Description
What does it mean to be a world-class competitor? It means being successful in your chosen market against any competition—regardless of size, country of origin or resources. It means matching or exceeding any competitor on quality, lead time, flexibility, cost/price, customer service and innovation. It means picking your battles—competing where and when you choose and on terms that you dictate.
Whitepaper
The seven keys
to world class
manufacturing
Table of contents
Whitepaper
2
Infor is in no way committing to the development or delivery of any specifed enhancement,
upgrade, product or functionality. See “disclaimer” paragraph contained herein.
Executive overview ..................................................................................................................................................... 3
Reduce lead times ...................................................................................................................................................... 4
Cut operations costs .................................................................................................................................................. 5
Speed time-to-market ................................................................................................................................................ 7
Exceed customer expectations .............................................................................................................................. 8
Streamline outsourcing processes ........................................................................................................................ 9
Manage the global enterprise ................................................................................................................................10
Unlocking the potential ...........................................................................................................................................11
About Infor ...................................................................................................................................................................12
3
Whitepaper
Infor is in no way committing to the development or delivery of any specifed enhancement,
upgrade, product or functionality. See “disclaimer” paragraph contained herein.
What does it mean to be a world-class competitor? It means being successful in your chosen
market against any competition—regardless of size, country of origin or resources. It means
matching or exceeding any competitor on quality, lead time, fexibility, cost/price, customer service
and innovation. It means picking your battles—competing where and when you choose and on
terms that you dictate. It means you are in control and your competitors struggle to emulate
your success.
What does it take to be world class? Richard Schonberger, a leading manufacturing consultant,
created the term “world-class manufacturing.” According to Schonberger, “manufacturing is gained
by marshalling the resources for continual rapid improvement.” To achieve world-class status,
companies must change procedures and concepts, which in turn leads to transforming relations
among suppliers, purchasers, producers and customers. Enterprise automation is indispensable to
manufacturing innovators who aim to gain market share, operate at peak efciency and exceed
customer expectations so they can be world class in their industry.
How can your company become and remain world class? There are seven keys to becoming a
world-class manufacturer that distill the broad concepts above into specifc actions that can be
addressed and accomplished in your company. Each is presented with a brief discussion and
examples of its impact on a manufacturing organization and its competitiveness. A more detailed
discussion of each of the seven keys is available from Infor.
The keys to success, in no particular order, are:
1) Reduce lead times
2) Speed time-to-market
3) Cut operations costs
4) Exceed customer expectations
5) Manage the global enterprise
6) Streamline outsourcing processes
7) Improve business performance visibility
Each of these objectives is important in and of itself; however, taken together, they describe the
focus of the activities and attitudes that defne world class.
Executive overview
Whitepaper
4
Infor is in no way committing to the development or delivery of any specifed enhancement,
upgrade, product or functionality. See “disclaimer” paragraph contained herein.
Shorter lead times are always a good thing. In many markets, the ability to deliver sooner will win
business away from competitors with similar product features, quality and price. In other markets,
quick delivery can justify a premium price and will certainly enhance customer satisfaction. In all
cases, shorter lead times increase fexibility and agility, reduce the need for inventory bufers and
lowers obsolescence risk. Lead times are cumulative and bi-directional—that is, order handling,
planning, procurement, inspection, manufacturing, handling, picking, packing, and delivery all
contribute to the lead time; and the time it takes to get signals down the supply chain to initiate
each activity adds to the overall time it takes to get the job done.
Infexible business rules and policies can drive undesired efects. Purchasing rules too focused on
unit cost lead to large quantity buys that result in high inventory and long lead times. Ironically, this
type of buying can also lead to shortages, since longer lead times mean you will be making and
buying to a less accurate forecast. The best combination of price and lead time often comes from a
stable buyer-supplier collaborative relationship based on long-term contracts with deliveries
according to a forecast that is shared with the supplier and updated frequently. The same is true on
the customer side. Instead of focusing on securing large, one-time, single orders that clog up the
supply chain, companies must focus on creating long-term contracts with customers and sharing
forecast information with customers to reduce lead times.
The same issues concerning large lot sizes also apply to internally produced parts and products.
Large lots, driven by a focus on lowest unit cost, raise inventory and lengthen lead times while
reducing fexibility and responsiveness, increasing eventual cost through premium expediting
instead of using large fxed lots, companies must dynamically adjust the lot size based on market
demand, product mix and capacity. Ongoing continuous improvement eforts focused on reducing
setup times can help companies reduce lot sizes, which provides fexibility in responding to
market demand.
Appropriate measurements contribute to high performance on the plant foor. On-time shipment
and inventory turns are good examples of high-level measures that tie to company objectives.
Focusing on isolated measurements like equipment utilization on non-constraining resources
encourages “busy work” that creates excess inventory and longer lead-times. Shop foor
measurements must encourage overall performance—shipping orders on time at minimal total
cost and minimal total cycle times. Performing manual transactions often slows down the supply
chain and adds to lead time. Reporting transactions at each operation or creating a paper purchase
order before suppliers work on a component are just two examples. In addition, manual transaction
reporting often introduces errors and impacts work productivity. Companies must eliminate non-
value added transactions and automate transactions to speed up the supply chain. For example,
backfushing can be used on the shop foor, and supplier purchase orders can be electronically
sent or completely eliminated using Supplier Relationship Management (SRM) solutions.
