Complex Manufacturers Dominate The Gartner Supply Chain Top 25 For 2015

  • supply-chain32% of the top global supply chain leaders for 2015 are competing in complex manufacturing industries.
  • Six of the top seven suppliers who maximize Inventory Turns are complex manufacturers.  Samsung Electronics (17.7), Lenovo Group (12.8), Cisco Systems (12.6), Seagate Technology (10.8), Toyota Motor (10.6) and Qualcomm (8.8) are the highest performing at turning inventory with the only exception being McDonald’s (157.3).

These and other insights are from Gartner’s 11th annual Supply Chain Top 25 published this morning, following an awards ceremony last evening where the winning companies were announced at Gartner’s Supply Chain Executive Conference.  What’s noteworthy about this years’ announcement of the top global supply chain leaders is the number of complex manufacturers included and the wide scope of their business models.

Intel, Cisco Systems, Samsung Electronics, Seagate Technology, Lenovo Group, Qualcomm, Cummins and Toyota Motor are among the top 25 supply chains globally according to Gartner’s analysis.  A thorough definition of the methodology is available here.

Gartner analysts found three stand-out trends are differentiating the highest performing supply chains globally. These include the ability to excel at bimodal supply chain strategies; a successful track record of continual improvements in delivering excellent customer experiences by gaining greater customer visibility; and the ability to support emerging digital business models.

The Gartner Supply Chain Top 25 for 2015 is shown below:

supply chain top 25

Source:  Gartner Press Release, Gartner Announces Rankings of Its 2015 Supply Chain Top 25, May 14, 2015. 
Everything you need to know about Cost of Quality in Aerospace & Defense

5 Killers of Cycle Time

iStock_000017987518_MWhen was the last time you walked the shop floor? I mean really walked it, paid attention to what the techs and inspectors were working on, looking at, and most importantly, the ratio of time spent actually working to time not working (and no, I don’t mean breaks)? What you may see could surprise or scare you. If your technicians and inspectors are spending more time not working, then you have a cycle time issue.  Sure, you have a lean shop and your personnel can quickly access their tools, but after that shop is lean and they are still spending time not working on product, then you are suffering from one of the top five killers of cycle time.

1.  Printing paperwork
Sure, paper is handy, paper is tangible, but paper is a waste of time.  Paperwork is lost, redone, and rerecorded more times throughout the day then can be generated. Volumes of binders and marked up paper is not only miserable but clutters up the workspace and only encourages an incomplete record of information.  How much paperwork are you printing, and then reprinting due to loss, changes, and data recording that is ineffective? Even the most seasoned technicians that may be a little nervous around computers would love to get rid of the paperwork. Help them out, go paperless.  I mean really go paperless, not just putting manuals and work instructions online.  Make it interactive; make it intelligent, make it a true Manufacturing Execution System.

2.  Logging into a drawing system
Drawings are perhaps the most critical piece of the manufacturing and build process and require the most analysis to determine correct revision, correct diagrams, and correct specifications.  How often is your technician or inspector having to walk back to the computer, log in, double check revision, print, and then recheck the drawing?  Probably a lot.  Many shop floor networks not only are slow, but there is so much security placed on the network and log ins, it’s not atypical for a simple drawing pull to take 5 to 10 minutes to access.  That time is wasted time.  Make it easy for your techs and inspectors, get the drawings on a big monitor (near their work station of course- see next killer) make it a touch screen so they can interact with the drawing.  Most importantly, start questioning the IT policy and security to see what is possible to make log on quicker and more accessible.

3.  Walking to the computer
Where is the computer located for the technical or inspector to access?  If it’s less than 2 steps away, then you aren’t helping your cycle time.  What is the ratio of personnel to workstations? If it is more than three, then it’s too many.  With today’s wireless infrastructures, mobility options, and cheap hardware, there is no reason the shop floor shouldn’t come first when it comes to having the most accessible workstation (especially when you went paperless due to killer number one).

