This year’s Top 20 list of Canada’s most innovative Canadian technology companies, has Shoplogix ranked in the top 10 within the Information and Communication Technology category. The ranking, done by the Canadian Innovation Exchange (CIX) has invited the Shoplogix President and CEO, Martin Ambrose to attend and present at an event on December 1st, 2011 at the MaRS Discovery District in Toronto.

Shoplogix will be showcasing its innovative concepts to a CIX audience, consisting of Canadian and international venture capital firms as well as corporate investors. At the end of the event, A People’s Choice Winner for each category will be announced through the use of a “virtual stock exchange.”

Read the announcement here from The Globe and Mail.

Encountering the opportunity to travel and get paid for it has always been an interesting concept for me, and up until this past year, the concept was just a pipe dream. Over the last eight months I have boarded more than 30 planes and visited more than 12 major (and minor) cities throughout the USA and South-Eastern Canada. Despite what any American may say, the traffic in Los Angeles is not that bad. At least not in comparison to Toronto’s! Also, no matter what the locals say… EVERYONE has an accent! This leads me to one of the more interesting “Social Experiments” I found myself conducting after my first few trips…

Part of the role of a Field Engineer is to directly interact with and deliver training to personnel from the Ground Floor, right up to Corporate – so you can imagine the vast differences in personality types I get to converse with. In the space of an hour, an FES can go from training individuals whose vocabulary consists mainly of four letter nouns, to individuals whose educational costs could have bought them a modest house in any major city.

The thing that puzzled me the most however, had nothing to do with education or vocabulary prowess… I found that no matter who I talked to, no matter how intelligent the content of my presentation or conversation… The more like them I sounded, the more engaged the audience became, and remained throughout my dialog. That’s right, I’m talking about putting your pride aside and using local lingo “Y’all” can “understaaand” when talking “about” (not “aboot”) the “Prawcess” at hand.

Until next Blog, that’s it for now…

In this article we will discuss a four-level model for manufacturing enterprises and focus on how performance metrics can be assigned at each level that link back to strategic goals.

Consider a very simple hierarchical model of a manufacturing enterprise comprised of: the entire corporation, the various Business Units (BUs), the plants within those business units, and the manufacturing lines within each plant. For the purpose of our discussion, this serves as a simple model allowing us to demonstrate how each level is a ‘black box’ to their parent level and how the ability to open this box and shine a light onto the activities within, helps meet performance, business and ultimately strategic goals.

Let us start with the corporation, which is the entire manufacturing enterprise made up of various business units possibly organized by geography, product, or service. The corporation will typically establish strategic goals, stated in financial terms, and assign each Business Unit performance metrics that support the achievement of those goals. For example, a corporation may be focused on maximizing its return on capital employed, and to realize this, may assign margin improvement numbers to each Business Unit and track the performance on a regular basis.

From a manufacturing perspective, the BU is comprised of a number of plants. In order to meet the performance goals established by the corporation, BU Leaders will assign Key Performance Indicators (KPIs) to each of their plants to support the achievement of the corporate strategy. For example, if margin needs to be increased by 10%, BU Leaders will look at KPIs that impact the Cost of Goods Sold (COGS), which may include the costs of raw material, labour, energy, and inventory. We would also like to add that the hidden costs associated with inefficiencies, losses and a lower production throughput than possible, impact margin by inflating unit costs. As such, BU Leaders will assign KPIs around Work In Progress, Inventory, Downtime, OEE, unit labour costs, unit energy costs etc., where the performance targets are set and assigned to the plants. Oftentimes the KPI targets are set based upon historical data. From a previous article, recall that inaccurate information is a major source of poor investment decisions for continuous improvement dollars. Here again, inaccurate information rears its ugly head. Since the targets are set on historical data and that data is inaccurate, the targets are likely to be inaccurate as well. A manufacturer we work closely with established product specific performance targets for OEE based on such a method and struggled to find improvement as the targets were incorrect. When visibility into the real targets was provided, as well as a means to reach those targets, it was clear that the previous production targets, based on inaccurate historical data, were actually hurting the company.

At the Plant level, Plant Leaders are responsible for ensuring that the right processes exist to meet the KPIs established at the BU. It is the Plant Leaders’ responsibility to ensure that the right processes exist to support the improvement of metrics and achievement of targets for Downtime, OEE or unit labour costs. They need to review their plants’ performance, in real-time, against these metrics and identify problems as they are occurring. It is no longer possible to wait until the next day or later to discover that something has gone wrong, it is important to discover the problem as it is occurring and take corrective action immediately.

It is at the Line Level where true progress is made. Here efficiency and throughput improvements are reflected in the Plant KPIs, which roll up to the BU and Corporate levels. Tactical measures result in the realization of strategic goals at the line level. Our experience has shown that operator engagement and real-time feedback to operators is critical in changing behaviour on the plant floor in order to align with the strategic direction established by the corporation. With accurate, real-time information, the operator is able to meet their performance targets which, as discussed, are linked directly back to strategic goals.

