Advanced
Finite Capacity Planning and Scheduling Helps SMC Improve Customer Service
Roberta
Jung, Chris Mulherin, and Terry Riggles, SMC Pneumatics Inc.
Introduction
SMC Pneumatics, headquartered in Japan, is
the world’s largest manufacturer of pneumatic components.
The company’s philosophy is “the closer we get to our customers,
the better we can serve them”. This
philosophy has significant impact on the way SMC manufactures its product.
Partially to be near its customers, the company has located its
facilities around the globe, with manufacturing, engineering and administration
facilities located in four continents, and subsidiaries in all of the
world’s industrialized countries.
SMC structures and operates its plants so
that they can provide maximum customer service and responsiveness, making
use of manufacturing methods perfected over the company’s 33 year history.
For instance, SMC has made worldwide use of techniques popularized
in Japan, such as cellular manufacturing and U-Line assembly.
However, SMC has not allowed tradition to prevent operations from
modifying procedures to suit local conditions.
As long as overall company goals are met, local operations have
the freedom to try innovative, customized solutions.
This article describes one such solution.
SMC’s largest North American plant is located
in America’s heartland, Indianapolis, Indiana.
Although it makes extensive use of manufacturing techniques popularized
in Japan, this facility operates in an environment different from SMC’s
home market. Therefore, to improve customer responsiveness and delivery
the efficiency of manufacturing operations, the Indianapolis plant turned
to a Made in America solution, advanced finite capacity planning and scheduling
software from Waterloo Manufacturing Software.
Company
background
In 1977, SMC established their North American
headquarters in Indianapolis, Indiana.
Today, this facility serves as a base for manufacturing, design,
sales and technical support. Business
has grown so that SMC has expanded its North American operation to include
plants in Los Angeles, Toronto, and Mexico City, as well as over a dozen
regional sales and warehouse facilities.
SMC Indianapolis’ pneumatic components are
used primarily in industrial applications.
Its customers include machine builders and providers of industrial
automation equipment, as well as companies involved in the automotive,
electric and electronics industries.
Large customers early in the company’s history
included Japanese companies such as Honda, Toyota, Sony and Panasonic
who had transplanted manufacturing operations to the United States.
In addition to these firms, today, SMC’s customers include many
major domestic manufacturers such as TRW, Anheuser-Busch and Eli Lilly.
From
distribution to manufacturing
Initially, the Indianapolis facility started
out as a distribution center. As
the amount of business done by Japanese transplant firms increased throughout
the 1980’s, and as the company penetrated the domestic market, the volume
of SMC’s North American business increased dramatically.
In order to handle this volume, and to maintain
customer closeness, the Indianapolis facility evolved from executing primarily
a distribution function, to doing light assembly, to performing a number
of high volume, high value added operations which take product from raw
material through to finished assemblies.
The
business problem
Managing change is never easy, and continually
increasing production requirements have presented the Indianapolis facility
with many challenges. However,
the situation is greatly compounded by SMC’s basic philosophies.
Superior customer service requires a balance.
It requires that customers be able to order the type of product
that best meet their needs.
Superior customer service also requires that
customers receive their product in a timely manner.
This commitment to service results in SMC offering a large product
line (over 6,000 different pneumatic components and assemblies), which
includes a huge number of variations (over 50,000).
SMC’s customers tend to take advantage of their diversity. This, in turn, leads to increases in overall production volume
that tend to get spread out over a wide range of part numbers.
Since it would be prohibitively expensive
for SMC to stock sufficient quantities of all product variants, the Indianapolis
facility tends to operate in a make-to-order environment.
An extremely large volume of low quantity orders for many different
part numbers, which are of varying sizes and configurations, and which
have differing production routings, characterizes this environment. All of these orders are characterized by very short lead times.
The
key to success
The Indianapolis plant’s challenge in this
environment is to maintain and continuously improve customer delivery,
while controlling costs. One
way these goals can be reached is through good production scheduling.
SMC accomplishes this task admirably in Japan.
However, given the company’s large share of the Japanese market,
part number production volumes are much higher and customer demand is
much easier to predict. Therefore,
techniques used in Japan are not directly transferable to the situation
in North America. The Indianapolis
plant had to develop scheduling techniques that suited its own unique
situation.
Unfortunately, as production volumes grew
at a rate exceeding 30%, by the early 1990’s the plant began to have increasing
difficult scheduling. The
problem was particularly acute in the machining area.