Reduce lead times
5
Whitepaper
Infor is in no way committing to the development or delivery of any specifed enhancement,
upgrade, product or functionality. See “disclaimer” paragraph contained herein.
Although recent developments in planning and Customer Relationship Management (CRM) have
focused more on top-line benefts—growing revenue—the bottom line is still greatly dependent on
controlling costs. Companies with a lower operational cost structure enjoy an obvious advantage in
proftability, and the ability to adjust pricing to meet competitive pressures if necessary, to
maintain or gain market share.
Costs are really just part of the scoreboard. When a company implements world-class operational
processes, it improves multiple measurements simultaneously, including cost, lead times,
inventory and customer service. This approach is superior to a pure cost reduction focus
without associated business process change, which can negatively impact other operational
measurements. Localized cost reduction eforts can often increase costs in other areas. Moving
production overseas to an area with lower labor rates, for example, will increase costs for
procurement, transportation, inventory and reduced fexibility, among others.
The relative cost of source/make/deliver, and therefore, the opportunities for cost reduction,
will vary with the specifc industry and the kind of products the manufacturer makes. Most
manufactured products today have relatively little direct labor content, generally less than 20%
and often less than 10%, whereas the material content of most products is more than one-half the
cost-of-goods sold (COGS). The rest is “overhead.” Since most direct labor costs tend to be fxed,
efective deployment of these resources can reduce unplanned manufacturing overtime, premium
expediting and outsourcing, as well as dramatically reduce cycle times. Since material cost is the
dominant cost, signifcant opportunities for reduction lie in analyzing current spending and
devising efective sourcing strategies for material. Overhead reduction is always a fertile area for
cost reduction, using automation to streamline the procurement, manufacturing and customer
management processes.
Additionally, fulfllment costs have not received as much attention as it deserves; inventory cost,
transportation, admin costs, electronic communications, and storage account for a signifcant
part of the cost of doing business. Fortunately, improving customer service can also generate
cost benefts at the same time. Improve business performance visibility Today’s fast-moving,
ever-changing manufacturing environment demands faster responsiveness to changes in the
market, product innovation and supply chain events. In this environment, ignorance is one of the
greatest threats to a manufacturing company’s health and success. Executives and senior
managers must understand how the enterprise is meeting strategic objectives. Middle-level
managers need visibility into how they are performing against tactical objectives. Responsible
individuals must be notifed immediately when supply chain issues threaten the completion of
objectives, so actions can be taken to ensure customer delivery and quality requirements
continue to be met.
Cut operations costs
Whitepaper
6
Infor is in no way committing to the development or delivery of any specifed enhancement,
upgrade, product or functionality. See “disclaimer” paragraph contained herein.
A well-implemented and efective business solution delivers overall visibility into the health of the
company and its operations and provides detailed information for performance measurement,
process management, and problem identifcation and remediation. Such a system can help
improve revenue through competitive advantage, help you understand your business and
therefore, manage it better, reduce operational costs, improve performance and improve
results for all stakeholders—owners, executives, managers and employees.
An enterprise business solution will capture literally thousands of pieces of information each day,
as activities are reported throughout the enterprise. All of this detailed data is of little use without
placing it in context and seeing each activity in relationship with all the other activities and the
overall plan. To turn data into meaningful information is an up-and-down process. Bits of data,
taken together and summarized, form higher level contextual information that shows status,
accomplishments and importance. From high-level summaries, the observer must be able to drill
down to details to understand exactly what is happening and how to drive those activities toward
the goals and objectives.
Management information and analysis is only as good as the data it is based on. Therefore, data
must be collected as quickly as possible and with the least amount of human intervention, which
tends to introduce delays and errors. It is equally important to collect data from supply chain
partners through automation as much as possible. Electronic Data Interchange (EDI) is the most
commonly used method today but EDI is rapidly being replaced by XML-based e-commerce
communications and Web-based portal technologies.
All systems should be integrated so information can pass freely between them without manual
re-entry. Many manufacturers are left with “islands of automation” after implementation of
specialized information systems in isolated portions of the business over the years. While each
contains valuable information, absence of integration prevents the efective use of that information
for overall management and coordination of efort toward company objectives.
7
Whitepaper
Infor is in no way committing to the development or delivery of any specifed enhancement,
upgrade, product or functionality. See “disclaimer” paragraph contained herein.
Developing and introducing new products and services is vital to most manufacturing companies.
Good ideas are not enough; well-managed processes for bringing new products to market can lead
to signifcant competitive advantages. Those activities, however, represent a signifcant risk that
can lead either to missed opportunities or to huge fnancial losses.
In addition to new product development, the same processes and resources are applied to product
improvements, corrections and variations throughout the product lifecycle. Based on market
research, products are often subject to frequent engineering changes due to customer requests,
technological advances, regulatory concerns or competitive pressures.
