Intersection of Lean and MESIntersection of Lean and MESB t P tiB t P tiBest PracticesBest Practices
Ralph RioResearch Director
ARC Advisory Group
rrio@arcweb com
Agenda
•Research Findings
•Recommendations
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.
Where Lean & MES IntersectWhere Lean & MES Intersect
Agenda:Agenda:
Lean and MES Trends
Best Practice Study Process
Survey Results
Recommendations
2© ARC Advisory Group
Market TrendsIs there a connection?Market TrendsIs there a connection?
Improvement Programs: 69%Lean Mfg.35%Lean Mfg.
Q4 2005 Q1 2007
g
Lean Adoption Nearly Doubles 2%
52%
TQM
Six Sigma
18%
34%
TQM
Six Sigma
0%
0% 25% 50% 75%
TOC8%
0% 25%
TOC
MES Market:‘05 to ‘06 Market
2.0
ForecastedBillions
Visibility to Manage• Agility
05 to 06 Market Grew 27.2%
0.5
1.0
1.5Forecasted
CAGR = 14.5%
3© ARC Advisory Group
• Speed 0.0
'06 '07 '08 '09 '10 '11Source: ARC Advisory Group “CPM Systems Worldwide Outlook for Discrete Manufacturing”
Lean and MESSurvey Lean and MESSurvey
RespondentProfile
Revenue
106 Survey Respondents
18%
30%
$25 to $250
$250 million to $1 billion
Over $1 billion
Styles of Manufacturing Continuous Improvement Program
Primary Improvement Program
21%
31%
0% 20% 40%
Under $25 million
$25 to $250 million
29%
38%
49%
Continuous
Assembly Lines
Batch/Lot
14%
22%
39%
Six Sigma
Lean Six Sigma
Lean/TPS Lean61%
20%
21%
0% 20% 40% 60%
Packaging
Job Shop
64%Discrete
Primary Industry
2%
12%
11%
No Program
Other
TQM
0% 20% 40% 60%
1%
12%
23%
Utilities
Process
Hybrid0% 20% 40% 60%Sum = 100%
4© ARC Advisory Group
1%
0% 20% 40% 60% 80%
Utilities
For these attributes, the Leaders, Competitors and Followers have similar profiles
Scope of ResearchLean and MESScope of ResearchLean and MES
DimensionsP l• People
• Processes• Technology
ProductionManagement
• Technology• Metrics
C t iCategories• Leader• Competitor Maturity Matrix• Competitor• Follower
People Processes Technology Metrics
Leader Best Practices
Competitor Common Practices
5© ARC Advisory Group
Competitor Common Practices
Follower Poor Practices
Best Practices Lean and MESBest Practices Lean and MES People
Who is Involved in the CI Program?Internal
77%Mfg. Support
Leaders
22%
Followers
Internal
59%
64%
68%
Product
IT
Plant Floor
9%
3%
41%
50%
55%
59%
CustomerSupport
Sales & Marketing
Development
16%
6%
9%
Fully: Over 75%
Partially: 50 to 75%of people36%
41%
0% 20% 40% 60% 80%
Accounting & Finance
Recv, Stock, & Shipping
9%
13%
0% 20% 40% 60% 80%
6© ARC Advisory Group
Leaders have Broad Involvement
0% 20% 40% 60% 80% 0% 20% 40% 60% 80%
PeopleBest Practices Lean and MESBest Practices Lean and MES
Who is Involved in the CI Program?External
Leaders Followers
External
50%
59%
Distribution to
Outsourced Mfg. Operations
Suppliers
9%
13%
64%
0% 20% 40% 60% 80%
Distribution to Customers 3%
0% 20% 40% 60% 80% 25% or more
7© ARC Advisory Group
Leaders have Broad Involvement
Best PracticesLean and MESBest PracticesLean and MES Process
How are Business Processes Managed?(routing, procedures, setup, etc.)
