3 factory operational strategies to secure revenue

Assessing production plan robustness can only be done if all existing data across different systems (ERP, supplier portal, MES, WMS, etc.) is visible and workable. Only then can one have a bird's eye view of the entire operation.

Similarly, production blockers can only be effectively identified and prevented once we can monitor, in real-time, the planning feasibility. This means instead of continuing today's approach of systematic management; operations managers need to move towards exceptions-driven management. In other words, they need to use data insights to help them better prioritize.

Operations managers can adopt three operational strategies to improve supply chain resilience, enhance revenue streams, and protect cash flow in a volatile supply chain environment.

Anticipate production blockers at granular level with better insight into data

Being several steps ahead of the game gives operations managers better foresight and greater agility to respond to disruptions. Many, if not all, production blockers can be anticipated ahead of time with the help of advanced analytics. For example:

  1. Late internal production operations 
  2. Lower yield than expected, therefore increasing the need for parts 
  3. Supplier delays 
  4. Unapproved purchase requests
  5. Lengthy quality inspections 
  6. Quality issues at reception  
  7. Delay shipments
  8. Expired supplier contracts
  9. Administrative blockers

It goes without saying that the sooner a production blocker is identified, the easier it is to deal with it. Take, for instance, the case of a missing part; AI can automatically suggest the "next enablement" date to reschedule a given work order and alternative work orders to carry out to avoid losing capacity. However, in the current setup, operations managers are all too often forced to dive into various siloed systems and processes involving different teams before being able to work toward a solution.

Receiving, and acting on, quick recommendations

Another essential strategy for operations managers is obtaining swift recommendations that enable supply chain & production control teams to make informed decisions. This strategy can be applied in the following areas:

1. Managing purchase orders

Advanced analytics can help factory operations managers synchronize their supply chain orders with their real production needs — all in real time. This means they can plan their purchase orders more effectively by analyzing data from various sources, such as sales forecasts, production schedules, and inventory levels, and prioritize parts based on actual production signals (e.g., stock below target stock security level, over lead time) rather than "noise", thereby gaining visibility into what will block the production line and jeopardize sales.

a. Preventing noise

This allows operations managers to avoid having to filter through all the noise (e.g. security stock alerts, over lead time, etc.), instead receiving actionable signals in real-time.

b. identifying pull-in opportunities

By holistically monitoring the supply chain and providing recommendations to synchronize all orders, advanced analytics enables operations managers to avoid production disruption due to missing parts. Take, for example, a scenario where you have acquired 999 out of 1000 needed parts yet cannot ship the product and generate revenue because of a single missing part. This scenario must be avoided at all costs, and advanced analytics can help prevent it. In doing so, operations managers can identify pull-in opportunities, create a prioritized supplier list to call, and more effectively arbitrage parts between different production lines. By instantly simulating (in real-time) new supplier delivery plans and their impact on production schedules, advanced analytics can also help managers prioritize conversations with suppliers based on parts that generate the most significant pay-off and help suppliers make better tradeoffs by prioritizing certain parts over others. In other words, an intelligent use of data drastically accelerates the feedback loop between operations managers and suppliers.

c. Identifying push-out opportunities

Analyzing parts coverage in detail will also result in identifying parts for which the reception can be delayed to avoid excess inventory and unnecessary cash spending.

d. Arbitraging parts between different production lines

Advanced analytics effectively identify opportunities to arbitrage parts from one production line to fill in gaps in another. Moreover, by analyzing maintenance records and production data, advanced analytics can even help predict which production lines are likely to experience shortages of certain parts — and even which parts are likely to fail — and recommend pre-emptive transfers to prevent production delays.

2. Suggesting stock transfers

Advanced analytics can also help predict demand patterns and optimize inventory levels to minimize stockouts and reduce excess inventory. More importantly, they can offer precious signals to operations managers on when to transfer stock most efficiently to minimize disruptions and maximize output.

3. Identifying blocked stock

By analyzing data from various sources, such as quality control reports and production data, advanced analytics can help operations managers identify blocked stocks. Algorithms trained on anomaly detection and clustering can locate issues with quality control, thus helping operations managers take proactive — rather than reactive — steps to improve the health of their inspection queues.

4. Reprioritizing inspection queues

Advanced analytics can process inspection data, quality control reports, and other relevant information to identify patterns and trends and help operations managers identify blockers in the inspection queues in advance and take mitigating action.

Improve your production plan

The third strategy that operations managers can apply is to define their operational goals and constraints before optimizing their production planning. As new constraints or bottlenecks appear due to daily volatility, teams should be empowered with the agility to react optimally in coherence with the operational strategy.

Just as Waze or Google Maps automatically reroutes users when there is a traffic issue, advanced analytics can help operations managers monitor the projected on-time delivery of parts and make decisions based on many variables.

1. Optimize part allocations & better calculate tradeoffs

Imagine a situation where an order is blocked by one missing component — and this occurs after another order was blocked by the same component, and so forth. The best course of action is to change the order, knowing there will be a refill. This can only be done with the help of advanced analytics.
Similarly, when a part becomes scarce and is necessary to manufacture different products, data can help prioritize the product to manufacture in priority and assess the impact on other products. Advanced analytics are also highly effective at analyzing service records and customer data to identify opportunities to use used parts in service orders. Not only does this increase profit margins, but by looking at a broader sample of options, advanced analytics can help identify more available parts. This adds the benefit of increasing equipment's life expectancy based on potential serviceable hours. For example, a part with 1000 hours of flight potential in the aviation industry can only be allocated to equipment with less than 1000 hours of flight time to avoid reducing its lifespan. These recommendations are made algorithmically, thus eliminating the potential for human error.

2. Increase reliability of customer delivery dates

By breaking the wall between commercial & operational teams, advanced analytics can help synchronize customer demand with production schedules. That means teams can know in real-time if the production planning covers demand and identify gaps at a granular level, as well as anticipate delivery blockers in advance, such as material coverage, late production, administrative blockers (such as export control certificates), quality control blockers, financial blockers, and even transport availability. Once these have been identified, operations managers can formulate mitigation scenarios for each blocker, for instance, by rescheduling production, increasing quality control capacities, or expediting transport and delivery services. In a nutshell, AI allows them to statistically estimate production end dates and delivery dates while considering all blockers and their resolutions. Accelerating the feedback loop with the customer generates greater customer satisfaction and better quality service.

3. Automatically estimate shipment dates

Enlisting the help of advanced data analysis such as Pelico's, which considers material coverage and capacity feasibility to come up with exact shipment estimates, factory operations managers can be much more confident about when essential parts will be delivered.

Wei Zhao
Gülşah Keleş
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Pelico's factory operations management platform empowers factory teams with the agility and resilience to quickly respond to any supply chain disruptions by having streamlined data-based collaboration.
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