The plant floor is a major determinant of costs as well as revenue generation. By linking performance metrics from the line -to the plant – to the BU and to the corporate strategy; manufacturing enterprises have the visibility, at every level, to improve their competitive position.

		George Dalle Ave George Dalle Ave is the Director of Solutions Development at Shoplogix Inc.

In this article, let’s take a look at how manufacturers can improve their strategic advantage through the use of accurate plant information. We’ll begin by discussing the possible types of generic strategic advantages and move onto the role that plant information can play in creating strategic advantage.

Most readers probably understand there are three generic ways to compete. A manufacturer can compete on operational excellence, product leadership and customer intimacy. While all manufacturers need to include each discipline in their execution, they need to focus on one area and decide to be a leader in that discipline. It is important to understand that it is not possible for a manufacturer to direct resources on being the best in all three areas. In cases this situation what typically happens is the manufacturer becomes a ‘middle of the road’ company in all three areas and a leader in none. Author Michael Tracey put it best when he drew an analogy to the Olympic Decathlon. In the decathlon, athletes compete in sprinting, long distance running, long jumping, pole vaulting, etc., making the decathlete, undoubtedly, one of the best athletes in the world. However, when compared to an Olympic sprinter or Olympic long distance runner, a decathlete is not in the same class. Why? Principally because the sprinter focuses all his time on running the 100m as fast as possible. A sprinter’s training, diet, and muscle mass is completely geared to making him the best. Since a decathlete has to be a generalist, they cannot possibly compete against the sprinter.

A similar situation arises with manufacturers, they need to choose one of the three generic strategic disciplines and focus their energy on being the best at that discipline. For example, a tier one pharmaceutical manufacturer may choose to compete based on a product pipeline and invest heavily in new products – this is product leadership focused. A generic pharmaceutical manufacturer may compete based on keeping their costs as favourable as possible – this is an operational excellence focus. Finally, a contract pharmaceutical manufacturer may compete based on integrating their information systems with the tier one pharmaceutical company to provide the best customer experience – this is a customer intimacy focus.

Now let’s take a look at each generic strategic discipline to determine the role that accurate plant information can play in improving competitive advantage and discuss examples of possible implementations of the strategic model to leverage the manufacturers’ advantage.

Let’s start with operational excellence as this is likely to be the easiest area to grasp. Companies that compete based on an operational excellence look for ways to keep their costs under control and pass that cost savings onto their customers. They align their operational and business processes to achieve a cost advantage over their competitors. They do this by continually reviewing their inventory, supply, production, delivery process to ensure they get the highest throughput from their value chain. The internal processes of these companies are geared towards understanding exactly where problems are and removing them. This can be done through identifying the bottlenecks, within current processes, and removing them as quickly as possible. Companies that compete on operational excellence require real time accurate information on production costs (raw materials, inventory, labour, and energy), and trained operators, who can recognize waste and eliminate it. These companies constantly determine which products are profitable and which are not. If they cannot drive the costs out of a product to make it profitable, they need to prune that non performing product and develop better products.

Companies that compete based on a product leadership position will invest heavily in new product development and will look at how their products perform within their ecosystem. They continually evaluate which products are able to produce the best returns. These companies are interested in establishing production standards that allow them to measure how effectively their product can be manufactured. They are interested in being able to bringing products to market more efficiently and faster than their competitors. These companies will often invest heavily in flexible manufacturing processes and will gather information to help them understand how quickly than can change to a new product line, due to the need to bring products to market more efficiently and faster than their competitors. Towards the end of the product lifecycle, these companies will begin to look for ways to stretch out the value of the product, by driving down costs, while they begin to bring new products on line. These companies need to understand the ability of their suppliers to perform with the newly created products, while being able to quickly and efficiently identify supplier problems early. This process will enable companies to maximize profits as their product enters the high adoption part of the product life cycle curve.

Companies that compete based on customer intimacy are interested in providing the best experiences possible for their customers. These companies will invest in quality programs that ensure only good products are delivered to the customers. In the cases where a defect has been sent to the customer, these companies will have well defined processes to ensure that the cause of the defect is completely understood and that immediate action is taken to make sure the problem does not happen again. Customer intimacy focused companies often link their processes tightly with the customer and invite customers into the manufacturing process as much as possible. This often allows companies to provide real time access to manufacturing information on quality and delivery for that specific customer. In order to ensure that quality processes can run properly, companies require access to the right quality information to ensure their quality processes can be run properly.

From this high level we can see that regardless of the way a manufacturer competes, real time accurate data, directly from the plant floor, is critical to developing a competitive advantage. An operational excellent company requires production information that allows them to drive out costs. A product leadership company is looking for plant information on their ability to introduce new products and manage them through the product lifecycle. A customer centric company is looking to provide customers with real time access to plant information, to ensure they have the best experience possible.

		George Dalle Ave George Dalle Ave is the Director of Solutions Development at Shoplogix Inc.