The Manufacturer’s Guide to Digitizing 7 Key Business Processes

Demonstrated in the following seven processes typical of any manufacturing operation is room for improvement and opportunities for automation and standardization.

1. Product planning and design
2. Procurement
3. Production
4. Sales and order processing
5. Distribution and logistics
6. Customer service
7. Compliance

Product Development and Design

Product Development and Design is the process by which R&D requirements are translated into manufacturing requirements and specifications, and particularly core processes connecting engineering with manufacturing. To achieve this, design sheets, research info, CAD/CAE drawings, standards and specifications, manuals, regulatory applications, inspections sheets, and dozens of other documents are created.

Communication problems and time delays can occur in handling engineering changes discovered during the manufacturing planning process and most organizations have no application-neutral format to document and communicate changes either internally or with suppliers. Engineering change order (ECO) documentation is scattered across multiple systems, making internal collaboration time-consuming. The effect of this is bottlenecks between engineering and manufacturing.

By automating and standardizing the unstructured information components of this process there could be a smooth transfer of requirements from engineering to manufacturing, secure retention and protection of valuable design information, and firm intellectual property. This can also improve action time and resolution to engineering change orders, faster time to market, reduced manufacturing costs, and more effective, timely and predictable collaboration between internal staff.

Procurement

Procurement is the process by which manufacturing requirements are translated into supplier requirements, supplier relationships, and the ordering of goods and services needed to produce the product.

Typical documents that must be managed in the procurement process include forecasting sheets, supplier information, requests for quotation documents, inspection sheets and approval document. In addition, there are functional testing and inspection reports, materials data, and defect reports used to determine whether an order met the original set of requirements. Over the long term, information about key supplier relationships winds up scattered across multiple repositories and systems.

Automating these processes could result in smoother acquisition of customer order and supporting documentation, ability to review this information against quotes or previously agreed-upon contracts, and dispatch to production for fulfillment. It could also lead to faster order fulfillment and increased revenue by handling more orders, faster bid processes and reduced procurement costs.

Production

Production includes the processes by which the product is produced and the documentation associated with these processes. Key concerns here are in process planning, design sheets and product information—all of which are critical. Quality testing and final fulfillment relies on inspection documents, manuals and approval documents.

Bottlenecks are the primary enemy throughput the manufacturing process. Although bottlenecks are usually thought of in the context of physical obstacles and problems along the assembly line, the inability to find the right information at the right time in the right context is also a significant cause of bottlenecks. Consequences include possible stalls in production, supply overstock, fall in employee morale and loss of customers.

Key benefits of digital processes, documents and data in production include improved quality and efficiency of operations, and streamlined testing as well as efficient management and control of the data and documents needed to maintain regulatory compliance for environment, health, safety, and more.

Sales and order processing

When documenting and assembling orders, organizations also often struggle with how to assemble an electronic package constituting full documentation of the order, and assembling and tracking all the documentation created throughout the manufacturing and delivery process. Typically, documents that relate to sales are scattered in multiple (and often insecure) repositories, increasing administrative costs and decreasing process flexibility and agility.

Digitizing the processes, documents and data can result in improved sales efficiency and effectiveness, reduced bottlenecks in the “order-to-cash” work stream, improved sales yield and improved order turnaround time.

Distribution and Logistics

Order instructions, product information, picking/packing slips, inspection sheets, bills of lading, proof of delivery, invoices and quality documentation must all be accessed during distribution. Additionally, when manufacturers don’t have full visibility to their inventory, they face the problems of either running out of stock at the wrong time or carrying too much stock, thus decreasing cash flow or increasing expenses to warehouse extra materials. These challenges are exacerbated by a growing global footprint of both suppliers and customers, a demand by customers for more specialized logistics and delivery solutions, and by integration of manufacturers into networks of suppliers and customers, requiring improved distribution and logistics agility and flexibility.

Digitization can reduce gaps or time delays in the fulfillment, delivery and invoicing processes, increased customer satisfaction and result in faster time to revenue.

Customer Service

Customers expect to be able to communicate via phone, email, FAX, chat, contact forms on a website and even via social media. In their minds, they are having “one” conversation, albeit across multiple channels with one organization. The challenge for firms is to integrate these conversations into one system, integrate that with order and account history, reconcile these disparate inbound communications and then respond in a timely fashion.

To do this, front-line employees need faster access to technical information to provide service and one-call service resolution, reduce cycle time, achieve on-time delivery and improve customer satisfaction.

Compliance

Per the Manufacturers Alliance for Productivity and Innovation (MAPI), U.S. manufacturers became subject to an estimated 2,183 unique regulations promulgated between 1981 and April 2012. Government regulatory complexity magnifies exponentially when doing business globally. Since 1998, growth in the cost of major regulations has far exceeded manufacturing sector growth and overall economic growth. In that span, the cumulative inflation-adjusted cost of compliance for major manufacturing-related regulations grew by an annualized rate of 7.6%. Over this same period, annual growth in the physical volume of manufacturing sector output averaged a mere 0.4% while U.S. inflation-adjusted GDP growth averaged 2.2% per year.

Many manufacturers must also demonstrate ISO 9000 (technically, ISO 9001:2008) certification. ISO 9000 certification is increasingly required in subcontracts, especially by European multinationals. To achieve ISO 9000 certification, a manufacturer must collect, update, and share its large library of ISO documents with single point access to the latest documentation. All of this is made more complex given that a new standard was published on Sept. 15, 2015. This means that the ISO 9001:2008 standard will become obsolete on Sept. 14, 2018. Thus, all ISO 9001:2008 certifications issued in late 2015 and beyond must bear an expiry date of Sept. 14, 2018.

Automating and standardizing the unstructured information components of compliance processes would ensure that operations use correct versions of information. Access to secure standard operating procedures and inspection reports can lead to increased productivity and accuracy, improved adherence to corporate quality and compliance initiatives, and audits. Lastly, organizations that manage compliance information and data in the same structure as they manage quality initiatives can leverage regulatory data beyond compliance, and use this intelligence for competitive advantage and quality improvement.

Choosing the Platform for Digital Transformation

One key to digital transformation is simplify and standardize these myriad processes in a common platform to manage all the unstructured information associated with them. Any such platform must be easy and intuitive to use (to minimize user adoption hurdles) and easy to integrate with manufacturing software platforms (to minimize drag on IT resources).

The platform must take advantage of the economies and flexibility of the cloud (to allow maximum flexibility and agility), and it should have a broad-based community of users to increase opportunities for shared knowledge and standardized processes.

Finally, any platform that you use to simplify procedures must demonstrate a satisfactory Return on Investment (ROI). Be certain that any solution provider can demonstrate the direct financial and process impact of their proposed solution—and do so with examples and references from manufacturing customers.

This article is an excerpt from a whitepaper authored by John Mancini of AIIM, Association for Information and Image Management. The entire whitepaper can be downloaded here.