Confronting Complexity in Multi-SKU Manufacturing Environments
Individual manufacturing operations can vary widely in the number of unique products or Stock Keeping Units (SKUs) they produce. While some facilities manufacture the same product day in and day out, others must switch between varied processes, recipes, and packaging styles on a routine basis. This introduces significant complexity on the shop floor, and manufacturers need solutions that can address that complexity.
Manufacturers Face Greater Complexity Than Ever Before
The extent of SKU variation in any given manufacturer depends largely on their specific sector. The food and beverage sector and consumer packaged goods, in general, are prime examples of the growing difficulties that come with an increasing number of SKUs produced by individual manufacturing facilities.
Data from McKinsey shows how SKU count increased among North American manufacturers increased by 66% in just three years. Estimates indicate that this complexity may cost manufacturers in the US as much as $50 billion in gross profits annually due to operational inefficiency and internal competition between a manufacturer’s own SKUs.
The Challenges Introduced by Growing Complexity on the Shop Floor
As SKU counts reach their highest point yet, manufacturers are grappling with a wide range of challenges on the shop floor. Introducing additional complexity affects operations in a variety of ways, and many manufacturers don’t have the tools to accommodate that complexity.
Multiple SKUs Eliminate Predictability on the Shop Floor
Manufacturing processes that don’t change are less likely to face challenges related to human error. If general production is always the same, production team members know what to expect and how to react in any given situation. Working with multiple SKUs introduces many opportunities for human error.
The changeover between any given SKUs entails a unique setup process. Depending on the type of manufacturing environment, operators may need to change molds, dies, and other equipment. Process settings, recipes, printing details, and other factors all change with a new SKU.
When alternating between just a few SKUs, this may not present a major challenge. Production teams can become accustomed to changeovers and setups for specific products. As the number of SKUs increases, that familiarity declines. Production team members will be unfamiliar with the requirements for any given SKU and will have to consult instructions more frequently.
Managing setup instructions for many different SKUs is a challenge in itself. With so much variability, tried-and-true manufacturing methods such as posting a complete list of instructions on or near equipment won’t cut it. Instead, operators will have to consult setup data stored in binders, spreadsheets, or any number of disparate software solutions.
When instructions change, manufacturers must ensure that production teams have up-to-date instructions and data. Dealing with many SKUs introduces the risk of changes going uncommunicated, meaning that entire production runs can be completed with the wrong instructions – resulting in potentially unsalvageable production.
Adjusting Production Schedules to Accommodate New SKUs
When new SKUs are introduced, they complicate production scheduling. A manufacturer that makes just one product does not have to allocate machine time and resources between multiple SKUs. Instead, the only significant factor in production scheduling is ensuring adequate time for maintenance.
With more SKUs, manufacturers must carry out the complex task of allocating machine time and resources between multiple work orders. They must take work orders and production forecasts and translate them into action on the shop floor, ensuring that orders competing for common resources are all completed on time.
With even higher numbers of SKUs, this presents a serious challenge due to a lack of reliable data. When working with lower numbers of SKUs, production teams can develop insight into how much time individual orders require from operators and machines to complete. When a large number of SKUs is used, each unique SKU is produced so infrequently that this knowledge base can’t develop.
In practice, this means that manufacturers can’t develop accurate production schedules. They don’t know how long any given order is going to occupy specific operators and machines, so they can’t create schedules that reliably meet on-time delivery for all orders.
What Manufacturers Can Do to Address Complexity on the Shop Floor
Confronted with these challenges, manufacturers must take action to prevent human error, facilitate setup, and optimize their production scheduling. Doing so ensures efficient use of resources, reduces waste, and improves profitability. There are a variety of methods available to manufacturers to deal with complexity and attain those benefits.
SKU Rationalization
The first method to reduce complexity is to reduce the number of SKUs. With fewer SKUs, manufacturers can reduce or even eliminate the challenges they face. Through the process of SKU rationalization, manufacturers can identify which SKUs to eliminate and which to keep.