4.  Waiting on changes
On your shop floor tour, go to the shelf of parts on hold, or paperwork nook of “waiting on changes.”  Then, look at how long this buildup has been touched.  Chances are there is some product that’s been sitting for a long while.  In addition, it’s probably waiting on a change or engineering decision.  It’s not the technician’s job to track down status of work orders.  Their job is to keep working so, get it off the technician’s or inspector’s plate.  Make a determination if this is likely to be resolved in the next ten days.  If it is, then, get on it.  If it’s not, then determine an alternate option.  Scrap it, send it back for rework, finish it as a specific build revision and get it into inventory.  Don’t let product sit, waiting for change to happen, if you do that, it never will.

5.  Administrivia
What extra stuff do you have your techs and inspectors doing; wiring mandatory improvement ideas, finding FOD, double checking certifications, validating an eDHR?  All the extra activities being performed are not only not part of their job description, but they are a waste of time.  You have paid administrative personnel that can handle these actions.  What activities were incorporated due to a response to an audit or corrective action?  Has anyone gone back and determined if the corrective action is effective?  If it is not, then it’s killing your cycle time.  Remove all barriers from production and let your employees focus on what they were hired to do; build and manufacture parts.  There are countless tools – including your new paperless shop floor system- that handle adminstrivia tasks. Let the workhorse do the overhead working.

When looking at ways to reduce cycle time, look at the ancillary activities happening on your shop floor. Chances are, you are experiencing one or multiple of these cycle time killers.  Focus on removing them, and you may be surprised at the result.

Using Analytics To Accelerate Supply Chain Accuracy And Performance

Global communications, EuropeBottom Line: The greater manufacturing, procurement, sourcing and quality complexity there is in any enterprise, the more urgent and varied the need for accurate, clear analytics that accelerate supply chain accuracy and performance.

Supply chains aren’t getting to the levels of optimal performance they are capable of because they lack accurate, real-time visibility into network and individual supplier performance and quality levels.  There is a significant gap in the accuracy, latency and visibility of data needed to manage the wide spectrum of make-to-stock through engineer-to-order production strategies many manufacturers are relying on today. Using advanced analytics and big data, manufacturers who are heavily reliant on their supply chains to streamline complex manufacturing strategies can significantly improve overall network performance.

Forward-thinking companies are relying on lean Six Sigma to selectively target and improve specific areas of their supplier network performance.  Manufacturers who are using the DMAIC methodology (Define, Measure, Analyze, Improve and Control) in conjunction with advanced analytics are gaining competitive advantages in time-to-market and improved quality.  There are many examples of companies with complex manufacturing operations who have standardized on lean Six Sigma to improve supply chain visibility and performance. General Electric (GE) has engrained the use of lean Six Sigma techniques throughout its many production operations which continues to be a solid contributor to their market share dominance in all key industries they choose to compete in (Bisgaard, Hoerl, Snee, 2002). GE’s reputation for being able to reduce core process cycle times and time-to-market while increasing quality and scaling product complexity is attributable to the depth of Six Sigma expertise and process improvement throughout their enterprise (Chung, Hsu, Yen, 2008).

Moving Beyond Six Sigma with Advanced Analytics

GE’s ability to aggregate, analyze and use intelligence to dominate new markets is enviable, and by many seen as unattainable. With the advent of analytics and big data, that’s not the case however. Manufacturers are bridging the gap between the insights and intelligence made available through the use of the Supply Chain Operations Reference Model (SCOR) model (Udoka, 2004) and the Hierarchy of Supply Chain Metrics originally created by AMR Research (now Gartner) (Hoffman, 2004) with advanced analytics and big data. It’s no longer about redefining reporting, advanced analytics and big data initiatives to align with current manufacturing constraints. Manufacturers are now scaling their supply chains, manufacturing operations and entire value chains based on the insights gained from advanced analytics and big data.

Using the Hierarchy of Supply Chain Metrics as a baseline for developing dashboards that provide insights into how supply chain operations impact the financial statements of their businesses, more manufacturers are able to gain greater insights and drive much-needed improvement in their operations. They are focusing on driving their operations to scale rather than scaling their analytics to match their operations. And that is making many of them more competitive in a wide cross-section of turbulent industries including high tech electronics and consumer packaged goods The Hierarchy of Supply Chain Metrics is shown below in Figure 1.