Changes and improvements are easiest to make— and least costly and disruptive—earlier in the
process. It is good business practice to collaborate with all operational areas of the business while
the product and process are still being designed. Cooperation should be focused on the following
areas: making sure the new product meets market needs (marketing and sales), that it is priced to
sell and generate a proft (marketing and accounting), that it can be manufactured efciently
(production, production engineering, quality, purchasing and key suppliers), and that the product
can be maintained and serviced (service).
Because customer expectations are increasing, and competition is coming from new players
around the world, bringing better and less expensive products quickly to market is more crucial
than ever. Research and development is a key success factor in a manufacturer’s survival and
growth. Efciency and responsiveness of R&D processes will impact the top line as well as the
bottom line.
Customers are quick to compare and switch vendors. The Internet empowers buyers by providing
fngertip access to many more suppliers around the globe; they can even customize products over
the Internet without having to ask an engineer to quote their specifc requirements. These
capabilities change behaviors and expectations, and success in today’s markets can only be
achieved through innovation, agility and aggressive marketing.
Speed time-to-market
Whitepaper
8
Infor is in no way committing to the development or delivery of any specifed enhancement,
upgrade, product or functionality. See “disclaimer” paragraph contained herein.
The ultimate goal in any business is pleasing your customers. The most successful companies
don’t just meet customer expectations, they exceed them and beat the competition by setting
the bar at a level that makes it difcult, if not impossible, for others to surpass. Successful
manufacturers manage the entire customer relationship—from prospect to post-sales service and
support—involving the entire organization in a customer focus. Whether or not they have direct
contact with customers, contributors must keep the customers’ needs in mind as they plan and
carry out day-to-day operations.
Manufacturers must truly understand the customers’ goals and objectives. Your products and
services must strive to support the customers’ vision. Communication is very important; neglect is
the number one reason that customers terminate a relationship. The key is to give customers
access to all appropriate information about your relationship and make it readily available
whenever and wherever they might need it—the Web is your ally in achieving this objective.
As most companies have painfully learned in recent years, customers often change their mind.
To be fair, market conditions are such that product cycles and demand patterns are constantly
changing. Agility is extremely important. A solid, collaborative partnership with customers will provide
the most reliable advanced information and therefore the earliest warning of upcoming changes.
In short, the best strategy is to make the customer want to do business with you. Strive to be
the preferred supplier through competitive products, high quality, the right price and superior
customer service.
Arguably, the most important aspect of customer service is on-time performance. There are two
sides to on-time delivery: promising a realistic date; then delivering on that promise. You must take
that promise seriously, meaning that it is not given lightly—all considerations and constraints are
factored in before committing to a delivery date. Performance measurements are a must; if you
don’t know how you are performing, you cannot improve upon it. It is not unusual for companies to
consistently have 98% - 99% success in meeting agreed-to shipment dates.
Quality must be considered a given. Work with your customers and engineering as early as
possible in the product development cycle to determine the required measurements. Measuring
and improving all processes through the order and fulfllment cycles, with an eye toward
continuous improvement, will allow you to achieve or even surpass expectations.
Exceed customer expectations
9
Whitepaper
Infor is in no way committing to the development or delivery of any specifed enhancement,
upgrade, product or functionality. See “disclaimer” paragraph contained herein.
Outsourcing of manufacturing operations is a common practice today because it ofers fexibility—
the ability to change products or processes rapidly— and can often save money by exploiting
economies of scale or other favorable cost factors ofered by the contractor. There are two
approaches to outsourcing: a single process step or group of steps may be performed by an
outside resource (heat treating, for example, or electroplating) or the entire manufacturing process
might be contracted to a third party. In either case, the manufacturer relieves demand on its own
plants and can concentrate on its core competencies— which might not include volume
manufacturing—while its partner(s) provide the resources for producing products.
Depending upon your current resources and circumstances, outsourcing a part of the
manufacturing process could save you from having to expand your manufacturing space (perhaps
even adding a new plant), searching for and hiring experienced resources, training the new hires
and paying various expenses involved in ramping up a new production line or process. Capital
assets can become a liability in a fast-changing marketplace. As customer demands and
technologies change the nature and makeup of products, it can be an advantage to not be tied to a
relatively infexible physical plant.
For companies large and small, the goal is to become a world-class organization and to be able to
compete in today’s global markets. For manufacturers, the fastest and easiest way to achieve this
goal is through partnerships with companies that have attained superior capabilities in particular
phases of the process—like production. By partnering with world class contract manufacturers,
you can reap the benefts almost immediately—well-managed processes, high quality, on-time
deliveries—and increase your performance and expectations. At the same time, you can focus
your own resources on the things that you do best—product innovation, design, marketing,
distribution, sales or manufacturing.
Streamline outsourcing processes
Whitepaper
10
Infor is in no way committing to the development or delivery of any specifed enhancement,
upgrade, product or functionality. See “disclaimer” paragraph contained herein.
The world in which we do business is shrinking, and virtually every enterprise is now involved in
some form of international trade, whether marketing and selling to customers in other countries, or
simply using parts or materials that are produced elsewhere. We can thank the Internet, or blame
the Internet if you prefer, for opening markets to product and services almost without regard to time
and distance. The “glass-is-half-full” crowd will view these developments as the onset of unlimited
opportunity. If you lean toward the half-empty- glass crowd, you are likely to see signifcant threats
in virtually unlimited competition from literally any place on earth.