L d F ll
59%
86%
I i i l
Written Documents
IT Systems
Leaders
41%
16%
Followers
86%Leader
Business Process Mgt. in IT SystemsIT SystemsMore Detail
9%
23%
32%
Ad Hoc
Verbal Instruction
InstitutionalKnowledge
16%
28%
53%
n
16%
27%
Follower
Competitor
0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80% 100% 0% 25% 50% 75% 100%
Primary
8© ARC Advisory Group
Leaders Use IT Systems for BPM
Best Practices Lean and MESBest Practices Lean and MES Process
If BPM is "Embedded in IT systems", which IT systems?which IT systems?
FollowersLeaders
31%
16%
77%
82%
ERP System
Production Mgt. (MES)
22%
25%
68%
77%
Separate BPM
Custom Application
Automation Systems
6%
0% 25% 50%
27%
0% 25% 50% 75% 100%
Separate BPM Application
9© ARC Advisory Group
Leaders Use IT Systems for BPM
Best Practices Lean and MESBest Practices Lean and MES Technology
Portion of Employees who Access a Computer DailyAccess a Computer Daily
77%
I di t
Indirect Exempt
Leader
87%
Competitor
63%
Followers
49%
68%
0% 20% 40% 60% 80% 100%
Direct Labor Non-exempt
Indirect Non-exempt
51%
77%
0% 20% 40% 60% 80% 100%
25%
41%
0% 20% 40% 60% 80% 100%0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80% 100%
10© ARC Advisory Group
All have Good Access to a Computer
Best Practices Lean and MESBest Practices Lean and MES Technology
Access to Information Needed to Perform their JobPerform their Job
69%
Di L b
Indirect Exempt
Leaders
24%
Followers
47%
Competitors
67%
72%
Indirect Non-exempt
Direct LaborNon-exempt
19%
35%
47%
43%
0% 25% 50% 75% 0% 25% 50% 75%0% 25% 50% 75%
11© ARC Advisory Group
Leaders Do Better Application Selection
Best Practices Lean and MESBest Practices Lean and MES Technology
What are Your MES Systems?
F ll
31%
25%
0%
6%
e
Followers
68%
86%
5%
5%
ERP Module
CustomApplication
Leaders
28%
28%
6%
6%
64%
68%
9%
5%
AutomationSystem
StandaloneApplication
0% 20% 40% 60%Current Future
0% 20% 40% 60% 80% 100%
12© ARC Advisory Group
Leaders Use More MES
Best Practices Lean and MESBest Practices Lean and MES Technology
Bottom line, is Technology an Impediment or Aid to your CI Program?Impediment or Aid to your CI Program?
Leaders Followers 32%Accelerates
ERP
6%
ERPLeaders Followers
18%
77%
Helps
Accelerates
MES
19%
9%
MES
0%
14%
41%
M j
Detraction
No effect
Helps
19%
16%
25%
t
0%
0%
0%
Major
Detraction
No effect
6%
3%
9%0%
0% 25% 50%
Major Impediment 9%
0% 25%
Automation AutomationLeaders Followers
0%
0% 20% 40% 60% 80%
Major Impediment 6%
0% 20% 40%
5%
32%
59%
No effect
Helps
Accelerates
9%
22%
9%
t
13© ARC Advisory Group
Leaders SuccessfullyApply Technology 0%
0%
0% 20% 40% 60% 80%
Major Impediment
Detraction
3%
3%
0% 20% 40%
Best Practices Lean and MESBest Practices Lean and MES Metrics
How and When are Metrics Calculated?First Pass YieldFirst Pass Yield
First Pass Yield rst Pass Yield
When is First Pass Yield Calculated?
Leaders Followers
How is First Pass Yield Calculated?
Leaders Followers
All Responses
14%
5%
23%
By shift
Each hour
About 15 min.