Hierarchy of supply chain metricsFigure 1: The Hierarchy of Supply Chain Metrics, Source: (Hofman, 2004)

 Combining the six management processes of the SCOR Model (Plan, Source, Make, Deliver, Return and Enable) with the Hierarchy of Supply Chain Metrics, supply chain strategists can get to greater levels of supply chain visibility including how network performance impacts divisional and corporate performance.  In speaking with several vice presidents and directors of supply chain operations, the focus each has on being able to more clearly define the financial performance of collaborative planning forecasting and replenishment (CPFR), current and future value of reverse logistics programs, and vendor managed inventory (VMI) operations from a financial standpoint is clearly a priority.  The combining of the SCOR and Hierarchy of Supply Chain Metrics is giving supply chain strategists a baseline of analytics, Key Performance indicators (KPIs) and metrics they can use to bridge the gap between supply network performance and financial results.

Advanced analytics and big data are being used to close the gaps in supplier network performance and alleviate the high cost of product customization with build-to-order, configure-to-order and engineer-to-order strategies. This is particularly challenging for smaller manufacturers whose supply chains can literally make or break their financial viability. For these manufacturers, their ability to move quickly with product customization strategies and respond faster than their larger competitors is one of their core competitive differentiators.  The SCOR model and Hierarchy of Supply Chain Metrics are a baseline for many of them, with advanced analytics tools providing them with the flexibility of defining their own metrics. Smaller manufacturers spoken with are focused on using big data to compete more on accuracy and speed, less on price or allowing overcommitment to customers dominate everything from their selling to production strategies.


Using advanced analytics and big data to broaden the scope of supply network performance beyond individualized Six Sigma projects alone is setting the foundation for an entirely new level of supply chain performance.  Using the insights and intelligence gained from these techniques, manufacturers are bridging the gaps between the SCOR Model and Hierarchy of Supply Chain Metrics.  This is leading to supply chain strategists being able to report back the financial results of their efforts at orchestrating and optimizing their supplier networks.


Bisgaard, S., Hoerl, R. W., & Snee, R. D. (2002). Improving business processes with six sigma. Quality Congress. ASQ’s Annual Quality Congress Proceedings, , 701-704.

Chung, Y., Hsu, Y., & Yen, T. (2008). Using the six sigma system approach to reduce core process times at a manufacturing plant. International Journal of Management, 25(3), 431-438,592.

Dyer, J. H., & Nobeoka, K. (2000). Creating and managing a high-performance knowledge-sharing network: The Toyota case. Strategic Management Journal, 21(3), 345-367.

Udoka, S. J., Ph.D. (2004). A framework for a confluence of six-sigma, lean strategies and SCOR. IIE Annual Conference.Proceedings, 1.

Everything You Need To Know About Improving Supplier Quality Management


Digital Technologies Are Revolutionizing Aerospace Manufacturing

  • jet-above-the-clouds53% of aerospace companies are expecting their investments in digital technologies to reduce manufacturing delays.
  • 100% of senior management respondents see digital technology as a means to transform Maintenance, Repair and Overhaul (MRO) support.
  • Aerospace manufacturers are planning to invest 5-10% of their total revenues in digital capabilities over the next three years to reduce time-to-market and increase quality.

Digital technologies have long been relied on for improving supply chain performance, reducing time-to-market and improving financial performance in aerospace manufacturers. The accelerating effects of analytics, big data, mobile and social are also reordering the digital technology landscape of aerospace manufacturing today. The recent Accenture study, The Digital Coming of Age, Seizing the Digital Opportunity in Aerospace (free, no opt-in, 16 pp) provides valuable insights into just how powerfully digital technologies are revolutionizing aerospace manufacturing. Today’s aircraft have nearly three times the number of software-driven functions as their predecessors from the 1990s, further underscoring the need for digital technology strategic planning.

