wipro.

com

Are You Doing Enough to

Plug Revenue Leaks in Your
Manufacturing Process?
wipro.com
A
tiny Adidas factory in Ansbach,
Germany, is currently drawing
the attention of the manufac-
turing world. The factory will produce
about 1 million running shoes for
Adidas in the next few years! . Called a
speed factory, the highly-automated
plant is primarily designed for two
things: to bring production back home
to Germany and to give Adidas the
capacity to respond faster to market
changes with new types of shoes. A
tertiary aim of the speed factory is
even more exciting to make shoes on
demand, using robots to turn out
customized orders within a day.
If costs can be kept under check, this
customization represents both growth
and margin expansion opportunities
not possible with traditional manufactur-
ing lines. So, it comes as no surprise that
forward-thinking companies like Adidas
and BMW are striving to deliver extreme
customization using intelligent digitized
production processes, connected IT
and OT systems and Artificial Intelli-
gence (AI) - all of them being key constit-
uents of Industry 4.0.
For most organizations, replicating this
level of customization-and all the other
cool things-made possible by Industry
4.0 tools and practices will take several
years of perseverance. Should they wait
5 years to put up a super plant and
harvest the benefits of Industry 4.0? We
think there is a faster way to feel and use
the power of Industry 4.0. We propose
raising the Manufacturing Intelligence
Quotient (MiQ) of manufacturing organ-
izations using Industry 4.0 practices.
MiQ is a philosophy a way of collating
operating parameters with the sole
purpose of drawing insights, and giving
instant access and control of critical
!
Source: http://www.adidas- group.com/en/media/news-archive/press - releases/2016/adidas-
expands-production-capabilities-speed factory-germany/
operating parameters to plant manage-
ment. These parameters include excep-
tions, variance and impending failures
and are triggered with events, a funda-
mental construct of Industry 4.0 and
super factories. Under the MiQ umbrella
we have a variety of applications such as
Revenue Leak Analyzer and Smart
Non-Conformance Management. The
Revenue Leak Analyzer has special
significance for manufacturing. Manu-
facturing veterans know that revenue
leaks even in well-run Lean and Six
Sigma operations. It does so for many
reasons, starting from variances in plant
to plant processes, mismatched labor
and non-optimized planning. What
makes this challenge daunting is the fact
that collecting these parameters takes
significant time, doggedness and cost.
The Revenue Leak Analyzer differenti-
ates itself from other performance
analyzer tools and methods with its
ability of decentralized edge analytics
for real-time dynamic performance
measure at production unit level for
product operation activities. Hierarchi-
cal computation enables unit-level
performance metrics to be aggregated
at station and plant level for financial
cost, productivity and quality, to
provide business information in
realtime. This provides an opportunity
for informed decision-making and to
align manufacturing strategy and
accounting systems.
The truth is that transactional process
loss doesn't receive as much attention
as it should. This is with good reason: it
represents the lowest level of detail for
profitability management and, in the
past, has been difficult to accurately
track the steady trickle and fix it in time.
2
 It may help to explain this through an
industry example. Imagine a manu-
Does your plant facturer of sophisticated centrifugal
have Manufactur- compressors for the auto and home
markets. The manufacturer has a
ing Intelligence target margin of 36% over the life of
assembly of a compressor. However,
Quotient (MiQ)? due to production gaps and process
complexities, there is a significant
erosion of margins, which go down as
low as 25% at the SKU level. The
manufacturer is unable to tell in real
time where the problems are.
For a large organization, where the
cost of quality could run into anything
from $100 to $250 million, moving
the needle by even 3% to 4% can be
significant. The good news is that
improving MiQ to plug revenue leaks
is relatively simpler than launching
the complete line up of Industry 4.0
technologies.
This second level of detailed data has
a second advantage it can also be
used to provide root cause data to
Manufacturing plants need applica-
tions such as the Revenue Leak
Injecting MiQ Analyzer that capture data with the
into your plant right granularity, at the right leak
points (see Figure 1), in real time. It
understand the where and the why of
poor Overall Equipment Effective-
ness (OEE) data that is somewhat akin
to understanding why the patients
temperature has increased! Compa-
nies are waking up to the fact that the
gaps reducing the value of their data
must be bridged. What is becoming
apparent is the need for granular,
non-siloed and real-time information
pertaining to product margins. These
organizations are now ready to
embark on the next level of maturity
with MiQ and access significant gains.
In our earlier example of the
compressor manufacturer, first pass
yield that typically hovers between
79% and 83% could improve to 93%
after the introduction of a suitable
MiQ application. The gain is signifi-
cant, and is certainly noteworthy
when you consider the fact that no
changes are required to be made to
the bill of material (BOM), plant
equipment or operations manpower.
has become much easier today to
create and deploy these applications
using modern interfaces, cloud
technologies and real-time analytics.
3
 TPM/
Overall
Machine Equipment Manpower Energy
Effective-
ness

Scheduled stops System failure due Vacation, sick leave, Unused energy
System disorders to faults absenteeism consumption during
Setup time losses Setup and adjustment Overtime production
Change over time Noload and short Planning losses Unused energy
stops Flow losses consumption with
Short stop and
Decreased velocity (waiting time) reduced production
load losses
Procedural and Quality losses Quality losses
organizational losses Reduced output and Movements
Rate losses start-up losses
Loss of quality machine

Process Quality Material

Losses due to idle and First pass yield Loss of quality material
small stops Scrap / rejects Over production
Capacity losses Rework Inventory FG/RM
Start up losses Customer returns Inventory turnover
Operating Losses Assembly yield
Quality losses
Losses due to molds,
tooling and fixtures
Loss of volume
Inventory losses

Figure 1: Possible Revenue Leak Points in Manufacturing

These applications address the prob- is here that organizations must consid-
lems of aggregated, dated and siloed er a technology partner that makes
financial information pertaining to data the center for all strategic and
margin, inventory and profit. They tactical change.
solve the problem of margin leaks
What happens after an organization
with near real-time insights through
or a plant has such MiQ applications in
process mining techniques applied on
place? Once the applications are
a per unit cost basis and relate it to
deployed, the insights they deliver
process gaps. In other words, a Reve-
can be further improved. The clues to
nue Leak Analyzer captures the event
improved performance lie in enrich-
that causes the leak at an SKU level,
ing the analytical data by supplement-
assigns a cost to the event and shows
ing it with data from other systems
this in real time. The trick is to make
such as PLM and SCADA. However, as
sure the expertise to implement the
must be clearly apparent, that is a
solution at the right points in the
topic which rightfully deserves a
manufacturing process is available. It
deeper discussion in the future.

4
 Sudhi Bangalore is General Manager and Head of Smart Manufacturing at
Wipro. With over 14 years of experience in industrial engineering and business
About operations across industry segments, Sudhis responsibilities include strategy,
market growth and P&L management for Smart Manufacturing. He was involved
The Author in the creation of Plant Technology Solutions group and the go-to-market
partnership with a major European company. Prior to this, he headed Wipros
Industrial Automation division.

Sudhi holds a Masters in Industrial Engineering from University of Louisville and an

MBA from Kent University. He can be reached at sudhi.bangalore@wipro.com.

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5
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