Machining is the highest value added process in the plant.
It is also an area of the plant where changeover and set up times
can consume valuable capacity.
At this time the Production Control Group
of the Indianapolis plant was following a scheduling procedure that made
use of programs it had developed in house using the DBASE database software.
The procedure required high degrees of manual data input.
Given the large number of orders completed daily, data maintenance
alone consumed a significant portion of the scheduling staff’s time. The
system also didn’t explicitly consider production loads or available capacity.
The best a scheduler could do with the software
and data available at the time was to develop a highly arbitrary daily
machine schedule. Sometimes
the schedule was achieved, but more often then not it was missed.
Also, the procedure provided schedulers little help resolving the
never-ending battle between “customer service and efficiency”.
While SMC’s philosophy mandated that customers receive product
in a timely manner, wherever possible, the production department wanted
to schedule similar work together to maximize machine uptime.
A
planning and scheduling solution
It was clear to the staff at the Indianapolis
plant that better scheduling was the key to improved customer delivery
in an environment of high production growth where order quantities and
volumes varied widely. Based
on experience with their existing systems, Production Control staff felt
that any solution had to explicitly consider available capacity and, therefore,
had to be able to schedule in a finite manner.
Given the large amount of functionality desired, it was obvious
that SMC would have to purchase commercially available software rather
than seek to develop a package in house.
The Production Control Group also had a preference for a PC based
solution so that staff could be as self sufficient as possible during
the implementation.
Based on input from staff in the Production
Control Group and the Production Department, Production Control began
a search for commercially available software, lead by the Supervisor of
Production Control. Over
a two-month period, staff contacted a number of vendors and received multiple
on site demonstrations. Follow
up presentations involved senior managers in Management Information Systems
and Production Management.
The Indianapolis facility purchased TACTIC,
a personal computer based advanced finite capacity planning and scheduling
software package developed, marketed, and supported by Waterloo Manufacturing
Software (WMS) of Wellesley, MA. TACTIC helps easily and effectively schedule
manufacturing operations in a finite manner.
The software allows “what-if” schedules to be interactively generated
and allows schedulers to see the impact of potential improvements, as
well as unforeseen shop floor occurrences, on customer delivery.
Production Control staff members were especially
impressed with the software’s generic data interface.
They felt they could easily link the software with data in the
facility’s IBM mainframe as well as with its existing PC based shop floor
control system.
Training
and implementation
The Production Control group assumed responsibility
for the implementation of the software and put together an implementation
team. The team consisted
of the Production Control Supervisor, the Production Control Group Leader
and other Production Control staff members as needed.
Team members remained responsible for their regular duties.
The team was able to quickly implement TACTIC in the plant’s machining
area, the highest value added and greatest bottleneck area of the plant,
and within five weeks began receiving benefits.
The team began the implementation with one
week of training and implementation assistance from WMS.
This session helped the Production Control Group understand the
function and features of the software, helped identify interface issues
with other systems and helped establish some of the necessary file transfer
links. The team also used
the training session to expose everyone even remotely involved with scheduling
to the software. Team members
hoped this exposure would help gain organizational acceptance for the
scheduling approach.
As part of the initial week of implementation
assistance, WMS helped model all of the production resources to be scheduled.
WMS also wrote software to extract production completion data from
the plant’s PC based shop floor control system and started on a program
to extract routing data from a PC based routings and standards data base.
Finally, WMS helped specify the necessary program to be written
by the MIS Department to down load customer order information from the
IBM mainframe.
Immediately after the session with WMS, the
team plunged into the implementation.
The first step was to complete the down load of routings.
Once routings were transferred to the system, the staff was able
to manually enter work orders and begin scheduling. A few weeks later, the MIS group completed their portion of
the project and the transfer of order data was automated.
Once scheduling began, problems surfaced. These problems were not specifically software related, but
are the types that occur whenever an organization attempts to rapidly
change the way it operates. The
implementation ran into problems in the areas of data accuracy, training
and organizational acceptance.
For the first time, the plant was actively
seeking to use its routings and standards database, and the standards
information, in particular, was not up to the test.
Problems were highlighted when the Production Department consistently
finished work sooner or later than the software indicated.
By underscoring standards problems, the software helped the plant
rapidly improve its data.
Other implementation problems were training
related. When the plant actually
got up and running with the software, quite a few staff members were involved
one way or another with the scheduling system.