Accenture surveyed senior executives from 30 aerospace companies globally, assessing the maturity of digital technology investment performance in commercial segments. These executives represent aircraft manufacturers, engine manufacturers and suppliers from Brazil, Canada, France, Germany, Italy, Spain, the United Kingdom and United States.

Key take-aways from the study include the following:

  • Engineering (53%), Customer Service (23%) and Supply Chain (17%) are the three areas aerospace manufacturers will invest in digital technologies the most in two to three years to increase opportunities.

figure 10 Manufacturing execution systems

  • Improving design and engineering collaboration (93%), digital supply chain performance (83%), supporting MRO (73%) and gaining greater accuracy of forecasting and prediction using big data technology (67%) are the four most important capabilities aerospace manufacturers are investing in to improve their company’s digital strategies.  

digital collaboration

  • Reducing cost and improving efficiency (73%) and improving product lifecycle management (53%) are the top three most important internally focused reasons aerospace manufacturers are adopting digital technologies. Improving customer retention and relationships (73%), growing revenues (70%) and improving relationships with partners (43%) are the three most important externally-focused reasons for adopting additional digital technologies.

Figure 2

  • 49% of aerospace manufacturers are forecasting they will invest 5% or more of total revenues ion digital technologies over the next two to three years.

Figure 3

  • Aerospace manufacturers anticipate their investments in digital technologies will continue to streamline and improve supply chains. Reducing costs (73%), reducing manufacturing delays (53%), and optimizing processes (50%) are the three areas aerospace manufacturing executives anticipate their investments in digital technologies to pay off the most in the next two to three years.

Figure 4a

  • Design and development activities are essential to every aerospace manufacturers’ current and future business. When asked how digital strategies will most impact design and development, executive respondents said reducing costs (87%), reducing manufacturing delays (77%), and optimizing processes (70%) are the three areas they expect the most impact in.

Design and development

Bottom line: Digital technology is galvanizing every aspect of aerospace manufacturing’s value chain to deliver faster time-to-market, higher quality levels, lower costs and an improved pilot and passenger experience.

aerospace value chain

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What Are Manufacturing Execution Systems (MES) For Complex Discrete Manufacturing?

manufacturing execution systems, MES, manufacturing execution system

The highest-performing Manufacturing Execution Systems (MES) reduce the chaotic clutter of paperwork by delivering greater accuracy, precision and quality of online work instructions, while scaling processes across all production centers anytime, anywhere.

Improving manufacturing productivity, quality and compliance by giving operators, supervisors and every plant manager visibility into shop floor operations also differentiates the highest performing manufacturers relying on these systems.

Traits Of High Performance Complex Discrete Manufacturers

They Rely On Manufacturing Execution Systems to bridge the gap between Engineering and ERP Systems

Manufacturers are realizing the need to integrate real-time manufacturing data into their corporate information view. Many production environments have been historically serviced by paper-based processes and homegrown systems that have not kept up with newer requirements for increased speed, agility and traceability.

Manufacturers realize that having disparate, disjointed applications supporting the shop floor increases the difficulty to integrate the required plant data into a complete and accurate top-level view of operations. Higher customer expectations, diverse product lines and complex supply chains are driving plants away from running the facilities with spreadsheets, paper and knowledge held by a few key experienced employees that might be nearing retirement.

Figure 1manufacturing execution systems, MES, manufacturing execution system

An MES manages shop processes and paperwork including (a) track engineering changes, (b) track installation of serialized parts or lot-tracked material, (c) document nonconformance, (d) track component swapping, and (e) document rework and repairs, (f) tooling manufacturing and calibration status.

Production Integrated to Engineering and ERP

Integration of plant floor systems with engineering and business systems, allows a streamlining of business processes that span across the organization. This includes product and process change management procedures. The discipline and agility acquired through enterprise systems integration can provide significant competitive advantage to an organization.

