Plant Managers: Industrial Jugglers at Work

July 1, 2001
Whatever the latest strategy, product or regulation in your company's supply chain, plant managers and other middle managers keep it moving.

Plant Managers: Industrial Jugglers at Work

Whatever the latest strategy, product or regulation in your company's supply chain, plant managers and other middle managers keep it moving.

by Bernie Knill, contributing editor

Think of the changes your company is going through. You may be changing distribution, customer service, the way you justify material handling systems -- and the changes are happening faster and faster. Software developments alone are taking place with each tick of the clock.

Plant managers are the can-do practitioners who make change happen for your company. (Strategies covered top management issues in April. This article will deal with plant management and other middle managers. The October issue will deal with engineers. Of course, there is overlap: Some plant managers, for example, are involved with engineering or perform top management functions. The common denominator that runs through this series is the material handling system.)

Let's start with economic justification of material handling systems, an ongoing procedure that can involve senior management, financial management, plant management, engineering, vendors and everybody who contributes anything to material handling.

James Tompkins, president of Tompkins Associates, a consulting and systems integration firm, describes three scenarios of economic justification:

1.The accountants and the chief financial officer are operating the same way they did in the past. They are still meeting the return on investment and are doing a fairly robust job of ranking allocation of their capital.

2. The CEO and COO (chief operating officer) are becoming much more vocal with respect to the speed of implementation and the nimbleness of the solution. They might be looking at how fast a proposed system pays off rather than a higher but slower payback -- a return on speed (ROS). They ask: How fast can you get those dollars to the bottom line?

3.The CEO and COO might be willing to make an investment in modular or flexible systems that have the ability to address solutions in the future, no matter how low the traditional payback. But these systems give the company a greater capability to cover a wider variety of alternatives, and they are willing to pay for RON (return on nimbleness). The chief financial officer comprehends that, but he can't calculate it.

"Economic justification will always be the final hurdle in any major material handling or supply chain investment. Today, in our rather twitchy economy, it is more important than ever," says Mike Kotecki, senior vice president, material handling integration, HK Systems. (Two ROI worksheets are downloadable from the Web site. These worksheets help the systems user to calculate both tangible and intangible justification line items.)

"The largest variable today is the required payback period," Kotecki notes. "In stable economic times, companies are forward-thinking and propel projects with a five-plus-year return on investment. When times are tight, that might drop to one-to-three years."

Kotecki also sees the influence on non-monetary, intangible justification as another variable. He points to factors like employee retention, the image of the company being a technology user, and customer retention due to fulfillment accuracy.

Ongoing economic justification

The subject of economic justification was addressed by Francis Korosec, manager of business development and marketing for material handling solutions at Lockheed Martin Distribution Technologies.

Economic justification is done throughout the process, Korosec explained. For example, a client may have an urge to automate some process. Early on, Lockheed Martin has to determine what is feasible and also what is cost-justifiable. This cost justification is then refined at each subsequent stage: Yes, it's feasible and it's going to cost so much. Finally, the cost benefits are these things.

"As we progress through and put more meat on the bones, from the concept and ultimately into the design, we get better information on what the system will ultimately cost, as well as a better understanding as to what the true savings will be and where they lie," says Korosec. "The result is a complete cost justification."

There are other factors as well. Maybe the Lockheed Martin client's motivation is a lack of labor to handle peak capacity or seasonality. In this case, the cost justification takes on a different flavor: It has more to do with opportunity loss than it has to do with savings.

"Ultimately, it goes back to our customers' goals. If they look at an automated material handling system for efficiency or cost reduction, the same justification parameters remain in place," Korosec says.

Success of the business was the theme of the justification strategies discussed by Ken Ruehrdanz, manager of marketing for Siemens Dematic (formerly Rapistan Systems). "Material handling systems proposed today are justified by considering the competitive advantage gained after their implementation. For example, modern order fulfillment systems that can extend order cut-off times provide a significant competitive advantage over another company that cannot offer this service," says Ruehrdanz. "Another new consideration for justification occurs with automation for high risk labor activities that eliminate potential worker injuries."

Supplier/customer relationships

The concept of vendor/customer partnerships has been around a long time, but implementation has been uneven and the insertion of consultants and systems integrators into the process has made it more complicated. Mike Kotecki of HK Systems notes some of the changes.

"Customer/vendor relationships have changed wildly over the last five years. We almost never receive requests for quotation (RFQs) for large, integrated systems anymore. Customers approach us much earlier, and with problems and ideas rather than hard RFQs and designs. This allows us to foster a more symbiotic relationship and work with the client to make design decisions that include their input." Kotecki says that HK Systems is being called upon as a consultant that develops solutions inclusive of the client's culture and industry expertise, then implements that solution.

"When it comes to automated integrated material handling systems, educated users now understand that they are buying an engineered business solution; treating it like a commodity does not work," says Ken Ruehrdanz of Siemens Dematic. "Long-term relationships that foster openness and complete understanding of the user's business and application environment by the system supplier is the only way to operate in this modern economy."

