Front Lines is a guest viewpoint section offering perspectives on current issues and events from people working on the front lines of Canada's technology industry.
Canadian manufacturers have had a difficult time competing in today's increasingly global economy. The high Canadian dollar and high labour expenses have contributed significantly to their endless headaches. Compared to their world-wide counterparts, Canadian manufacturers pay more for personnel, materials, and repairs, which drives up production costs significantly. As a result, many are deciding to offshore and outsource their operations in order to compete with emerging economic powerhouses like China, India and Mexico, who offer the same or similar goods at reduced costs.
Often, the end result of producing goods in foreign countries means that Canadian plants have to close, putting people out of work as we've seen with the recent GM and Ford plant closures in Ontario. According to the Canadian Labour Index, roughly 20,000 manufacturing jobs have been lost since the Canadian dollar began to appreciate.
Manufacturers can, however, successfully keep their operations within Canada's borders if they make a considerable effort to reduce losses and inefficiencies. The Canadian market provides a competitive advantage — a highly educated workforce — that isn't exploited sufficiently. Introducing new methods to improve plant operations, such as technology and performance management principles that engage everyone in the plant, will result in optimal plant performance. For example, by setting a target to improve production throughput by 5 per cent per year, a manufacturer with an annual operating cost of $100-million, can save $2.5-million in loss. The end result means that cost-per-part decreases and the plant not only remains open, but can compete effectively in the global economy.
Technology is the strategy
One way to reach that 5 per cent is to incorporate performance management software. Best-in-class manufacturers such as Magna International and Ford have implemented this technology in Canada with great success. This technology helps to make the waste in manufacturing processes visible and provide techniques to eliminating it. Leveraging this type of manufacturing intelligence can help manufacturers identify problems or constraints in real-time, cutting the cost associated with constraints, improving overall product quality and supporting continuous improvement initiatives. For example, by taking a constraint-based approach to throughput improvement, employees can correct various types of production losses, such as uptime and downtime, thereby, increasing net good parts-per-hour.
The typical manufacturing facility in North America runs at efficiencies of between 45 and 65 per cent. The room for improvement exists but the challenge is trying to understand how to prioritize where the plant operators and managers should focus their continuous improvement efforts. Another challenge is the complexity and often chaotic sequence of events that are required to successfully keep the flow of raw materials transforming into finished goods. By offering very simple and visual representations of chronic constraints impeding product flow in the facility, operational managers can focus their attention on issues that will directly impact production throughput, resulting in reduced cost per piece. Essentially, the entire plant will work from a common view of the operation with a clear understanding of the top issues to focus on. The net result is improved ability to deliver quality parts on time and on budget.
Rally the troops
Performance management technology can also help engage the entire team since continuous improvement is something that everyone in the plant should take seriously. Plant operations need extra attention from managers, operators, and shop-floor workers to ensure production runs smoothly and efficiently. Together, a plant's staff can work from a common view of the priority issues and help prevent loss as a proactive team, instead of simply reacting to challenges. Canadian companies and manufacturers are often first to incorporate employees as valued members of the plant. By leading this initiative, these plants have a competitive advantage which can ultimately help keep outsourcing and offshoring at bay.
Together, human capital and performance management technology can help refocus attention to the top constraints in the manufacturing facility. By doing this, the plant can improve overall production throughput and ultimately control costs. Keeping Canadian manufacturers in business can be a challenge, but by rallying the plant and employing the right technology, the plant can maintain its operations and be a strong competitor in our global economy.
Dennis Cocco is the Chief Product Strategist at Activplant Corporation (www.activplant.com), and founded the company in 1998. Headquartered in London, Canada, Activplant specializes in performance management software for high-volume, discrete manufacturers.
