Boost Throughput, Exceed Customer Promises

Beyond Products and Price: How Throughput Drives Customer Loyalty and Market Share

Increasingly, customers base their loyalty not on price and product but on service—the ability of organization to keep their customer promise. As a result, those with high throughput levels are perfectly poised to take away market share from lower throughput competitors. Higher throughput is a key indicator that an organization can produce and deliver a product most efficiently and deliver within the promised delivery window.

The challenge is that all too many of us do not fully understand how to best leverage SAP tools to build throughput rates nor do we fully grasp the entirety of what is happening on the shop floor. Recognizing the value opportunity of identifying and measuring throughput and understanding where it is being constrained is essential to keep us agile and flexible.

Keep in mind that standard SAP does not directly measure throughout. What it does is actively measure throughput time—the time it takes for a material to pass through a manufacturing process following release to the shop floor. This time measurement consists of process time, inspection time, move time and queue time. Organizations that can reduce queue time—all non-value-added time—will recognize a direct increase in manufacturing efficiency.

Knowing the right metrics to use can help us find the bottlenecks in our production lines and processes that contribute too long queue times. And it can give us the insights we need to continuously refine our efficiency levels. Finally, it can improve our ability to quickly take a series of actions and steps to achieve a particular end goal or outcome that will be key to our success.

Understanding Throughput Time: The Key to Identifying Non-Value-Added Activities

We must stay constantly vigilant because there will always be constraints that popup—material shortages, inaccurate processing time, lack of physical capacity.The majority of us are most likely to experience internal capacity constraints, where our ability to deliver is less than the market demands under current conditions.

When these constraints occur, it is vital to know where breakdowns are occurring and get inventory on the shop floor sooner to achieve a particular goal or outcome. The deviations we uncover result from our inability to efficiently track the interdependency and relationship of inventory performance. Often, they are symptomatic of manufacturing inefficiencies or the master data itself. If we have indeed optimized our data correctly, those deviations are likely to be small. And if we haven’t? We will need to realign the master data. Through doing so, we can take a deeper dive and determine where the bottleneck is—by material, operation and date for granularity.

We know that a single source of truth is essential to creating high throughput levels. To truly turn SAP into an asset and increase throughput, we need to ask ourselves: “How does a growth-oriented manufacturer effectively use the production planning module of SAP to increase operations visibility and information across the supply chain to its fullest extent?” We also need to dedicate ourselves to eliminating manual tasks and custom transactions by moving from planning by Excel to within the SAP environment.

At the same time, we must continue shifting from a push to a pull supply chain. In a push-based chain, production occurs based on a demand forecast and products are “pushed” through the chain from production to retailers. In a pull-based supply chain, procurement, production and distribution are truly demand-driven rather than based on sometimes inaccurate predictions. To learn more about shifting from a push to a pull supply chain, read our white paper, When You Walk the Shop Floor and Ask, “Is Your Supply Chain Organization Mature Enough to Be Demand-Driven?”

Once we optimize and maintain master data, define our throughput rates, focus on real-time confirmations, quickly deal with constraints, share tribal knowledge and trust SAP for discrete and process solutions, we are well on our way to the promised land, which is increased throughput. The result is a boost in throughput and an alignment of supply and demand that elevates us to a world-class manufacturer. Download our full white paper now to learn more about demystifying manufacturing efficiency to optimize throughout and better meet our customer promises.