Some customers are reducing their vendor base to a minimum, thus making radical changes in the customer/vendor relationship. Paul Hopersberger , director, marketing communications, Jervis B. Webb Company, says that these customers are selecting vendors with experience in a specific segment, such as material handling or logistics or subassembly of components, etc. Hopersberger outlines advantages to the supplier:

• Blanket orders that make it easier to fill requests;

• Ability to spend more time building a deeper relationship with the customer;

• Additional sales opportunities;

• Less day-to-day competition on smaller projects;

• A partnership environment that fosters cost-savings in a confidential atmosphere.

There are advantages to the customer also, Hopersberger notes:

• A single source that is familiar with the customer's needs;

• A fixed contract pricing structure that can lower total costs;

• A simpler process for parts availability and identification;

• Easy ordering through the use of electronic data interchange;

• Open vendor/customer communications;

• Additional vendor services that aren't available in the competitive bidding process.

Consultants and integrators

Companies that market material handling systems have always had some type of consulting service. Producers of controls and components also offer consulting advice on how their products can be integrated into systems. Look for more consulting services and integration capabilities offered by different kinds of sources.

One example is Tompkins Associates, a traditional consulting firm. A new Tompkins service is The Material Handling Integration Dimension, which offers "end-to-end solutions." President James Tompkins says that the Integration Dimension has strong acceptance by clients' middle managers as well as top management. One factor is that middle managers don't have the time to deal with as many suppliers that would ordinarily be required. Other factors that make an integrator attractive are lower prices and one-stop shopping with accountability. "There's no handoff," Tompkins says. "Previously the consulting firm would select an equipment supplier and hand off the project at a certain point. Now the transition from consulting to integration is seamless."

Rockwell Automation's Global Manufacturing Solutions group consists of six business areas: asset management; consulting and engineering; customer support; process; software; and training. Consulting is a critical component of the GMS service offering. Alan Gasvoda is principal consultant.

Linking activities from the warehouse of the manufacturing floor to the client's business system is key for optimizing process, reporting actual performance and making informed decisions, Gasvoda says. Integrated systems enable the flow of information generated by manufacturing or warehousing and integrate it in real time directly into business systems or into Web-based systems.

"There has been extensive work done in advanced planning systems, supply chain integration, collaborative planning processes and more sophisticated transportation management systems to foster the ability to access through the Web," Gasvoda says." However, too often a company's manufacturing or warehousing information is not tightly integrated into those systems. "Our consulting services help companies assess their operations and develop strategies and plans for attaining e-manufacturing objectives. GMS has an opportunity to focus on how their clients can integrated the specific products offered by suppliers into complete solutions," Gasvoda says.

Another approach to systems design: "We're a material handling systems integrator" is the way Francis Korosec describes the Material Handling Solutions part of Lockheed Martin Distribution Technologies. "We work side by side with the consultant, whether the consultant be part of our project team or working for the customer. We work in parallel; this technique enables us to do detail design so that when the concept is finished, the detail design is finished not long after. So we're in a position to begin implementation seamlessly when the concept is final," Korosec says.

Building the systems team

Systems teams are almost a cliché; every article written about material handling systems says that you need a team and that it should be representative of the operation. But the composition of the systems team is changing, especially in the area of controls and information technology.

Some aspects of the systems team haven't changed much, though. Mike Kotecki of HK Systems notes that some companies have a central engineering group that ensues consistent practices throughout the organization; others maintain some corporate practices but also emphasize regional management and site-specific needs as well. "Both approaches work well, and many companies drift from one mode to another, based on the market and management culture," says Kotecki.

James Tompkins of Tompkins Associates says that as more sophisticated systems teams are developed, more technical personnel are involved. Previously an information technologies (IT) professional might have been on a steering committee to make sure that the consultant's solution was consistent with the company's standards, but there was no real participation. According to Tompkins, IT professionals are now getting intimately involved with the project and are contributing real add-ons. So the clients are doing a better job of understanding the systems; they also have the ability to configure what they buy.

"Clients are much less PLC-oriented and more personal computer oriented," he says. "The middleware has become so standardized that clients can reconfigure their application without getting into the coding. As an example, people can use the PC to run wave releases differently in slow seasons than in busy seasons. Back in the PLC environment, it was very difficult to make those changes, so people didn't even try to learn how to do it."

Ken Ruehrdanz of Siemens Dematic points out that an important development and trend is the advent of "configurable software" for material handling. Previous to this development, customized software was required to facilitate the operation of most automated material handling systems. Because each system had unique software, long-term support was challenging. "With configurable software, each module is thoroughly tested so users get stable, reliable, quality-tested modules along with the ability to configure modules to meet specific needs," says Ruehrdanz. "Furthermore, troubleshooting is simplified, documentation is comprehensive and extensive, and because the software is standard, training guides and universal online support services are provided."