Like it or not, every executive must recognize this new reality and factor global business into plans,
processes and strategies. Design products to appeal to international markets. Search for suppliers
in other geographies. Understand local regulations and expectations, import/export processes and
requirements. Consider language challenges in labeling, documentation and marketing. Establish
new sales channels or coordinate manufacturing operations across geographies and time zones.
The Internet is a key tool for joining the global business community and conducting business
around the globe.
Globalization and Web commerce have changed traditional business behaviors and practices. If
manufacturers don’t expand into new geographic markets, their market share is likely to shrink as
new competitors will enter their territory and target their historical customers. Companies must
adapt their products and services to those new potential customers. They must leverage the
Internet to quickly establish a virtual presence. They must use collaborative technology in order to
respond to customer’s requirements better and faster.
Manufacturers often grow and enter new markets by acquiring or merging with other companies.
This usually means, however, that diferent facilities within the newly merged enterprise are using
several applications on diferent hardware platforms, applying diferent part numbers for the same
items and using diferent operating procedures. The challenge is to bring as much uniformity to the
varied facilities as practical without destroying the uniqueness and competitive edge that the
individual units had before the merger. The new divisions need to communicate, exchange many
kinds of data (product information, customers, suppliers, employees, etc.), coordinate and
synchronize logistics operations, provide visibility to materials and components requirements,
optimize fxed assets utilization across multiple facilities, consolidate fnancials and much more.
A natural consequence of having operations scattered through multiple locations, whether around
the world or in a specifc region, is the need to gain visibility across all sites. Visibility can lead to
more negotiating power for purchased parts, more efcient centralized credit and collections and
accounts payable, and opportunities for improved customer service by gaining access to world-
wide inventories and production capabilities.
Manage the global enterprise
11
Whitepaper
Infor is in no way committing to the development or delivery of any specifed enhancement,
upgrade, product or functionality. See “disclaimer” paragraph contained herein.
The keys to becoming a world-class manufacturer are not a secret—they are not even especially
profound— they are simply a distillation of the experiences of leading companies and how they
have managed to excel in their chosen markets. Any company can take advantage of the wisdom
and the practices developed in more than 100 years of manufacturing since the Industrial
Revolution, but many simply do not have the insight or the will to recognize what must be done
and to accomplish it.
It is a poor workman who blames his tools for shoddy work, but it is also true that professionals
understand the value of good tools and insist on having and using the best whenever possible.
When selecting a production machine—a machining center, insertion machine, automated
assembly line or robot—you would certainly look for one that can handle the tasks you have in
mind, but also one that is fexible enough to adapt to additional products and uses that may arise in
the future. This practice is even more important with a business solution because the handling and
use of information is changing faster than any other technology on the planet. And, remember that
information management is a fundamental support for each and every one of the keys to world-
class performance.
When looking at extended ERP, supply chain management or CRM solutions some people tend to
get distracted by details of the technology and miss the bigger picture. Keep in mind the reasons
you are looking for a solution in the frst place—to provide tools to manage the information that is
essential to growing business value. And that’s the application software, not the hardware or
operating system. On the technology side, you only have to ensure, as much as you can, that the
operating platform is capable of supporting your business needs today and in the foreseeable
future, and that the supplier(s) will be around when you need them. Of course, no one knows the
future, but you can certainly improve your odds with careful selection.
The keys to world-class manufacturing dictate a requirement to deploy capabilities to improve
manufacturing operations and processes. Subsequently, technology-based solutions must then
be built around the functional processes of design, sell, plan, source, make, deliver, service and
fnance. Being world class is all about being as good as any competitor in the world, and just a little
bit better, quicker, smarter, or more responsive than the rest. World-class manufacturers can
choose their battles and compete on their own terms. They are in control of their own destiny and
are seldom, if ever, blindsided by something they haven’t anticipated or cannot handle.
Unlocking the potential
Whitepaper
12
Infor is in no way committing to the development or delivery of any specifed enhancement,
upgrade, product or functionality. See “disclaimer” paragraph contained herein.
Infor delivers business-specifc software to enterprising organizations. With experience built in,
Infor’s solutions enable businesses of all sizes to be more enterprising and adapt to the rapid changes
of a global marketplace. With more than 70,000 customers, Infor is changing what businesses expect
from an enterprising software provider. For additional information, visit www.infor.com.
About Infor
INFWP_SWMGEENODD_1207-3
www.infor.com
Infor Corporate Headquarters
13560 Morris Road
Suite 4100
Alpharetta, Georgia 30004
USA
Phone: +1(800) 260 2640
Copyright © 2007 Infor. All rights reserved. The word and design marks set forth herein are trademarks and/or registered
trademarks of Infor and/or related afliates and subsidiaries. All rights reserved. All other trademarks listed herein are the
property of their respective owners. www.infor.com.
Disclaimer
This document refects the direction Infor may take with regard to the specifc product(s) described in
this document, all of which is subject to change by Infor in its sole discretion, with or without notice to
you. This document is not a commitment to you in any way and you should not rely on this document
or any of its content in making any decision. Infor is not committing to develop or deliver any specifed
enhancement, upgrade, product or functionality, even if such is described in this document.
doc_813828539.pdf
What does it mean to be a world-class competitor? It means being successful in your chosen market against any competition—regardless of size, country of origin or resources. It means matching or exceeding any competitor on quality, lead time, flexibility, cost/price, customer service and innovation. It means picking your battles—competing where and when you choose and on terms that you dictate.
