You’ve probably seen the sign before which reads: “Plan Ahead”. Of course, the sign has a little ‘d’ squeezed in at the end because there wasn’t room. I’m also pretty sure you’ve heard the expression, “The best laid schemes (plans) of mice and men…” which basically means “the most carefully prepared plans may go wrong.” So what does this lesson in literature have to do with manufacturing?
Simply put: manufacturers love to plan. Companies have invested millions in sophisticated Sales & Operations Planning (S&OP) systems so they can plan exactly what’s needed and when. Driven by demand sensing technology, these systems harvest granular levels of customer buying patterns in order to predict future demand. Then the planning system kicks into gear, adjusting goals and production schedules for the next week, or month, or however the system is set up.
This level of planning is a great improvement over the educated guesswork that used to drive manufacturers. But there’s a catch to all this—real manufacturing plants, somewhere in the global system, have to step up and actually produce the product. And this has been getting harder and harder to do, because other forces have been at work in manufacturing in recent years.
When operating lean can work against efficiency
One of these forces is the Lean Manufacturing practice adopted by most leading companies. Changing production plans was easier when you had a lot of inventory sitting around. But these days, manufacturers have purged their system of waste, and extra inventory is likely a thing of the past. Now when production plans change, the local plant often has to scramble to find the needed materials and move them smoothly into the production stream.
Maybe you’ve adapted to this and have a very agile supply chain. But there’s a second force at work complicating things still further: the increasing variability and demands on packaging.
If you’re a global manufacturer, you have many different packages for the same product. There are packages for different regions, packages for white label customers, and labeling for different regulatory requirements. Clearly you must label and/or date every package correctly. Accurate packaging can also provide the key to executing a recall or other product traceability issue, should something go wrong.
All of this complexity, coupled with the agile front-end planning systems, is putting a real squeeze on manufacturing plants. The problem is that packaging management has not always kept up with planning. Not that many years ago, packaging was an afterthought on the plant floor. Today, packaging is becoming the tail that wags the dog. There are some products—food and beverage are good examples—where packaging can be the single biggest differentiator, and the hardest part of the production process to change quickly, precisely because every product has so many packaging variations.
A new approach
Industry leaders have not only identified this problem, but have put in a plan to address it. The first step is to throw out the idea that packaging operations can operate as a silo. It can’t. The next step is to realize that manufacturing operations are best managed on a multi-site or global basis. Trying to optimize production or output across your enterprise is the best mindset to establish—and with this philosophy it becomes readily apparent why packaging operations should be an integral part of your overall production strategy.
Are you considering doubling the output of Product “A”? A modern approach to manufacturing operations management dictates that this type of production change can’t be done without specific consideration of all the repercussions that come with such a change. For example, arranging for more raw materials to be available from your suppliers (which might even include a different mix by vendor), ensuring the necessary staff is available to perform their role, and that the packaging requirements, components, and scale up constraints have been anticipated and mapped to target outputs.
Best-in-class manufacturers are now implementing operational excellence programs capable of achieving these very objectives. Achieving success, however, is no small feat. Rather, it is a journey that must be ensured for the long haul. Establishing an enterprise wide IT infrastructure that can adapt quickly to change is an accomplishment, but one that can present enormous rewards.
According to recent research conducted by LNS Research, the top strategic objectives for embarking on this journey were to ensure consistent quality, improve responsiveness to changing customer demands, and to increase production capacity and capabilities—which correlates directly into improving operational agility within packaging operations. The top challenges to overcome include a lack of collaboration across different departments, disparate systems and data sources and ROI justifications for improvement investments. More research findings on this subject can be found here in this Infographic, prepared by LNS Advisors.
It ain’t over ’til it’s over
It’s ironic but true. The bottleneck in your planning system, the thing that’s keeping you from being truly responsive and ahead of your market, may not be in your demand sensing or planning systems, or even in your ability to manufacture your products. The bottleneck may be at the very tail end of your production processes: your ability to manage and execute product packaging.
In that sense, planning is a lot like baseball. As the great Yogi Berra once said, “It ain’t over ’til it’s over.”