Adds Lockheed Martin's Fancis Korosec, "New control technologies save time in both development as well as the integration of controls and supportability down the line. New programmable logic controls are more fault-tolerant and give us the expandability to add input and output capacity as needed. They also provide faster communications on the Internet so that things we couldn't do 10 years ago because the response time on the systems was too slow are not issues today."

Alan Gasvoda of Rockwell Automation agrees that the IT professional is becoming more important to the systems team, and adds, "That's because the strategic use of information in manufacturing or warehousing needs to be integrated into the client's business system. Another reason that more of the team's initiatives are being driven by IT professionals is that manufacturing and distribution information needs to be processed in real time."

"Teams are better balanced than they were in the past." Gasvoda says. "There may be an IT person leading the initiative, but there's also representation from operations and engineering. The focus is shifting from emphasis on representation from a particular operation to a more company-wide, corporate-wide team structure.

"What's happening is that no part of an organization operates in a vacuum - any change to the system affects other parts of the organization. Also, companies are operating with fewer resources than they had in the past," Gasvoda notes.

Designing for maintenance

“The trend is toward keeping conveyor systems operating efficiently and reliably for as long as possible," says Jervis B. Webb's Paul Hopersberger. "One solution is a consistent preventive maintenance program."

This increased emphasis on reliability and maintainability of material handling systems has made maintenance, replacement parts and modifications another element in the justification process. "Customers have invested in system monitoring products," says Hopersberger. "The vendor's technical expertise has become a greater factor. Does the vendor do a good job of evaluating and analyzing the system? Does the vendor offer in-depth services?"

HK Systems is often called upon to provide continuous aftermarket support, notes Mike Kotecki" Support can range from periodic to full-time and can be on-site," Kotecki says. "These projects are no longer events -- they are relationships with shared risk and shared gains."

Whether they like the word or not, all progressive plant managers and middle managers are partners.

Systems Design Factors

What a user should look for in conveyor-based material handling systems was a topic addressed by Paul Hopersberger, director, marketing communications, Jervis B. Webb Company:

Modifications and current products are incorporating design features that permit them to operate in clean and quiet work environments. These developments also factor in considerations of ergonomics and easier maintenance as well as flexibility for simpler system modification processes.

In addition, intelligent material handling systems are coming of age. The users' desire for more real-time information and the management of that data are propelling the development of smarter material handling systems.

Continuous improvement is a factor in systems design and implementation. There is a consistent effort to reduce the design, manufacture, delivery, installation, and commissioning to as short a time frame as possible.

Mechanically, this trend translates into the identification and use of assemblies and subassemblies that are modular in design. Electronically, it means the incorporation of plug-and-play controls componentry. Logistically, it means that the supplier has to work smarter do design, build and deliver to the installation schedule sequence.

Realistically, for both supplier and customer, this trend means doing more up-front planning and execution, to simplify and minimize field installation, and to ensure that the debugging, commissioning, system training and turnover time frames are reasonable. All the while, both supplier and customer should strive to remain flexible to the changing schedules and circumstances that are inherent in most construction processes.

Middle Managers Cope with Regulations

Consider 29 CFR 1910 Powered Industrial Truck Operator Training (PITOT). Basically, PITOT mandates that your company train any operator of any powered industrial truck. In some cases, compliance with PITOT starts with top management; but more likely the plant manager or some other middle manager has the responsibility. The standard merely states: "All operator training and evaluation shall be conducted by persons who have the knowledge, training, and experience to train powered industrial truck operators and evaluate their competence."

It's not necessary that the training and evaluation be done by the same person; this responsibility can be shared. However, both trainer and evaluator should sign the certificate that states that the operator has been trained.

Compliance Directive CPL 2-1.28 explains how the training must be done. "OSHA requires a combination of formal instruction and practical training. Although formal training is valuable for teaching the principles of vehicle operation, it is the hands-on training and evaluation of vehicle operation that finally proves the adequacy of the training and the ability to use that training successfully."

PITOT is about a year and a half old now. If your company hasn't had a lift truck accident lately, it might be that you haven't been checked for compliance. But there's no guarantee that inspectors won't look at your training operation in the future. Maybe an internal inspection for compliance with PITOT is in order.

In its brief but stormy life, OSHA's ergonomics standard has been signed into existence by ex-president Clinton, then killed by Congress, using the previously untried Congressional Review Act. The ergo act would have laid an enormous compliance burden on plant managers and middle managers in general. (For details on the ergo standard, see the Compliance columns in the 2000 and 200l issues of Material Handling Management.)

However, ergonomics has become a factor in material handling systems design. There's new interest in lift tables, balancing hoists and industrial manipulators. Conveyor systems especially are being designed to minimize manual lifting at interfaces. Look for applications of low-cost robots in material handling systems.

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