Many leading manufacturers are integrating their manufacturing system to the Enterprise Resource Planning (ERP), and Product Lifecycle Management (PLM) systems. PLM handles the product definition (including specifications and geometry), ERP handles market facing activities (including planning demand fulfillment, purchasing, and inventory control), and MES handles product realization activities (including work execution, work-in-process tracking, and quality management). The tight integration of these systems can compress time-to-market for both new product and major product upgrades.

manufacturing execution systems, MES, manufacturing execution system

Are Exceptional At Product/Process Configuration and Change Management

The manufacturing of a complex product like an aircraft or satellite involves the management of a continuous stream of engineering changes directed at work in process. The integration of the engineering system with MES can create a seamless link between product development, manufacturing planning, and manufacturing execution functions. This link closes the loop on engineering changes, and assure that as-built configurations match as-designed.

manufacturing execution systems, MES, manufacturing execution systemIntegrate and Continually Improve Quality Control Processes

Beyond providing visibility into areas for improvements, the manufacturing information system should provide process control procedures to implement and sustain quality improvements. This includes in-process inspection and verification steps, statistical process control (SPC), alerts to out-of-control conditions, and integrated handling for discrepancies found during production (including defect containment and corrective actions) to eliminate recurrence.

With the high investment that goes into these types of products (for parts and labor), they are rarely scrapped. Instead, these industries require rework, repair, and deviation handling procedures to ensure that deviations are documented, reviewed, and approved by the appropriate personnel. The integration of production and quality systems can ensure that deviation instructions cannot be skipped by the mechanic performing the work. Deviation history is also considered part of each product unit history.

Excel At Compliance Management

ISO9001 and its aerospace counterpart, AS9100, establish a standard for a quality management system, or QMS. These standards define the basic practices and procedures organizations must follow to ensure that quality goals are systematically and consistently improved and sustained.

The MES forces adherence to procedures including the following: (a) authoring and revision control of work instructions, (b) the execution sequence of manufacturing orders and data collection, (c) the use of proper resources, and (d) the handling and approval of any deviations during production via the configured business process workflows and change management functions.

Companies must be able to demonstrate adherence to process control and risk management. It’s not just a matter of satisfying compliance — these procedures and processes will also reduce cost, improve product quality, and ultimately improve customer satisfaction and the bottom line.

Compliance Management, manufacturing execution systems, MES, manufacturing execution system

These and many other traits differentiate high performance manufacturers relying on MES to accelerate and improve compliance, quality management, resource management, product unit history and records archival.

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Are Your Manufacturing Operations Ready for Transparency?

What does transparency mean in the context of manufacturing operations? Literally, it means we can see through the manufacturing organization into its internal workings. Practically it means full availability and access to information required for collaboration and collective management decision making. It means full disclosure of detailed historical records for root-cause investigation purposes to uncover areas for continuous improvement. It means being open to sharing our best practices along with our past mistakes so they serve as learning experiences.

Transparency is an essential condition for a free and open exchange and evaluation of priorities for process improvements. It is essential to creating a culture of trust and teamwork in the organization.

Transparency through manufacturing metrics

The deployment of a performance measurement system with standardized manufacturing metrics is a key ingredient to providing unbiased visibility and transparency within the organization.

In addition to providing a mechanism for transparency, carefully selected metrics can help an organization achieve its strategic goals. Work groups can become more motivated and engaged when their performance is measured according to well selected numeric metrics. Personnel must understand the relation of their metrics to the corporate goals and feel that the targets are achievable. Work group level metrics are considered a better practice than individual employee goals to promote teamwork in the organization. Wouldn’t it be great if all employees understood the corporate goals and how they could make a difference?

Personnel must trust the accuracy of the data and the calculation of the metrics. Manually calculated metrics in spreadsheets can lead to the introduction of bias, manipulation of the data, and general distrust of the reported numbers. Having a manufacturing system that automatically collects data and rolls it up into metrics avoids these types of concerns and greatly improves accuracy.

Manufacturing Metrics and KPI selection

The selection of good metrics and the involvement of key stakeholders can greatly help with the trust and adoption of the standardized measurement system.

Generally we should be able to relate the metric to (a) strategic corporate goals, and (b) to desired outcomes for the customer. If the relation between the metric and a corporate goal or key performance indicator (KPI) is indirect, we should explain and publish this relation so it is very clear to all stakeholders.