Whitepaper
The seven keys
to world class
manufacturing
Table of contents
Whitepaper
2
Infor is in no way committing to the development or delivery of any specifed enhancement,
upgrade, product or functionality. See “disclaimer” paragraph contained herein.
Executive overview ..................................................................................................................................................... 3
Reduce lead times ...................................................................................................................................................... 4
Cut operations costs .................................................................................................................................................. 5
Speed time-to-market ................................................................................................................................................ 7
Exceed customer expectations .............................................................................................................................. 8
Streamline outsourcing processes ........................................................................................................................ 9
Manage the global enterprise ................................................................................................................................10
Unlocking the potential ...........................................................................................................................................11
About Infor ...................................................................................................................................................................12
3
Whitepaper
Infor is in no way committing to the development or delivery of any specifed enhancement,
upgrade, product or functionality. See “disclaimer” paragraph contained herein.
What does it mean to be a world-class competitor? It means being successful in your chosen
market against any competition—regardless of size, country of origin or resources. It means
matching or exceeding any competitor on quality, lead time, fexibility, cost/price, customer service
and innovation. It means picking your battles—competing where and when you choose and on
terms that you dictate. It means you are in control and your competitors struggle to emulate
your success.
What does it take to be world class? Richard Schonberger, a leading manufacturing consultant,
created the term “world-class manufacturing.” According to Schonberger, “manufacturing is gained
by marshalling the resources for continual rapid improvement.” To achieve world-class status,
companies must change procedures and concepts, which in turn leads to transforming relations
among suppliers, purchasers, producers and customers. Enterprise automation is indispensable to
manufacturing innovators who aim to gain market share, operate at peak efciency and exceed
customer expectations so they can be world class in their industry.
How can your company become and remain world class? There are seven keys to becoming a
world-class manufacturer that distill the broad concepts above into specifc actions that can be
addressed and accomplished in your company. Each is presented with a brief discussion and
examples of its impact on a manufacturing organization and its competitiveness. A more detailed
discussion of each of the seven keys is available from Infor.
The keys to success, in no particular order, are:
1) Reduce lead times
2) Speed time-to-market
3) Cut operations costs
4) Exceed customer expectations
5) Manage the global enterprise
6) Streamline outsourcing processes
7) Improve business performance visibility
Each of these objectives is important in and of itself; however, taken together, they describe the
focus of the activities and attitudes that defne world class.
Executive overview
Whitepaper
4
Infor is in no way committing to the development or delivery of any specifed enhancement,
upgrade, product or functionality. See “disclaimer” paragraph contained herein.
Shorter lead times are always a good thing. In many markets, the ability to deliver sooner will win
business away from competitors with similar product features, quality and price. In other markets,
quick delivery can justify a premium price and will certainly enhance customer satisfaction. In all
cases, shorter lead times increase fexibility and agility, reduce the need for inventory bufers and
lowers obsolescence risk. Lead times are cumulative and bi-directional—that is, order handling,
planning, procurement, inspection, manufacturing, handling, picking, packing, and delivery all
contribute to the lead time; and the time it takes to get signals down the supply chain to initiate
each activity adds to the overall time it takes to get the job done.
Infexible business rules and policies can drive undesired efects. Purchasing rules too focused on
unit cost lead to large quantity buys that result in high inventory and long lead times. Ironically, this
type of buying can also lead to shortages, since longer lead times mean you will be making and
buying to a less accurate forecast. The best combination of price and lead time often comes from a
stable buyer-supplier collaborative relationship based on long-term contracts with deliveries
according to a forecast that is shared with the supplier and updated frequently. The same is true on
the customer side. Instead of focusing on securing large, one-time, single orders that clog up the
supply chain, companies must focus on creating long-term contracts with customers and sharing
forecast information with customers to reduce lead times.
The same issues concerning large lot sizes also apply to internally produced parts and products.
Large lots, driven by a focus on lowest unit cost, raise inventory and lengthen lead times while
reducing fexibility and responsiveness, increasing eventual cost through premium expediting
instead of using large fxed lots, companies must dynamically adjust the lot size based on market
demand, product mix and capacity. Ongoing continuous improvement eforts focused on reducing
setup times can help companies reduce lot sizes, which provides fexibility in responding to
market demand.
Appropriate measurements contribute to high performance on the plant foor. On-time shipment
and inventory turns are good examples of high-level measures that tie to company objectives.
Focusing on isolated measurements like equipment utilization on non-constraining resources
encourages “busy work” that creates excess inventory and longer lead-times. Shop foor
measurements must encourage overall performance—shipping orders on time at minimal total
cost and minimal total cycle times. Performing manual transactions often slows down the supply
chain and adds to lead time. Reporting transactions at each operation or creating a paper purchase
order before suppliers work on a component are just two examples. In addition, manual transaction
reporting often introduces errors and impacts work productivity. Companies must eliminate non-
value added transactions and automate transactions to speed up the supply chain. For example,
backfushing can be used on the shop foor, and supplier purchase orders can be electronically
sent or completely eliminated using Supplier Relationship Management (SRM) solutions.