6%
3%
0%
t
r
45%
9%
14%
MES
Manually Calculated
Spreadsheet Software
0%
28%
16%
14%
5%
14%
14%
Monthly
Weekly
Daily
y
3%
9%
16%
y
y5%
14%
45%
0% 20% 40%
Automation System
ERP
MES
Sum = 87% 0%
3%
0%
0% 20% 40%
Sum = 47%
0%
14%
0% 20%
Quarterly
Monthly
0%
3%
0% 20%
y
y0% 20% 40% 0% 20% 40%
14© ARC Advisory Group
Leaders use More Metrics More Often
Best Practices Lean and MESBest Practices Lean and MES Metrics
How and When are Metrics Calculated?Overall Equipment Effectiveness - OEEOverall Equipment Effectiveness OEE
OEE OEE
When is OEE Calculated?
Leaders FollowersOEE OEE
How is OEE Calculated?
Leaders Followers
5%
23%
B hift
Each hour
About 15 min.
3%
0%
59%
9%
23%
MES
Manually Calculated
Spreadsheet Software
OEE
6%
13%
16%
OEE
27%
14%
5%
Weekly
Daily
By shift
6%
3%
3%
9%
0%
59%
Automation System
ERP
MES
0%
3%
6%
Sum = 38%Sum = 100%
0%
18%
0% 20% 40%
Quarterly
Monthly
0%
9%
0% 20% 40%
0% 20% 40% 60% 0% 20% 40% 60%
15© ARC Advisory Group
Leaders use More Metrics More Often
Best Practices Lean and MESBest Practices Lean and MES Metrics
How and When are Metrics Calculated?Scrap and ReworkScrap and Rework
Scrap and Rework nd Rework
When is Scrap & Rework Calculated?
Leaders Followerscrap and ReworkS d R k
How is Scrap & Rework Calculated?
Leaders Followers
23%
0%
9%
By shift
Each hour
About 15 min.
p
3%
3%
0%
%
25%
31%t
crap and Rework
0%
23%
MES
Manually Calculated
Spreadsheet Software
Scrap and Rework
18%
18%
23%
Weekly
Daily
By shift
9%
19%
3%
3%
6%
0%
Sum = 65%5%
18%
45%
Automation System
ERP
MES
Sum = 81%
0%
23%
0% 20%
Quarterly
Monthly
0%
28%
0% 20%
y0% 20% 40%0% 20% 40%
16© ARC Advisory Group
Leaders use More Metrics More Often
ConclusionsEmbed BPM in Your MES & IT systems ConclusionsEmbed BPM in Your MES & IT systems
Automate Business Processes
ConsistencyWhat are the impediments to your continuous improvement program?
Change Sticks
Embedded in
ce
p p gAll 106 Survey Respondents
Business Process
Performan
ManualBusiness Process
Begin Analysis
Identify Improvement
Change C l t
Time
Source: Lean Institute Survey of Members 2/04Primary Obstacle: 36% “Sliding back to old ways”
17© ARC Advisory Group
Complete
Make Improvement Continuous
ConclusionsEmpower the People who do the WorkConclusionsEmpower the People who do the Work
Involve people throughout the enterprise’s value stream
Value Stream Map“Order to Cash”
Provide real-time visibility and metricsPrimary Reasons for MES Why did you buy a MES?All 106 Survey Respondents
Identify in real-timewhen and where to 34%
39%
59%
Historical Data
Flexibility for Changing Demand
Real-time Visibility
when and where to“Go and See”
26%
31%
Functions for
Quality/SafetyEnforcement
Build Based on Consumption
18© ARC Advisory Group
25%
0% 20% 40% 60%
Functions for Lean Six Sigma
Primary
Intersection of Lean and MESIntersection of Lean and MESB t P tiB t P tiBest PracticesBest Practices
Ralph RioResearch Director
ARC Advisory Group
rrio@arcweb com
Agenda
•Research Findings
•Recommendations
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.
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