It should be fairly straightforward to understand how the metric is derived. This will make it easier for everyone to visualize, trust and relate to the metric.

The consequences of bad performance of the metric should be easy to see on the shop floor. For example, for longer than planned cycle times we should start seeing work orders and planned inventory queuing up somewhere in the work cell. For an increase in cost of poor quality, we should see an increase of rework orders at the shop floor.

The metric should be actionable. It should be easy to derive the types of actions that could be taken to improve performance in relation to the metric. For example, a metric should not combine too many measures into one number because the possible corrective action becomes very unclear.

Metrics should be consistent and independent of subjective bias. A good metric is consistent in what it measures. The source of data, the equations used, and the weighting criteria applied should be consistent but might also evolve over time. When it does change, it should be communicated to all stakeholders. It is good practice to avoid measures where a subjective evaluation is introduced in the calculation. Different people might apply the subjective criteria differently leading to inconsistent results for that metric in the organization.

Accountability and fairness

The organization can set goals to achieve specific target levels on key metrics within a certain timeframe to promote motivation, create urgency, and establish commitments for the team. Accountability in the organization is driven by how performance to the goals is tied to a performance reward system and the actions taken by the management team about poor performance.

For accountability to work, personnel must understand and trust the metrics, perceive the targets to be achievable, and feel that they are empowered to improve performance on the metrics selected for goals. For example, manufacturing throughput rates are constrained by the number of purchase orders brought in from Sales. Increasing the number of purchase orders is out of the control of Operations so it would be better to set performance goals for Operations on something they have more control on like improving cycle times.

In order to successfully set goals and reward systems based on metrics, they must be fair across the organization. But some types of work are harder and more prone to error than others. To be fair with metrics used to compare and benchmark across the organization, it is important to have a method to weigh the difference in difficulty for achieving similar results across the different types of work centers. An example of a weighted metric is the Six Sigma metric, Defects Per Million Opportunities (DPMO). Since DPMO weighs defects by the number of opportunities for defects in each manufacturing operation, we can use the metric to compare performance across different work centers.

Constructive scrutiny

Are you ready for peers looking over your shoulder? Questioning your numbers? Are you used to constructive feedback? The executive management team must be open to bad news and reward the messenger of bad news. Instead of punishing the manager that comes forward, the organization should provide additional budget to that department to help fix the problems. Other managers will get the idea and embrace honest reporting as part of the organization’s continuous improvement processes.

I heard Allan Mulally a few years ago (CEO at Ford at the time) talking about establishing a culture of teamwork and rewarding bad news in management meetings.  Alan celebrated finding improvement opportunities. When he started at Ford, he would ask “How can all the lights in the dashboards be all green when we just announced big losses?” He applauded the manager that brought that first issue up in a meeting. Instead of frustration, he showed enthusiasm and asked, “How can we help you solve that problem?” The following week, he was presented with a rainbow of colors in the charts.

The anxiety can be high in management meetings when there is so much visibility and transparency. It is important to keep the meetings positive with a spirit to collectively address problems and improve the overall organization.

Team buy in

Often it is easier to select a set of metrics than to get employees to buy into the performance measurement system. We listed some important considerations above to improve stakeholder acceptance and trust. Personnel that is not used to being evaluated based on metrics will offer a natural resistance to this new process. The executive management team must express a compelling case for how this new system is linked to the organization achieving its strategic goals.

A few key departments can be selected to pilot the new system. Change champions should be enlisted in these departments and early success in those departments with the new system should have a high visibility celebration.

Evolution over time

Just as a company’s goals and objectives evolve over time so should the set of performance metrics be revisited periodically and changed over time.

For example, for the last two years the strategic goals might have been to reduce cost by 10% and metrics were selected to reduce cost of poor quality and improve labor efficiency. This year the corporation might have a growth strategy and it wants to focus on reducing cycle time and time to introduce engineering changes into production.

Deploying a standard performance measurement system is no simple task but it is a tool to help your organization move up to a new level of business process maturity. It can become a differentiator for your business, and lead to major improvements to the bottom line.