Reduce lead times
5
Whitepaper
Infor is in no way committing to the development or delivery of any specifed enhancement,
upgrade, product or functionality. See “disclaimer” paragraph contained herein.
Although recent developments in planning and Customer Relationship Management (CRM) have
focused more on top-line benefts—growing revenue—the bottom line is still greatly dependent on
controlling costs. Companies with a lower operational cost structure enjoy an obvious advantage in
proftability, and the ability to adjust pricing to meet competitive pressures if necessary, to
maintain or gain market share.
Costs are really just part of the scoreboard. When a company implements world-class operational
processes, it improves multiple measurements simultaneously, including cost, lead times,
inventory and customer service. This approach is superior to a pure cost reduction focus
without associated business process change, which can negatively impact other operational
measurements. Localized cost reduction eforts can often increase costs in other areas. Moving
production overseas to an area with lower labor rates, for example, will increase costs for
procurement, transportation, inventory and reduced fexibility, among others.
The relative cost of source/make/deliver, and therefore, the opportunities for cost reduction,
will vary with the specifc industry and the kind of products the manufacturer makes. Most
manufactured products today have relatively little direct labor content, generally less than 20%
and often less than 10%, whereas the material content of most products is more than one-half the
cost-of-goods sold (COGS). The rest is “overhead.” Since most direct labor costs tend to be fxed,
efective deployment of these resources can reduce unplanned manufacturing overtime, premium
expediting and outsourcing, as well as dramatically reduce cycle times. Since material cost is the
dominant cost, signifcant opportunities for reduction lie in analyzing current spending and
devising efective sourcing strategies for material. Overhead reduction is always a fertile area for
cost reduction, using automation to streamline the procurement, manufacturing and customer
management processes.
Additionally, fulfllment costs have not received as much attention as it deserves; inventory cost,
transportation, admin costs, electronic communications, and storage account for a signifcant
part of the cost of doing business. Fortunately, improving customer service can also generate
cost benefts at the same time. Improve business performance visibility Today’s fast-moving,
ever-changing manufacturing environment demands faster responsiveness to changes in the
market, product innovation and supply chain events. In this environment, ignorance is one of the
greatest threats to a manufacturing company’s health and success. Executives and senior
managers must understand how the enterprise is meeting strategic objectives. Middle-level
managers need visibility into how they are performing against tactical objectives. Responsible
individuals must be notifed immediately when supply chain issues threaten the completion of
objectives, so actions can be taken to ensure customer delivery and quality requirements
continue to be met.
Cut operations costs
Whitepaper
6
Infor is in no way committing to the development or delivery of any specifed enhancement,
upgrade, product or functionality. See “disclaimer” paragraph contained herein.
A well-implemented and efective business solution delivers overall visibility into the health of the
company and its operations and provides detailed information for performance measurement,
process management, and problem identifcation and remediation. Such a system can help
improve revenue through competitive advantage, help you understand your business and
therefore, manage it better, reduce operational costs, improve performance and improve
results for all stakeholders—owners, executives, managers and employees.
An enterprise business solution will capture literally thousands of pieces of information each day,
as activities are reported throughout the enterprise. All of this detailed data is of little use without
placing it in context and seeing each activity in relationship with all the other activities and the
overall plan. To turn data into meaningful information is an up-and-down process. Bits of data,
taken together and summarized, form higher level contextual information that shows status,
accomplishments and importance. From high-level summaries, the observer must be able to drill
down to details to understand exactly what is happening and how to drive those activities toward
the goals and objectives.
Management information and analysis is only as good as the data it is based on. Therefore, data
must be collected as quickly as possible and with the least amount of human intervention, which
tends to introduce delays and errors. It is equally important to collect data from supply chain
partners through automation as much as possible. Electronic Data Interchange (EDI) is the most
commonly used method today but EDI is rapidly being replaced by XML-based e-commerce
communications and Web-based portal technologies.
All systems should be integrated so information can pass freely between them without manual
re-entry. Many manufacturers are left with “islands of automation” after implementation of
specialized information systems in isolated portions of the business over the years. While each
contains valuable information, absence of integration prevents the efective use of that information
for overall management and coordination of efort toward company objectives.
7
Whitepaper
Infor is in no way committing to the development or delivery of any specifed enhancement,
upgrade, product or functionality. See “disclaimer” paragraph contained herein.
Developing and introducing new products and services is vital to most manufacturing companies.
Good ideas are not enough; well-managed processes for bringing new products to market can lead
to signifcant competitive advantages. Those activities, however, represent a signifcant risk that
can lead either to missed opportunities or to huge fnancial losses.
In addition to new product development, the same processes and resources are applied to product
improvements, corrections and variations throughout the product lifecycle. Based on market
research, products are often subject to frequent engineering changes due to customer requests,
technological advances, regulatory concerns or competitive pressures.
