate an area with a little more labor or equipment, the shorter lead times result in lower system-wide “waste” and the reduction in these costs outweigh the cost of additional resources.
Implementing a Unified Strategy Enterprise-Wide
As manufacturers continue to look towards IIoT to provide visibility for all of their processes and enable them to be more responsive to market conditions, they need to consider QRM to take full advantage of IIoT benefits.
“If we don’t have the structure in place to enable people to take advantage of these technologies, how are we going to use it to get back to the customer with something useful and valuable to them?” asks Suri.
Each company needs to figure out how to deal with the data based on their organization, their customers’ needs, the products and services they provide and the markets they serve.
To learn more about Quick Response Manufacturing, please register for the upcoming WOTM workshop in Rockford, Illinois: “It’s About Time! Increasing Your Competitive Advantage Through Quick Response Manufacturing (QRM)”—Presented by Rajan Suri, Emeritus Professor of Industrial Engineering at the University of Wisconsin-Madison. Visit http://www.wotm-rockford.com/events for registration details.