While they may not have been actively scheduling, the reporting,
clerical, and support functions that they provided were critical to the
system’s overall success. The large volume of orders that the Production
Department rapidly produced required frequent scheduling, which in turn
required that the support tasks be carried out in a timely, highly accurate
manner. Once the team identified
training as an area of concern, it immediately documented all tasks related
to the software’s operation and trained staff members in these procedures,
quickly and effectively solving the problem.
Only time solved the last set of problems. Even though the team had actively involved personnel from the
Production Department in the initial software selection and training process,
some staff remained skeptical that finite scheduling would be of benefit.
They feared that the software would spit out schedules that would
force them to set up and run work in an inefficient manner.
The entire Production Control Group alleviated their fears by continually
involving others in the scheduling process and by showing them how the
software could be used in a manner that incorporated their input to ensure
that the best scheduling decisions were made.
As better and better schedules were generated, the benefits of
the software became obvious.
Ongoing
use
The Indianapolis plant has successfully been
using TACTIC in the machining area for over a year.
The Production Control Group starts a typical day’s use of TACTIC
by downloading orders from the mainframe.
Hot orders that cannot wait until the next
morning to be downloaded are entered into the system manually.
Schedules are generated and dispatch lists of the day’s suggested
production are electronically transmitted to terminals on the shop floor.
Production personnel are responsible for reporting actual work
completions twice a shift by a set time through these same terminals.
The completion information, as well as additional new orders, is
considered in schedules generated shortly after the production-reporting
cut off points.
Shop floor supervision gets a list of any
orders that are scheduled for finish after their due dates so that they
can take corrective action. Supervision
likewise gets a list of projected machine utilization.
On an as needed basis, production supervision meets with Production
Control to address anticipated problems highlighted by the software. These meetings make use of the software to review proposed
actions such as working overtime or rerouting work from heavily loaded
resources to those that are more lightly scheduled.
Benefits
SMC’s Indianapolis facility has received numerous
benefits from use of TACTIC, some of which are easily quantifiable, others
that are harder to measure. One
of the most obvious benefits of the software is that it has replaced an
in house scheduling system that was very cumbersome and time consuming
to operate. Shortly after
implementation, the Production Control Group was able to reduce the man-hours
required to perform scheduling related tasks by 50%.
These meant that the software paid for itself in less than its
first year of operation.
TACTIC has also helped smooth operations on
the shop floor. The software
has given the plant the visibility to look ahead in time and spot potential
problems and make the necessary adjustments before the situation becomes
critical. For instance, the staff is now able to better plan overtime
production and tends to get much better value for the overtime dollars
spent. The Production Department
has also been able to better organize the shop floor and to leverage investments
in capital equipment and tooling.
TACTIC has highlighted the machines on the shop floor that tend
to be consistently overloaded.
This information has allowed staff to better
group production over machines based on part geometry, reducing setups
and creating more available capacity.
The software has also helped identify instances where relatively
small investments in tooling can enable lightly used machine tools to
be converted so that they can assume some of the load run by capacity
constrained resources.
While the plant has been able to attribute
substantial cost savings to TACTIC, the tool has also helped increase
profitability. SMC’s growth
has been based on superior customer service and quality.
However, past success is not always an indication
of future performance. Rapid
growth and increasing order volumes often imperil the very levels of customer
service that have led to that success.
The software has helped SMC to avoid this trap and to maintain
high levels of customer service.
SMC’s production, scheduling, and customer service personnel use
TACTIC to monitor the status of orders as they make their way through
machining. When an order
is in danger of finishing late, corrective action can be taken.
Summary
SMC Pneumatics has benefited greatly from
the installation of TACTIC advanced finite capacity planning and scheduling
software at its Indianapolis plant.
The software was successfully implemented in five weeks and paid
for itself in less than a year with easily documented cost savings.
However, TACTIC’s benefits have gone beyond
simple cost savings. Through
helping the company execute its fundamental strategy of superior customer
service, TACTIC has helped SMC Pneumatic maintain its enviable growth
rate.
About the authors
Roberta Jung manages
the production control group at SMC Pneumatics.
Chris Mulherin is the production control group leader at SMC Pneumatics.
Terry Riggles is the scheduler at SMC Pneumatics.
They have had considerable experience with SMC Pneumatics and are
members of the American Production and Inventory Control Society.
About the paper
This Paper was published in APICS The Performance Advantage. It is being provided with compliments from Waterloo Manufacturing Software.
© SMC Pneumatics Inc., All Rights Reserved.