Changes and improvements are easiest to make— and least costly and disruptive—earlier in the
process. It is good business practice to collaborate with all operational areas of the business while
the product and process are still being designed. Cooperation should be focused on the following
areas: making sure the new product meets market needs (marketing and sales), that it is priced to
sell and generate a proft (marketing and accounting), that it can be manufactured efciently
(production, production engineering, quality, purchasing and key suppliers), and that the product
can be maintained and serviced (service).
Because customer expectations are increasing, and competition is coming from new players
around the world, bringing better and less expensive products quickly to market is more crucial
than ever. Research and development is a key success factor in a manufacturer’s survival and
growth. Efciency and responsiveness of R&D processes will impact the top line as well as the
bottom line.
Customers are quick to compare and switch vendors. The Internet empowers buyers by providing
fngertip access to many more suppliers around the globe; they can even customize products over
the Internet without having to ask an engineer to quote their specifc requirements. These
capabilities change behaviors and expectations, and success in today’s markets can only be
achieved through innovation, agility and aggressive marketing.
Speed time-to-market
Whitepaper
8
Infor is in no way committing to the development or delivery of any specifed enhancement,
upgrade, product or functionality. See “disclaimer” paragraph contained herein.
The ultimate goal in any business is pleasing your customers. The most successful companies
don’t just meet customer expectations, they exceed them and beat the competition by setting
the bar at a level that makes it difcult, if not impossible, for others to surpass. Successful
manufacturers manage the entire customer relationship—from prospect to post-sales service and
support—involving the entire organization in a customer focus. Whether or not they have direct
contact with customers, contributors must keep the customers’ needs in mind as they plan and
carry out day-to-day operations.
Manufacturers must truly understand the customers’ goals and objectives. Your products and
services must strive to support the customers’ vision. Communication is very important; neglect is
the number one reason that customers terminate a relationship. The key is to give customers
access to all appropriate information about your relationship and make it readily available
whenever and wherever they might need it—the Web is your ally in achieving this objective.
As most companies have painfully learned in recent years, customers often change their mind.
To be fair, market conditions are such that product cycles and demand patterns are constantly
changing. Agility is extremely important. A solid, collaborative partnership with customers will provide
the most reliable advanced information and therefore the earliest warning of upcoming changes.
In short, the best strategy is to make the customer want to do business with you. Strive to be
the preferred supplier through competitive products, high quality, the right price and superior
customer service.
Arguably, the most important aspect of customer service is on-time performance. There are two
sides to on-time delivery: promising a realistic date; then delivering on that promise. You must take
that promise seriously, meaning that it is not given lightly—all considerations and constraints are
factored in before committing to a delivery date. Performance measurements are a must; if you
don’t know how you are performing, you cannot improve upon it. It is not unusual for companies to
consistently have 98% - 99% success in meeting agreed-to shipment dates.
Quality must be considered a given. Work with your customers and engineering as early as
possible in the product development cycle to determine the required measurements. Measuring
and improving all processes through the order and fulfllment cycles, with an eye toward
continuous improvement, will allow you to achieve or even surpass expectations.
Exceed customer expectations
9
Whitepaper
Infor is in no way committing to the development or delivery of any specifed enhancement,
upgrade, product or functionality. See “disclaimer” paragraph contained herein.
Outsourcing of manufacturing operations is a common practice today because it ofers fexibility—
the ability to change products or processes rapidly— and can often save money by exploiting
economies of scale or other favorable cost factors ofered by the contractor. There are two
approaches to outsourcing: a single process step or group of steps may be performed by an
outside resource (heat treating, for example, or electroplating) or the entire manufacturing process
might be contracted to a third party. In either case, the manufacturer relieves demand on its own
plants and can concentrate on its core competencies— which might not include volume
manufacturing—while its partner(s) provide the resources for producing products.
Depending upon your current resources and circumstances, outsourcing a part of the
manufacturing process could save you from having to expand your manufacturing space (perhaps
even adding a new plant), searching for and hiring experienced resources, training the new hires
and paying various expenses involved in ramping up a new production line or process. Capital
assets can become a liability in a fast-changing marketplace. As customer demands and
technologies change the nature and makeup of products, it can be an advantage to not be tied to a
relatively infexible physical plant.
For companies large and small, the goal is to become a world-class organization and to be able to
compete in today’s global markets. For manufacturers, the fastest and easiest way to achieve this
goal is through partnerships with companies that have attained superior capabilities in particular
phases of the process—like production. By partnering with world class contract manufacturers,
you can reap the benefts almost immediately—well-managed processes, high quality, on-time
deliveries—and increase your performance and expectations. At the same time, you can focus
your own resources on the things that you do best—product innovation, design, marketing,
distribution, sales or manufacturing.
Streamline outsourcing processes
Whitepaper
10
Infor is in no way committing to the development or delivery of any specifed enhancement,
upgrade, product or functionality. See “disclaimer” paragraph contained herein.
The world in which we do business is shrinking, and virtually every enterprise is now involved in
some form of international trade, whether marketing and selling to customers in other countries, or
simply using parts or materials that are produced elsewhere. We can thank the Internet, or blame
the Internet if you prefer, for opening markets to product and services almost without regard to time
and distance. The “glass-is-half-full” crowd will view these developments as the onset of unlimited
opportunity. If you lean toward the half-empty- glass crowd, you are likely to see signifcant threats
in virtually unlimited competition from literally any place on earth.
