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01 October 2002

'LEAN' or MES? To optimize, take best of both.

Smart users know rival vendor groups offer unique strengths.

By Charles H. Gifford

When companies look to optimize production, business drivers vary dramatically depending on industry, product, and organization. Typical drivers (not a complete list) include the following:

• Lower production costs
• Increase throughput
• Increase product quality
• Decrease rework
• Reduce waste, material, and human resources
• Decrease time to volume on a new product introduction (NPI)
• Decrease time to theoretical yield and cycle time on an NPI
• Reduce inventory and work in process
• Reduce regulatory reporting costs with electronic history records
• Decrease in-line setup for new product runs
• Increase equipment utilization

Vendor solutions for plant optimization traditionally break down into one of the following:

Lean manufacturing techniques (lean): This vendor group uses a systematic approach, based on optimizing human and production workflow practices. Lean vendors base product flow entirely on the direct pull of customer demand, using process and organizational change to eliminate non-value-add activities, from production through continuous improvement.

Computer-based manufacturing execution systems (MESs): This vendor group characterizes and optimizes production by applying the Theory of Constraints through various product control database applications that execute and validate workflow business rules. Subsequent product data collections (genealogy) and analyses optimize workflow and increase productivity efficiency.

During the past 20 years, each of these vendor groups has viewed the other as competition and/or unnecessary. For example, lean vendors see no value in adding MES computer-based work order tracking systems to production. MES vendors, meanwhile, believe lean techniques are too slow and ineffective-unable to optimize a plant's continually changing environment.

While both approaches use metrics and quantitative analysis, MES technologists contend lean vendor techniques are not able to understand and collect high-quantity transactional data needed to optimize new product and process changes. Nor can lean techniques handle scaling or misaligned schedule, capacity, inventory, and maintenance, MES vendors say.

MES vendors also view their solution as the real-time component, or data engine, of the integrated supply chain within a company's enterprise resource planning. Lean technologists, meanwhile, correctly view MES as a set of tools rather than an actual manufacturing method.

They also correctly assert MES vendors have typically been too expensive for tier 2 and 3 manufacturers. Lean has been incrementally applied in those smaller companies with a high rate of success.

SUCCESSFUL WHEN COMBINED

To be successful, demand- or flow-driven production requires a supply chain with a similar workflow and philosophy. In actual practice, when the two approaches combine, the success and rate of deployment rise dramatically.

In the past 20 years, both lean and MES approaches have had very mediocre results individually, with high failure rates. When both approaches have great success, results have produced very large throughput increases and lowered product costs and waste.

Ironically, the rivals' stories are basically the same. The primary reason for failure is that corporate management has not understood these approaches are not an event or silver bullet. Their implementation is not a project-it's a process!

Both live and die on whether management adopts organizational change management practices. Fundamentally, both are a process for continual productivity improvement. Both lean methodologies and computer-based tools require people and process reorganization, as well as philosophical changes.

Combining these approaches empowers a company to adjust quickly to a negative change in its market or economic environment in a much less disruptive way compared with make-to-stock or just-in-case manufacturing processes and philosophies.

BOTH HAVE GOOD POINTS

The actual reality for most manufacturers is they require some degree of both lean and MES approaches to optimize. A prime example for applying a combination of both is the discovery and benchmarking phase at the beginning of an implementation process.

The first step for any company is to assess and quantitatively benchmark the plant's current workflows and inefficiencies. This exercise typically provides hard data necessary to justify the investment from a business perspective. Both lean and MES consultants use these steps in the "proof of concept" or solution discovery phase at the beginning of a project.

Typically, both also apply similar industrial engineering practices to quantify one or more of the above business drivers. One such industrial engineering practice during the discovery phase is using overall equipment effectiveness (OEE) to measure the uptime of an operation or a whole plant. While the OEE formula has many variations, it is basically this:

% availability x % performance x % quality

where availability is calendar hours minus the planned and unplanned downtime divided by calendar hours minus planned downtime; performance is the loss due to variation against an ideal rate; and quality is the percentage of good product produced.

OEE is considered an MES-driven metric. It is also considered a lean practice.

Utilization-standard capacity analysis

Example capacity analysis from FactoryWare.

One vendor of an OEE solution both lean and MES consultants use is FactoryWare's FactoryPulse system. It's an integrated hardware and software package that allows consultants to not screw together a system or understand hardware/software interfaces.

It enables a consultant to set up and begin analysis in one day. FactoryPulse illustrates how an MES technology is effectively used in combination with lean practices. FactoryWare claims more than 1,000 deployments to date. Customers include General Motors, Motorola, 3Com, Harley-Davidson, Hershey's, and Intel, among others.

The program's rapid deployment gives customers rapid access to the most valuable productivity data, providing a prioritized solution migration path and business justification data. Lean advocates like the software's portable rapid deployment features. MES consultants like the way it automatically captures real-time data and offers sophisticated analytics.

MANAGEMENT GETS REAL-TIME DATA

The typical OEE approach is to get to management, in near real time, the process workflow data that's of greatest value. OEE breaks down workflows into granular time increments with accurate reason codes for value-add and non-value-add activities.

Computer-based OEE is much less subject to human error, compared with non-computer-based approaches. OEE implementations that combine LEAN and computer-based database applications, including FactoryPulse, allow managers to see the 20% of productivity data that contains 80% of the information they need to make business decisions. And they get the data in 10% of the time and cost, compared with competing approaches.

This high-ROI approach allows managers to quickly act to reduce setup/changeover time, reduce downtime, and boost productivity by making the most important productivity data available in a concise, actionable, real-time format without an extensive systems implementation.

By analyzing both automatic and manual processes with this OEE approach, a migration/ transformation plan for productivity improvement is developed that incorporates the best of lean and MES practices to rapidly move a company to a demand or pull-based organization.

FINDS OPTIMIZATION CANDIDATES

The quantitative data from an OEE assessment usually identifies a number of areas for immediate plant optimization. The data also identifies workflows that need to be immediately replaced with a lean value-add flow.

Compared with the more manual techniques of lean consultants, this OEE approach has typically enabled managers to capture 20% to 25% more downtime events through finer resolution provided by automatic data collection.

Customers typically experience 10% to 30% improvements in productivity vs. the Phase 1 MES and lean solutions identified in a computer-based OEE assessment.

Merging MES and lean combines technology and philosophy. One cannot exist without the other in this global economy. And together, they enable and sustain each other. The trick, of course, is to get the lean and MES supporters to view each other as necessary partners that jointly develop sustainable and maintainable manufacturing solutions. IC

Behind the byline

Charles H. "Charlie" Gifford is director of business development for ASECO Integrated Systems Ltd. He is chairman of Industrial Computing's Editorial Advisory Board and was director of ISA's Computer Technology Division (1996-1998). His e-mail is charlie.gifford@aseco.net.