Operational Excellence
Cost of Quality Metric: The Formulation Management Conundrum
LNS Research discusses how quality, cost, and formulation management can have a big impact on consumers.
Whether it’s in regard to the production of printed circuit boards or final assembly, small-to-medium sized contract electronics manufacturers are faced with challenges that touch every business unit and process. With mainly large, powerful, and demanding customers, these companies supply regulated and unregulated industries such as medical device, aerospace and defense, and industrial equipment.
For success, managing demand, margins, and the global economy, among others, have to be balanced with capabilities and data from procurement, engineering, manufacturing, quality, and the supply chain. By integrating and automating processes across the value chain, executives and plant managers are leveraging increased visibility to overcome these challenges. With the dynamics of the electronics industry, having a thought process backed by real-time data often means the difference between beating a competitor in the market and falling behind.
Emerging technologies such as Cloud ERP are providing the needed functionalities to address these challenges, many of which can be managed by monitoring key metrics. In this blog, we’ll discuss the main operational metrics that electronics decision-makers are improving upon today with the use of Cloud ERP.
Successful New Products Introduction (NPI)
Because electronics companies are faced with both the uncertainties of demand and rapidly changing consumer preferences, it’s critical to have an operational model that facilitates improvements in NPI. These organizations need seamless transitions and integration between design and manufacturing. In the industry, many market leading companies are differentiated by short time to market cycles, and the ability to maximize volume and quality. Measuring NPI can help with this.
Complete and On-Time Deliveries
Calculated as the percentage of products delivered on time and complete with no errors or re-promise dates, the complete and on-time deliveries metric is a good way to monitor operational efficiency as well as product quality. With demanding customers and the global supply chain, inventory must be able to move at a fast pace. Otherwise, companies will be left with excess and obsolete products.
Operational Equipment Effectiveness (OEE)
One of the most comprehensive operational management metrics, the OEE formula measures an asset’s availability, efficiency, and quality. This helps to measure how often an asset is available when it should be producing product, how close it is producing to its theoretical maximum, and the percentage of products produced within specification.
OEE is closely tied to quality, and consequently, yield and rework measurements. Additionally, it should be noted that there are numerous ways to calculate the OEE formula. With the dynamics of the electronics industry, companies should be weary of optimizing availability beyond demand, as operational success often relies on the supply-chain efficiency and JIT capabilities.
Percentage of Products in Compliance
In regulated industries, percentage of products in compliance is a critical metric. With REACH, RoHS, WEEE Directive, and others, in addition to internal specifications, companies can use this metric to measure the effectiveness of corporate educational programs and SOPs as well as the ability to meet local, national, and global policies.
In utilizing the global supplier network for the electronics industry, this metric is key for improving business performance and reducing operational risk. With regulations having the ability to impact innovation, delivery, and revenue, there can be no tolerance for failure in compliance.
Measurable Improvements in Electronics
An important attribute of automating processes is in the ability to standardize and centralize data. Rather than relying on manual or paper-based processes and disparate systems, by taking a holistic approach to operations, decision-makers can monitor these metrics in a more effective way. Cloud ERP functionalities such as reporting and analytics, data visualization, real-time visibility, and mobility, are providing superior capabilities to streamline workflows for monitoring and improving these metrics.
By intersecting business processes with IT architectures, market leading companies are improving business performance. Creating an arena for this to take place are advancements in Cloud ERP platforms and functionalities. Increasingly, executives and plant managers are making decisions with integrated data from across the value chain.
On September 5 at 1p.m. EST, our President and Principal Analyst, Matthew Littlefield, will be participating in an electronics and high-tech manufacturing webinar. He will be discussing these topics more in-depth as well as diving into how organizations can move toward operational excellence with a Cloud ERP system.
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All entries in this Industrial Transformation blog represent the opinions of the authors based on their industry experience and their view of the information collected using the methods described in our Research Integrity. All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.