ZIFFPAGE TITLEFirst Things FirstBy David F. Carr | Posted 2005-06-10 Email Print
Re-Thinking HR: What Every CIO Needs to Know About Tomorrow's Workforce
The manufacturer's motto: maximum efficiency with minimum technology. Tom Mathis' response: a parts-tracking system to make workers more productive.
First Things First
In good Danaher fashion, Mathis first ran three continuous improvement planning sessions aimed at streamlining the procurement process. But he came away convinced that "we didn't have the basics in terms of system support."
He evaluated supply chain management vendors starting in late 2002; by early 2003 he selected SupplyWorks of Bedford, Mass. SupplyWorks offers access to its SupplyWorks MAX system over the Web, operating the servers itself, which would minimize demands on Danaher's information-technology staff.
For this project, the major task would be to make Mapics exchange data with SupplyWorks. The inventory database would become more important, since the data printed on the kanban cards was being reduced to a bar-code label.
But the benefit of that change was that cards wouldn't have to be reprinted when details like the part supplier or the quantity to be kept in each bin changed. The new information would be updated directly in the database.
Just eliminating the time spent updating kanban cards and replacing lost ones would free up 28 minutes per day for Gurnee's staff, Mathis determined. For the pilot project, he developed a series of these measures of "non-productive time," which added up to 105 hours per week or 90% of their time. Through automation, he aimed to reduce the time spent on routine tasks and expand the time available for strategic efforts.
The SupplyWorks pilot in Gurnee was limited to a portion of the parts inventory, but results were encouraging. In a January 2004 Webcast presentation for SupplyWorks, Mathis cited a 75.6% reduction in the time buyers spent on the "waste" activities he had identified.
The results since the system was fully implemented in Gurnee last June haven't been quite as dramatic. Mathis says the actual efficiency achieved as of the end of 2004 was about 57%a reduction from 105 hours to 45 hours per week of non-productive work. While he sees the project as a success, he and others acknowledge it hit some snags.
Laura Hanna, manager of purchasing, shipping and receiving for the Gurnee facility, talks in the future tense when discussing the benefits of the SupplyWorks system, which went into production in June 2004 and has since been deployed to factories in Fultonville, N.Y., Lancaster, S.C., and Elizabethtown, N.C. "Hopefully, all the pain we've gone through is going to pay off for the other [Danaher] sites," she says.
In addition to being the trailblazer, Gurnee turned out to have the worst environment for radio interference of the four factories. The other sites, perhaps because of their higher ceilings, seemed to provide a better match for wireless networking than the squat Gurnee building.
Spotty wireless coverage and an unproven piece of handheld computer software from SupplyWorks brought the project at the Gurnee plant to a low point. When the connection failed in the middle of a data upload from one of the handheld computers carried by the pacers, data would be lost, Hanna says.
The pacers then had to retrace their steps, again scanning the cards to find empty bins. This happened several times, undermining the notion that the new system saved time and labor, according to Hanna.
SupplyWorks responded with an update to the handheld computer software that warned the pacers when an upload was interrupted and prompted them to try again. Rick Zarbo, a SupplyWorks consultant to Danaher, says the software wasn't losing data, but its screen didn't provide workers with enough clues about what to do when a wireless connection was interrupted. "We made it much more visible to them," he says.
That didn't make the wireless connectivity problems go away. The handheld computers could also be placed into a cradle to upload their data, but that meant Hanna and her staff would be getting the information in batches rather than continual updates from the floor.
Mathis is hoping that some of these issues will be solved by substituting industrial-strength handhelds from Symbol Technologies for the Hewlett-Packard units originally deployed. The Symbol devices have stronger radio reception, which ought to help solve Gurnee's wireless networking complaints, according to Zarbo, who planned to begin introducing them to Gurnee in May. Mathis says he so far plans to keep using the HPs at the other factories, where they have produced fewer complaints.
The application lets buyers create, modify and track "blanket orders," or templates for orders, from pre-selected suppliers that will be placed automatically, based on empty parts bins reported electronically by the pacers. Parts suppliers can log in to the system to retrieve new orders or report a shipment. The system also generates alerts that can be sent to an e-mail account or pager.
But Hanna found the system tended to drown suppliers in unnecessary alerts. For example, the system prompts suppliers to file an advanced shipping notification, a document that tells the recipient of a shipment when it should arrive. Some regular suppliers, such as Arrow Electronics, were getting reminders after parts were waiting on Danaher's receiving dock. SupplyWorks refined its product to allow customers to adjust when alerts are sent.
Hanna also had to adjust to getting application changes from an external vendor, which involved more negotiation than working with Danaher's technology staff. SupplyWorks wanted to minimize customization and focus on improvements that multiple customers would find useful.
Although SupplyWorks has other large customers, such as Ingersoll-Rand, the vendor sometimes seemed to be out of its depth, says Molly Robinson, a former Gurnee materials manager who consulted on the project as a liaison with the software firm. "They seem energetic, but when we present them with a problem, it's often something they haven't seen before," Robinson says. "That is somewhat scary."
Mathis says he deliberately picked a relatively small vendor, believing he would get more attention to his requirements than he ever would have from a large packaged software vendor. He also estimates he paid about half what a comparable product from an ERP vendor would have cost.
"Expectations were high, and maybe that's my fault because I've had to sell this thing," Mathis explains, but he is seeing results and expects to see more as the system is refined. By early 2005, the electronic kanban process was being followed for Gurnee's major suppliers, representing about 11% of the parts inventory and 44% of the spending on components. Materials costs are down about 10%, he says.
Bill Swanton, vice president at Boston-based AMR Research, says SupplyWorks offers one of the few standalone supplier portal products available to manufacturers who want to tie in one or more existing systems, rather than spend millions on an upgrade to an ERP suite that includes a supplier portal as one module.
Implementing SupplyWorks is less labor intensive than creating a custom supplier portal atop a general-purpose Web application server, Swanton says, but tailoring it to a specific manufacturer is still not simple: "It shouldn't have surprised them if it took a while to work that out."