Companies are constantly navigating an intricate, complex and diverse business landscape, striving to optimize efficiency and meet the ever-changing demands of the market. The need for accurate and timely data to drive efficient planning is as great as ever, but many find themselves hampered by the limitations of traditional practices. For decades, planning teams used data from ERP systems that were designed for financial analysis. Yet, as the business landscape evolves at an unprecedented pace, it has become imperative for leaders to question the efficacy of these longstanding practices.
Why are so many manufacturers reliant on outdated methodologies like standard costing, run rates and material usage that use accruals to account for variances in financial results? This practice undermines the accuracy of financial analysis, while hindering the supply chain’s ability to swiftly respond to market fluctuations and disruptions. These antiquated practices lack accuracy and fail to provide the real-time visibility required to make informed decisions. In an era where agility and adaptability are paramount, clinging to conventional approaches may prove detrimental to a company's competitive edge. It’s time to break free from legacy systems that hamper progress and take a leap forward.
The disconnect between Manufacturing Execution Systems (MES) and executive-level decision-makers further compounds these challenges. Despite the wealth of data generated by MES, the failure to integrate and analyze this information into strategic decision-making processes creates inefficiencies and missed opportunities across the supply chain.
These conventional practices have given rise to various common challenges that cost money and impact customer fill rates due to poor schedule adherence, unexpected changeovers and production delays, driven from:
- Limited visibility into Raw Material issues. Often, companies struggle to track the availability of raw materials in real-time, leading to delays and disruptions in production schedules. This lack of visibility impacts operational efficiency and increases the risk of missed delivery deadlines and customer dissatisfaction. For example, a raw material issue, such as receiving the wrong material or experiencing quality issues, can halt production lines and impact overall productivity. Furthermore, raw materials are sometimes stored or managed outside of the shop floor, complicating inventory management processes, especially when raw materials are in-transit or stored at supplier locations. This decentralized approach to raw material handling can result in inefficiencies, as operations teams may struggle to access critical materials when needed.
- Limited connectivity between planning and operations teams. In many organizations, these two functions operate in silos, leading to misalignment and communication gaps. When there is a connection, it’s often a one-way street with supply chain pulling data from MES when it should be a bi-directional flow of information. When delays occur in execution, there is no option to quickly reassess the situation and respond via connected data, decision-making, and operations. Additionally, nuances in efficiencies and capacity are not accurately represented in strategic decision-making.
- Unfeasible master production schedules. Production plans may not accurately reflect operational realities, leading to unfeasible master production schedules. Using standards from ERP for production run-rates and material consumption can cause significant variances between the labor, machine hours and materials planned and what is needed on the shop floor. Unplanned downtimes due to changeovers, raw material shortages, and production line disruptions represent another critical challenge for manufacturers. These downtime events can occur unexpectedly, causing delays and interruptions to schedules that lead to unsatisfied customers.
- Inefficiencies due to limited visibility into existing capacity. While MES provides production rate data, there's often no direct feedback to planning systems, leading to inaccurate capacity assessments and manufacturers struggling to optimize production schedules. Relying solely on ERP for capacity information is insufficient, as these systems may not capture all relevant data, resulting in discrepancies between planned and actual capacity. An effective integration of MES and planning with real-time exchange of data is crucial for accurate capacity assessments and agile decision-making.
The Digital Thread
The digital thread, as defined by Gartner, “offers supply chain leaders responsible for manufacturing operations strategy a framework to connect the intricate webs of data across increasingly complex products, customer requirements and supply bases.”
The seamless connection of John Galt Solutions’ Atlas Planning Platform and GE Vernova’s Proficy Smart Factory MES establishes a powerful digital thread that spans the entirety of the customer’s value chain. This digital thread represents a real-time integration that both connects disparate data sources and enables advanced analytics and machine learning algorithms to derive actionable insights. The power of this bi-directional connectivity enables companies to transcend the limitations of traditional accounting-centric approaches and drive better outcomes, primarily:
- Enhanced visibility, efficiency and schedule attainment. This unique GE Vernova/John Galt digital thread delivers unparalleled visibility into various aspects of both the extended supply chain such as in raw material procurement, and the manufacturing floor. With real-time data at their fingertips, teams across the business can make informed decisions, for example, regarding RM sourcing and allocation, ensuring that the correct amount of raw materials is available when needed and at what node of the supply chain. This improved visibility translates into greater efficiency and the ability to satisfy orders as promised, thereby enhancing customer satisfaction levels.
- Improved schedule adherence by accurately reflecting production realities. Seamless communication between planning and MES means companies have more closely aligned production schedules that reflect true operational capabilities. Now, it is possible to attain new levels of production while minimizing disruptions. The enhanced schedule adherence drives increased production yields and cost efficiencies, while delivering the potential to considerably boost service levels.
A significant challenge for many companies is the inherent uncertainty and volatility in their production environments. Now, leveraging the insights derived from this digital thread, companies can better anticipate and manage disruptions. For example, by analyzing historical data on plan changes and disruptions, companies can proactively adjust their plans to accommodate unforeseen events – minimizing the impact of disruptions while enhancing resilience.
The digital thread enables companies to optimize their planning processes by identifying areas for improvement. Understanding the frequency and magnitude of plan changes helps develop more flexible plans that can withstand disruptions. It’s a significant step forward to planning that equips teams with the ability to more effectively navigate the complexities of modern supply chains and maintain a competitive edge.
Time to Rethink Planning with a Holistic Approach
The integration of the Atlas Planning Platform and GE Vernova’s Proficy Smart Factory MES empowers companies to harness the full potential of their supply chains with real-time visibility, advanced analytics, and powerful insights that drive better decisions. As businesses continue to evolve and adapt to changing market dynamics, the digital thread will serve as a cornerstone for innovation and profitable growth.
The time is now to rethink planning processes and stop relying on outdated standard data from ERP systems which are no longer viable in today's fast-paced and dynamic business environment.
Companies must pivot towards leveraging accurate, timely, and relevant data. We’ll help you take the next step to create a cohesive digital thread that connects disparate data sources and operations for better decision-making across the entire ecosystem, enabling your team to effectively anticipate and adapt to disruptions.
The power of the seamless MES and supply chain planning integration accelerates value across the organization and removes decision latency. Learn more about GE Vernova’s Proficy Smart Factory MES and John Galt Solutions’ Atlas Planning Platform.
