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Better Planning Delivers the Best ROI

Writer's picture: Paul HogendoornPaul Hogendoorn

Everything in manufacturing comes down to two things: planning and execution (production).


Automation and robots are all about execution. They are expensive and take time to properly select, purchase and deploy. And in most cases, they only address specific functions or areas of execution.


Improved planning and preparation, however, benefits every function and area of execution in the whole operation – not just on the floor, but in the office too.


In most engineer-to-order, (or “project-based” manufacturing operations), as well as in many “product-based” (or produce-to-order manufacturers), better planning is the key to far bigger and far faster ROI.


(And yet, many companies look to invest far bigger sums of money in technologies that solve issues arising as a result of planning problems, and not the planning problem itself. Why is that?..)


Technology help improve your company’s productivity and it can address problems such as the shortage of skilled workers, but, the technology you choose to apply first is of critical importance. Most folks I speak with think that automation, or robots, or eliminating the need for people on the plant floor will solve their people shortage problem, or their productivity challenge, but after reviewing their whole process, it's not where I often see the biggest bang for the buck.


As beneficial as automation and on-the-floor technologies may be, the most immediate and easily the most cost-effective way for many manufacturers to improve productivity, or address the labour shortage challenge, is by deploying technology and techniques that lead to better planning and better preparation.


To illustrate, I’ll share some significant outcomes that I’ve seen two manufacturers I’m very familiar with achieve. The first is a large “engineer to order” (or E2O) company that used to design, produce and deliver approximately 28 projects a year, but now delivers 56 projects a year – with the same headcount, the same number of machines, out of the same building, while at the same time eliminating all overtime, pulling back in all subcontracted work, and giving their production people extra time off between Christmas and New Years. The second is a medium “build to order” (B2O) operation that has a standard product mix of about 200 recurring products, with 15 to 20 of them representing 80% of their overall revenue. Their typical order-to-delivery time used to be about two weeks. In the last two years, their top line revenue stayed the same, but their “hands on” head count dropped significantly, and their delivery time is now consistently one week. Needless to say, the bottom line in both companies improved greatly.


Both companies did invest in some new machines and technology on the plant floor, but this was a result of better planning, data collection, and preparation. They had the data to support their purchasing decisions and the insights to know where to spend it.


New machines only affect “up time”, or “value creating/adding time”, and part of improving uptime is reducing or eliminating “downtime”, but the biggest waste in many companies I tour is not downtime, it’s “wait time” – the time between processes or operations where something in process is waiting at the end of an aisle on a skid, or shuttled to a holding area, or put back into inventory as WIP. In Lean terms, this is considered waste – a waste of capacity, of space, of capital, and of time.


Planning and preparation doesn’t start on the plant floor, it starts in the front office. Time lost by not processing orders, getting drawings done or approved, or ordering specialty parts in a timely way goes unnoticed, and the consequences go unfelt until the product or project hits the plant floor. And then its panic, pressure, and stress caused by shifting daily priorities. Adding automation and equipment on the plant floor to address the issues caused by poor upstream processes is a far more costly resolution to the problem, in effect treating the symptoms, not the cause. Eliminating the problem is far better than mitigating the problem.


The best productivity improvement initiatives I’ve seen start with better planning tools that start at the quoting and estimating stage, and if the order is won, continue through the engineering and approval stage and into the production planning and execution stage.


With better planning, raw materials aren’t machined into finished components before they’re needed just to improve an expensive machine’s OEE numbers; sheet metal pieces aren’t cut, bent and punched, too far ahead of when they can be welded, assembled and painted; finished products are finished on time – never later, but never too far ahead of time either.


Anytime something is sitting still, in a semi-completed state, time, space and capital is being wasted and capacity is being lost. Investments in automation, equipment and robotics can help certain steps along the production chain, but investment in better planning and preparation tools helps the whole way.


Better preparation could involve technology, but it can also be as simple as better training for your people, and better workplace conditions for them to perform their work in. And of course, measurements are key; there’s no sense planning on making improvements if you are not also planning to measure them.


Check out another other blog I’ve written on the topic of what you should measure and why: https://www.tpi-3.ca/post/time-is-money-that-s-why-you-should-measure-it-wisely

You can also check out https://www.tpi-3.ca/dashboard to see an example of a tool that shows you how you can start measuring today.


If this is a topic of interest to you, or an area you think your company would appreciate some added objective insights, feel free to connect with us at your convenience.



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