Lean Digital Thread: Achieving Operational Excellence Is a ‘Must Have’

I'd like to start with a quote by Aristotle: "We are what we repeatedly do. Excellence, therefore, is not an act, but a habit.”

Are current manufacturing processes no longer suitable for electronics? Newer consumer-buying patterns are pressuring factories to rely on technology to become more dynamic and agile. The latest technologies can be successful in streamlining certain processes, but the whole business process, entrenched in bad habits, merits real change.

Here we present five of the most shocking manufacturing statistics positioned to yield the best change-enabling opportunities—the pandemic and the tariff wars took it to the extreme.

1. Ninety-five percent of manufacturing businesses focus on optimizing just 1% of their total business cost.
The once competitive edge of accessing lower-cost labor by offshoring manufacturing is now insignificant.  Yet, it holds our focus while we ignore other compelling factors.

The true proportion of manufacturing vs. other costs is profoundly obvious when you compare a light purchased from a Chinese website for $3.96 (with free shipping) and the same light priced at $19.97 at a local hardware store.

An onshore factory with direct shipping via a small internal, flexible warehouse would be positioned for far greater success than the manufacturing models offering the light for $19.97 with their current distribution setup. 

The labor costs in the onshore example may be much higher than the corresponding factory in China, but those costs are small in comparison to the cost savings from distribution.

2. SMT operations often run at as little as 20% absolute productivity.
Why rely on methods of reporting that enable artificially inflated levels of production?

The truth is that very few SMT operations function in a high-volume way due to pressures to produce a high mix of products and cope with sudden changes in demand. Setup time, changeover time, etc., are often (falsely) considered “unavoidable” losses.

A factory running at 20% absolute productivity (instead of 80%) yields a startling manufacturing-per-product cost that is 400% higher than need be. Lost productivity can be regained by employing common feeder setups that adapt dynamically to customer demand patterns, achievable with today’s best software. Adoption of Lean material management logistics can also enhance fluidity and mitigate losses.

Figure 1: Automation is not only about hardware and software.

3. Seventy-five percent of raw materials in an SMT factory need not be there.
Lean material logistics is essential to SMT production today, particularly for its effectiveness in enhancing inventory accuracy. Adoption of Lean material management can both remove 95% of WIP material on the shop floor and increase data accuracy via the collection of data directly from each SMT machine. 

Further, Lean material logistics can reduce warehouse inventory by as much as 75%, without the risk of shortage occurrences, and affords greater flexibility to production schedules.

4. Thirty percent of products leaving the factory were never tested.
Testing and inspection processes cannot find all defects. Let’s move the emphasis for quality away from testing and toward three steps in manufacturing: 

  • Step 1: Verify setup and operations are administered correctly, consistent with instructions. 
  • Step 2: Strict operational adherence to a process, remove all operational variances. 
  • Step 3: The application and use of traceability data within manufacturing; data that is essential in finding the scope and elimination of any market-quality issue.

Complete and accurate traceability data can be a company’s greatest weapon against market quality issues and can benefit you’re manufacturing far more than standard testing processes. Today, we can even offer another layer of traceability by using machine learning to identify counterfeit components.

5. Eighty percent of factory management know these statistics, but feel powerless.
Executive leadership can view manufacturing as a nonprofit operation, a strictly budgeted entity creating a barrier that prevents performance issues from getting their due attention. It can and needs to be a crossable barrier. Put the above in financial terms and include a volatile customer base. The conclusion is that extreme flexibility from factories is becoming a requirement. It is not just the operation, but also the location of the manufacturing processes that need reassessment.

Figure 2: Busy does not mean productive. 

Applying the information above in a factory that is closely coupled with the market can yield very positive results, but only once people who are responsible for a business ask these questions in a serious way.

If you plan to achieve production excellence, please PM me on LinkedIn.

Sagi Reuven is a business development manager for the electronics industry at Siemens Digital Industries Software. Check out this additional content from Siemens Digital Industries Software:



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