Tying the front office to the shop floor drives productivity, profitability
December 12, 2006
For a job shop or contract manufacturer to take as much labor out of the manufacturing process as possible, automation is necessary. This can be helped with the integration of front-office and shop floor software.
Historically, the majority of a manufacturer's costs have been labor. In fact, when Henry Ford introduced the moving assembly line in 1913, labor accounted for an estimated 80 percent of total costs. One of Ford's key beliefs was that labor costs could be greatly reduced by eliminating unnecessary steps workers had to take throughout the manufacturing process.
Ultimately, though, machinery accomplished what Ford and many others set out to do: streamline the production of goods and improve efficiencies on the shop floor. Machines could complete the same tasks as humans on an assembly line but at a much quicker pace and at significantly lower costs. As a result, production and assembly processes required fewer workers, and labor costs dropped considerably.
Faced with tighter margins and increasing competition, job shops and custom manufacturers today are embracing innovative ways to take shop floor automation and business management to the next level. Driven by new applications and technology advancements, automation is enabling businesses to minimize costly manual labor practices throughout the manufacturing process to obtain a level of efficiency that their predecessors could only have imagined. In addition, these systems allow shops to maximize other resources, including their existing investments in machines, systems, and applications.
One of the new tools responsible for driving this level of efficiency on the shop floor is intelligent numeric controls. Capable of running on virtually any machine—from the simplest lathe to multifunction machines with the most advanced algorithms—intelligent numeric controls monitor and measure the output of production data, such as job starts, machine hours, and part counts, without manual intervention. These controls provide seamless integration with almost any application and peripheral, including shop management systems, while also interfacing with bar coders, feeders, robots, probes, and tool setters to help streamline production.
The true value of intelligent numeric controls is apparent when they are integrated with an enterprise resources planning (ERP) system on the back end to automate the collection of production data and enable communication with business and production systems on the shop floor. Production data can come directly off machines into the ERP system, providing a level of accuracy unattainable with traditional data entry methods. Moreover, by automating this process, job shops can always have the most up-to-date data in real time, and they can also better control head count and costs.
It is critical for job shops and custom manufacturers to have access to this production data along with employee information and other operational data in a single system to manage production more effectively. The integration between the front office and the shop floor provides a more holistic view of the organization and enables management to better plan and schedule projects.
A similar level of efficiency can be gained by integrating what has traditionally been known as the front and back offices. However, before discussing this integration and its benefits, it's important to explain exactly what these two terms mean, as well as to discuss the types of technologies that are available to manage each operational area better.
The front office typically encompasses those employees and departments within the organization that interact directly with customers. These customer-facing operations generally include sales, customer service and support, and other administrative functions.
Software applications that help businesses manage the front office fall under the area of customer relationship management (CRM) systems. A good CRM system, for instance, provides a Web-based environment in which an organization can centrally track and manage vital information about its customers and accounts, from the sales cycle through customer service and support. This information typically includes the products and services they've purchased, problems or issues they may be having with a certain product, revenues generated from that customer, key contacts, last contact, and other important documentation. Making this information accessible through the Web allows management and salespeople to more easily match customer needs with products, inform customers of service requirements, follow up on sales calls, and assess the overall health of their accounts.
The back office, on the other hand, is where all the work gets done. In job shops or custom manufacturers, the back office includes non-customer-facing employees who work on the shop floor—machine operators, maintenance, production schedulers, shop foremen, and team leaders, for example.
Applications used in the back office typically include shop floor control systems, inventory control systems, tool crib software, accounting systems, and, of course, ERP systems. ERP encompasses the broad set of activities that help manufacturers manage functions critical to the production of goods, including planning product, purchasing materials, maintaining inventories, interacting with suppliers, scheduling the shop, and tracking orders. Most ERP software offers multiple modules to address these functional areas, encompassing what is also known as "shop management software" or "shop floor control software."
Another important software application available to manufacturers is supply chain management (SCM). SCM is defined as the coordinated set of techniques to plan, execute, and manage all steps in the manufacturing process, from acquiring raw materials from vendors, transforming them into finished goods, and delivering both goods and services to customers. SCM systems focus on chainwide information-sharing, planning, and possibly even resource coordination and tracking global performance measurements.
It's nearly impossible to find a single solution that addresses all functional areas within the organization. As a result, an important goal for any buyer is to find the systems that adequately address each of the areas discussed previously, while also providing tools to seamlessly integrate the front office with the back office and the shop floor.
Integration tools available to software developers today have come a long way from traditional batch updates, where data is exported out of system A and into system B in a batch mode. Rather, many vendors that offer both front-office and back-office applications look to provide seamless integration between these products. In these instances, the applications may actually share a database and common data tables, ensuring that up-to-date information is always available throughout the entire company in real time.
Without this integration, departments within the organization operate in isolation, and the left hand not knowing what the right hand is doing can be detrimental to customer satisfaction, sales, and overall business success. After all, what sales or customer service representative hasn't had to field questions from a customer, such as "When is my order/job due to ship?" or "What is the status of the order I gave you last week?" These questions relate back to work being done on the shop floor and information managed in the back office; without integration, the rep would either have to access multiple systems or ask another employee for the answer. Having a single source of information, on the other hand, enables that rep to easily pull up the customer account and locate the answer.
The difficulty for most organizations is determining how to reach this level of integration. With the advent of new software applications and the evolution of older market segments, figuring out which technologies are the key to profitability is confusing. In most cases, shop owners and management are forced to wade through a confusing array of acronyms (CRM, ERP, SCM, et al.), trying to determine which software suites suit their business needs.
The ultimate goal of any job shop or custom manufacturer is to operate with sustainable revenues and profitability. Understanding the software terminology and how "connected," or integrated, applications can drastically improve the ability of organizations to manage their customers, vendors, and internal processes will enable them to bring more cash to the bottom line, and that is the end game.