At outdoor apparel maker Polartec LLC, the difference between warmth and waste is measured in dollars and cents — $516,000, to be exact. Until recently, that’s how much the company spent each year cutting extra fabric out of the seams of coats and other clothing in the end stages of manufacturing.
The Polartec coats are inspected before they ship out the door, and sometimes a seam must be manually resewn, which leads to discarding extra fabric. The process is necessary, but the problem was the company’s inability to understand why it was wasting $516,000 worth of fabric each year in those final-stage activities.
Today, Polartec tracks and analyzes the inspection process using SAP’s Business Objects software. “When something is cut out, we have to key into the system the reason why,” says Dave Alves, Polartec’s director of IT. “We started with four or five reasons. Now we are up to 12, and if one keeps surfacing, we are able to look at it and identify the low-hanging fruit that can be easily fixed.”
Those easy fixes, Alves says, will help the company realize its near-term goal of reducing the cost of wasted fabric from $516,000 per year to about $150,000 per year.
“Any penny we can save today goes right to the bottom line,” Alves says. In fact, applying a simple solution that can save money “is like finding gold,” he says.
Like Polartec, most manufacturers are forced to search for new ways to save money in this cruelly difficult economy. And many are going back to the basics, whether it’s finding the root cause of waste or lowering the average time it takes to change over product on an assembly line. And, increasingly, manufacturers are investing in relatively simple analytical tools used to build scorecards and dashboards that can help measure production, increase quality, and empower employees to accelerate enterprise and operational performance.
Big, multimillion-dollar technology infrastructure investments are not the priority these days.
“Now companies want to take cost out,” says Dennis McRae, vice president of operations at Celerant Consulting, a global management firm that helps manufacturers improve operations. Very often, that means moving away from tech talk and applying good, old-fashioned business acumen. “It’s about management, meetings, reports, and how people behave to drive business. Technology is just the enabler,” McRae says.
In 2009, the technologies that manufacturers are turning toward to accelerate business performance are applications that provide visibility into processes, according to the results of a recent Managing Automation poll.
Survey respondents indicated that global competitive and economic pressures are the main reasons they are investigating new ways to enhance business performance. Those approaches include investment in a category of software tools known as business performance management. BPM delivers a framework for organizing, automating, and analyzing the methodologies, metrics, processes, and systems that drive business and operational performance. The applications under the BPM umbrella include business intelligence (BI), data mining, and dashboards, to name a few, as well as best practices related to Six Sigma, balanced scorecards, and total quality management.