Streamline your information flow to create a leaner, meaner manufacturing operation—free of clogs and leaky pipes.

In 1966, a $100 million printed circuit board assembly factory in Buffalo Grove, Ill. was struggling with 74 percent on-time delivery. The company’s top OEM customers demanded 98 percent, threatening to take their business elsewhere if they didn’t get it.

Initially, management surmised that the company’s MRP II system was inadequate to support current business demands. In addition, it realized that implementing a new system would not solve the problem fast enough to save the business.

In response to this pressure, the company formed a team consisting of quality, information technology, sales, customer service, manufacturing, supply management and distribution staff. They closely examined the types of information people would need in order to improve on-time delivery, and ultimately were dismayed to discover a lack of both information quality and coordination across departments. 

They also learned that:

• The different departments had different definitions of "promise date." Depending on the department, "promise" was interpreted to mean when the product should be built, when it should ship, and when it should arrive at the customer.
• The departments basically didn’t trust each other. The factory would engage in wishful thinking with regards to promise dates, instead of using actual historical run rates. This led the company to purchase more raw materials than it needed. In addition, salespeople would overstate demand as a hedge against the factory underperforming.
• Some of the data was, at best, missing detail, and, at worse, inaccurate. The clean up was a project in itself.
• It was critical to immediately share the best possible information regarding supply shortages and changing demand.
• The data had to be more accessible and in a format that was easier for people from different disciplines (finance, production, marketing) to read.

Ultimately, the team realized that the only IT investment required was for a new scheduling report and capable-to-promise inquiry screen that would display all critical information in one place. A schedule was set up to list when specific data would be updated. And regular meetings were scheduled to discuss routine matters. Lastly, the company formed a DIRT (Drop In Response Team) to deal with exceptions caused by changes within the "frozen" two-week scheduling horizon.

"We had a breakthrough when everyone in the organization realized we all had to be literally 'playing off the same sheet of music,’ if we were going to improve our service levels," says Don Hood, the company’s distribution director. "We had to be looking at one schedule, although it might be with different views, instead of each of us working off our own spreadsheets. Everyone had to make sure that the schedule had the best information available. Everyone had to be vigilant in reviewing and addressing exceptions. All of us being synchronized in our daily work had a tremendous positive impact. We realized if we focused on the information, our MRP II system could be a tool, instead of an excuse."

The result of their efforts was an increase to 96 percent on-time delivery against the promise date – and all within only six months.

In another example, a lighting controls company in Lake Zurich, Ill., was missing sales-and-profit-margin opportunities because it could not get new products and cost-reduced products into production quickly enough. 

As the company prepared to implement an electronic vault and automated workflow system in order to help the situation, it found that the work conducted by its cross-functional team – designed to enhance information flow – already was leading to significant improvements. The team defined the stages of product development and generated a clear, phase-by-phase checklist that outlined which department needed to supply what information. The recipients of the information in the subsequent phase were required to approve and date the information as it was received. The number of attempts it took before the information was accepted provided management with a good quality metric. Management also tracked the cycle time of each phase, and the wait times between phases. 

The upshot of focusing on improvements in information flow was that even before the new system was implemented, the company – using the same resources as before – had doubled the number of new and cost-reduced models introduced monthly.

Continuous improvement in productivity and quality is another example of an information-intensive process. 

"The goal of the game is determined by how the score is kept," says Denise Rousseau, professor of Organizational Behavior and Theory at Carnegie Mellon’s Graduate School of Industrial Administration. At a sporting event, the point is clear and visible. You want your team to score more than the other team. 

At the Buffalo Grove factory in our first case study, productivity improved by more than 10 percent in only five months. How? Assembly line results were reported hourly to the plant manager’s pager and displayed on an overhead signboard. Employees therefore could see the score and the results of their improvement experiments.

In the same factory, defects had been reported to workers for years. But the feedback loop was too far removed from the workers’ actions to tell them what they might have done wrong, or what they might do to improve the situation. 

A simple enhancement to the defect database meant that hourly printed reports could inform workers of goals, and could communicate the quality issues as they occurred. Over the next eight months, the assembly line experienced a more than 50-percent reduction in manual assembly defects due to improvements in temporary worker training, and in the design of assembly assisting rigs and the assembly process. All these measures were inspired by factory workers’ suggestions. Again, the IT investment was modest but the impact significant.

Streamlining How To’s

The process of streamlining information flows isn’t that hard, but it takes work. The task gets more complicated, and more critical, when you factor in the demands of speed, scale and cost, etc.

• Begin thinking about the information various departments need to share with each other in order to respond to changing market and customer requirements.
• Decide on the best, easiest and earliest way to record critical information.
• Next, examine the best way to make information accessible to the right people.

As you consider these information flows, look for leaky pipes and bottlenecks.

When streamlining information in your company’s product development process, ask yourself:

1. What information do the engineers need from marketing, and how can they best communicate this need?
2. How can information gathering be made easier for marketing?
3. How can the company easily track who is waiting on whom, and for what information?
4. What information does finance need from marketing, engineering, procurement and manufacturing?
5. What does procurement and manufacturing need from the design engineers?
6. Can forms and checklists be created to ensure solid information flows?
7. Is there any appropriate technology to help?
8. How can you measure the quality, timeliness and completeness of each product development step?

Most importantly, resist the urge to spend money on technology as the magic answer to your business problems. First look at information and business processes. By identifying hot spots where critical information isn’t flowing well, and correcting those problems, you are essentially making your information systems leaner. Tight information flows make any signal from customers visible to your organization. People can respond sooner, improving service, decreasing expediting costs and reducing just-in-case inventory costs. 

Do You Have “Leaky Pipes”? The answer is, "yes" if...

Data entry is duplicated: If sales, distribution, scheduling and purchasing each have a proprietary system, the departments won’t be able to talk to each other effectively. This results in delays, errors, inconsistent information and unnecessary work re-entering data.

Information is not in the required form: A list of parts might work for purchasing, but not for manufacturing. So the people on the production side have to download data and massage it or re-key it. This wastes time and creates data-entry errors. 

About the Author
Jeffrey Korman heads the IT practice for the Chicago Manufacturing Center, a consulting firm specializing in manufacturing business solutions. Jeffrey has an MBA and Master’s degree in systems engineering from Northwestern University. He can be reached at (312) 542-0492 or jkorman@cmcusa.org.

Reprinted courtesy of INSIGHT Magazine – “Corporate Financial Leadership Special Issue,” for the Center for Corporate Financial Leadership.

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