Like it or not, every executive must recognize this new reality and factor global business into plans,
processes and strategies. Design products to appeal to international markets. Search for suppliers
in other geographies. Understand local regulations and expectations, import/export processes and
requirements. Consider language challenges in labeling, documentation and marketing. Establish
new sales channels or coordinate manufacturing operations across geographies and time zones.
The Internet is a key tool for joining the global business community and conducting business
around the globe.
Globalization and Web commerce have changed traditional business behaviors and practices. If
manufacturers don’t expand into new geographic markets, their market share is likely to shrink as
new competitors will enter their territory and target their historical customers. Companies must
adapt their products and services to those new potential customers. They must leverage the
Internet to quickly establish a virtual presence. They must use collaborative technology in order to
respond to customer’s requirements better and faster.
Manufacturers often grow and enter new markets by acquiring or merging with other companies.
This usually means, however, that diferent facilities within the newly merged enterprise are using
several applications on diferent hardware platforms, applying diferent part numbers for the same
items and using diferent operating procedures. The challenge is to bring as much uniformity to the
varied facilities as practical without destroying the uniqueness and competitive edge that the
individual units had before the merger. The new divisions need to communicate, exchange many
kinds of data (product information, customers, suppliers, employees, etc.), coordinate and
synchronize logistics operations, provide visibility to materials and components requirements,
optimize fxed assets utilization across multiple facilities, consolidate fnancials and much more.
A natural consequence of having operations scattered through multiple locations, whether around
the world or in a specifc region, is the need to gain visibility across all sites. Visibility can lead to
more negotiating power for purchased parts, more efcient centralized credit and collections and
accounts payable, and opportunities for improved customer service by gaining access to world-
wide inventories and production capabilities.
Manage the global enterprise
11
Whitepaper
Infor is in no way committing to the development or delivery of any specifed enhancement,
upgrade, product or functionality. See “disclaimer” paragraph contained herein.
The keys to becoming a world-class manufacturer are not a secret—they are not even especially
profound— they are simply a distillation of the experiences of leading companies and how they
have managed to excel in their chosen markets. Any company can take advantage of the wisdom
and the practices developed in more than 100 years of manufacturing since the Industrial
Revolution, but many simply do not have the insight or the will to recognize what must be done
and to accomplish it.
It is a poor workman who blames his tools for shoddy work, but it is also true that professionals
understand the value of good tools and insist on having and using the best whenever possible.
When selecting a production machine—a machining center, insertion machine, automated
assembly line or robot—you would certainly look for one that can handle the tasks you have in
mind, but also one that is fexible enough to adapt to additional products and uses that may arise in
the future. This practice is even more important with a business solution because the handling and
use of information is changing faster than any other technology on the planet. And, remember that
information management is a fundamental support for each and every one of the keys to world-
class performance.
When looking at extended ERP, supply chain management or CRM solutions some people tend to
get distracted by details of the technology and miss the bigger picture. Keep in mind the reasons
you are looking for a solution in the frst place—to provide tools to manage the information that is
essential to growing business value. And that’s the application software, not the hardware or
operating system. On the technology side, you only have to ensure, as much as you can, that the
operating platform is capable of supporting your business needs today and in the foreseeable
future, and that the supplier(s) will be around when you need them. Of course, no one knows the
future, but you can certainly improve your odds with careful selection.
The keys to world-class manufacturing dictate a requirement to deploy capabilities to improve
manufacturing operations and processes. Subsequently, technology-based solutions must then
be built around the functional processes of design, sell, plan, source, make, deliver, service and
fnance. Being world class is all about being as good as any competitor in the world, and just a little
bit better, quicker, smarter, or more responsive than the rest. World-class manufacturers can
choose their battles and compete on their own terms. They are in control of their own destiny and
are seldom, if ever, blindsided by something they haven’t anticipated or cannot handle.
Unlocking the potential
Whitepaper
12
Infor is in no way committing to the development or delivery of any specifed enhancement,
upgrade, product or functionality. See “disclaimer” paragraph contained herein.
Infor delivers business-specifc software to enterprising organizations. With experience built in,
Infor’s solutions enable businesses of all sizes to be more enterprising and adapt to the rapid changes
of a global marketplace. With more than 70,000 customers, Infor is changing what businesses expect
from an enterprising software provider. For additional information, visit www.infor.com.
About Infor
INFWP_SWMGEENODD_1207-3
www.infor.com
Infor Corporate Headquarters
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Suite 4100
Alpharetta, Georgia 30004
USA
Phone: +1(800) 260 2640
Copyright © 2007 Infor. All rights reserved. The word and design marks set forth herein are trademarks and/or registered
trademarks of Infor and/or related afliates and subsidiaries. All rights reserved. All other trademarks listed herein are the
property of their respective owners. www.infor.com.
Disclaimer
This document refects the direction Infor may take with regard to the specifc product(s) described in
this document, all of which is subject to change by Infor in its sole discretion, with or without notice to
you. This document is not a commitment to you in any way and you should not rely on this document
or any of its content in making any decision. Infor is not committing to develop or deliver any specifed
enhancement, upgrade, product or functionality, even if such is described in this document.
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