>Column Material …

>Column


                                                Material
                                                Handling in ETo
                                                Rapid response to changes that impact contract planning,

     CuTlEr                                     costing, scheduling, and execution show up as the bottom-line

      SpEak                                     profitability of ETO manufacturers who often operate on thin
                                                margins...




T
           he ability to issue materials in an available                           to break out a small amount of inventory from a larger
           unit of measure (UOM) is quite often differ-                            receipt, or when someone is receiving a large order. It is
           ent from that on the requisition form for a                             also possible to serialise manufactured parts when they
           complex or engineer-to-order (ETO) build                                are entered into inventory on the completion of a work
instruction. The ability for one-of-a-kind production                              order. Using the serialised inventory in combination
manufacturers to deplete inventory of appropriate ma-                              with the `Select Inventory for Selected Item(s)' func-
terials, even in a different UOM than originally speci-                            tion, a user can break the FIFO or LIFO cycle and select
fied, has bottom-line profitability impact.                                        specific receipts from a serialised lot for work orders."
    Similarly, the ability to select specific receipts to
allocate or issue to projects is vital particularly if there                       other solutions in the ETo environment
are multiple receipts of the same material, the manu-                              Project-focused manufacturers have unique needs that
facturers can select the `Select Inventory for Selected                            frequently surpass out-of-the-box capabilities of gener-
Item(s)', choosing from a list of receipts.                                        ic software packages. The ability to find highly custom-
    Yacht-builders for example, also appreciate the abil-                          isable interfaces while providing a system of record for
ity to borrow inventory allocated to another project to                            everything project-related; including a complete view
maintain the benchmark deliverables to receive incre-                              of the business, is rare. Some of the key factors to con-
mental billing. In few MES (Manufacturing Execution                                sider are discussed here.
System) solutions, the software technology allows us-
ers to do what they are already doing on the shop floor,                           Streamlining procurement processes
namely borrowing available inventory from projects                                 Seamless business solution is required to request for
that have not been started to help complete projects                               quotes, vendor quotes, project planning, requisition ap-
when purchase orders have been delayed. This criti-                                proval, and processing into purchase order generation.
cal documentation allows for an audit trail covering                               There needs to be support of standard purchase orders,
the transaction, something that never happens when                                 blanket orders and releases and subcontract purchase or-
someone grabs something off the plant floor.                                       ders, manage purchasing commitments by project and
    According to Randy Richel, P.Eng., CEO and Gen-                                the two-way or three-way match with accounts payable.
eral Manager of Canada-based Trakware, "The ability to                                 According to Stephen Parker, CEO of North Caro-
serialise inventory allows users to break up a large lot                           lina-based Datacraft Solutions, "The reduction of waste
of inventory into smaller lots (each with its own serial                           associated with rarely used items in inventory as well
number) and this can be done when someone wants                                    as allowing distributors to focus on core competen-


28 > January 31, 2008 > Industry 2.0 ­ Technology Management for Decision-Makers                                              www.industry20.com
cies and production efforts is vital. No time should
be wasted sourcing and procuring infrequently used
items. There are very few digital kanban systems, and
the old kanban card system has severe restrictions when
there is an external supplier in the supply chain. Digi-
tal kanban re-orders based only on actual consumption
are electronically communicated during each phase
of replenishment."

Tracking customer orders
Detailed order tracking with complete project support
and creation of inventory demand allows ETO manu-
facturers the ability to configure each customer's order.

Tracking project and asset inventory
The ability to track and manage asset inventory includ-
ing raw materials, work in process (WIP), and finished
goods inventory specifically assigned to a project is vital
for project ownership, and a complete audit tracking.

manufacturing by project
Seamless business solution for project and financial
management, configuration management, supply chain
management, and production execution, is rarely com-
bined with robust project management functions and
coordination that spans engineering, planning, pro-
curement and production.

Gaining control of processes
According to Richel, "Tracking projects from the proto-
type and design phase, through materials procurement,
manufacturing and order fulfillment is essential when
there are complex procedures and unique exceptions."
    Ultimately rapid response to changes that impact
contract planning, costing, scheduling, and execution
show up as the bottom-line profitability of ETO manu-
facturers who often operate on thin margins. A small
error can make an ETO product highly unprofitable,
clearly articulating the need for effective technology so-
lutions, and is even more critical than in the repetitive
manufacturing environment.

             Thomas R Cutler is the president & CEO of Fort Lauderdale
                                           Florida-based TR Cutler, Inc




www.industry20.com                                                        Industry 2.0 ­ Technology Management for Decision-Makers > January 31, 2008 > 29