There are many cases where eliminating SKUs is a prudent decision. When an organization decides to introduce a new SKU, there is a trade-off in complexity introduced and associated costs against potential profits. When a new SKU doesn’t address new consumer demand or compete with other manufacturers in an existing space, it will likely only compete with different SKUs from the same manufacturer.
SKUs that don’t serve a competitive purpose cause complexity and increase costs without any increase in profits. Identifying and eliminating those SKUs provides a net benefit for the manufacturer. However, it isn’t always easy to identify which SKUs are valuable and which aren’t.
SKU rationalization is a careful evaluation of existing SKUs. It requires an understanding of the product category and market segments to develop insight into which SKUs should stay and which should go. In many cases, the actual implantation relies heavily on trial and error. Manufacturers will have to review the impact of changes and adjust their strategy when new information becomes available.
However, eliminating SKUs isn’t always an option. Manufacturers at different points in the supply chain may not have the ability to pick and choose. Instead of being able to alter their own product lineup, many manufacturers work with buyers who require a certain number of unique SKUs, or they’ll take their business elsewhere. These manufacturers need other solutions to address complexity.
Relying on a Central Platform for Setup
With so many of the challenges associated with complexity arising during setup, it’s a natural target for any solution. Manufacturers can remove much of the potential for human error and slowdown during setup by relying on a central platform to manage instructions, recipes, and other criteria.
Maintaining all setup instructions in a central platform lets manufacturers link those instructions directly to production schedules. This eliminates the step where operators must reference physical or digital documents to find the correct product setup instructions, saving time and eliminating a potential source of error. The platform can even be accessed directly at workstations with dedicated tablets.
This approach also ensures that all production team members are kept up to date on any changes. There’s no risk of outdated setup instructions being used, as they are automatically updated in the central platform, which is the only way that production teams access those instructions. Changes in processes, recipes, and more are all maintained in the same place to avoid any errors.
Having clear, complete, and accurate setup instructions managed through a central platform eliminates the disadvantages of complexity in that area. It doesn’t matter how many potential SKUs there are when production teams can rely on this approach during every changeover.
Basing Scheduling on Real Production Data
A new approach to production scheduling can eliminate the negative impact of complexity on production efficiency. Relying on a solution that can achieve dynamic scheduling based on real production data transfers the burden of schedule optimization from production team intuition to concrete production metrics and insights.
Automated production data aggregation is the first part of this solution. Having data collected from all machines and other sources and consolidated in a central platform can provide significant insight into the production. It also enables teams to leverage data more effectively than if historical production data were kept in spreadsheets or other solutions.
The same central platform can also provide dynamic production scheduling that generates accurate time estimates for complete work orders and individual process steps. Even when a large number of SKUs leads to unique SKUs being manufactured infrequently, the central platform makes use of all historical data to optimize production scheduling.
Manufacturers can eliminate the need for teams to consult complicated and often incomplete production records to make production time estimates. Instead, they can rely on complete production data aggregation and a solution that handles estimates and optimization in real-time, facilitating any changes in work orders and product demand.
Changing the way people work in factories
Request a DemoFace Complexity on Your Shop Floor With Matics
You can take advantage of Matics Real-time Operational Intelligence to face complexity on your shop floor and enjoy the same benefits that manufacturers around the world have already seen. Comprehensive data aggregation and analysis in real-time lets you maintain complete visibility over production and develop the unique insights needed to tackle complexity.
Work management tools let your team maintain excellence in complex manufacturing environments. Dynamic scheduling based on historical data enables you to achieve on-time delivery and maximize efficiency on your shop floor, even when dealing with multiple SKUs. Your team will always have correct, clear, and accurate setup instructions to reduce time loss and human error.
You can find out more about how Matics can help you manage complexity without compromise by scheduling a demo with our team today.
