Not paying attention to the widening gap between your internal processes and optimizations being realized through new technology can quietly erode the fair market value of your company.
On the other hand, leveraging these capabilities can generate as much as 25% to 40% ROI through more efficient internal communication that results in improved customer service and profits.
Most surely recognize that over the last decade technology has profoundly changed the way we work, interact, and do business. While it affects individuals in many different ways, many plastic processors have not yet integrated these new technologies to optimize their operations. It’s all about getting reliable and accurate information to achieve the desired results faster and in the least expensive and most efficient way.
Plastics Processor Gap Analysis – Quickly check your results against the 10 most common efficiency gaps.
GAP #1. The myriad of internal systems
In many companies, at the core operate with off the shelf standalone software packages centered on accounting and make use of other customized database systems and spreadsheets. While functional and perhaps critical to their individual departments, resources operate within their own “bubble” and are totally inefficient at sharing vital information in real-time between each other, causing duplication and a chain of small points of failure.
GAP #2. Collecting integrated data from the shop floor
Manufacturing Shop floor data, including quality testing results, are often captured by operators via handwritten documents and then manually recopied to a spreadsheet and often other databases for possible further analysis. Consistency, accuracy, legibility and time delays all negatively impact these processes from alerting staff to potentially avoidable issues.
Integrated shop floor data acquisition readily delivers vital information such as quality assurance statistics, actual costs versus estimated cost for product pricing, on time deliveries, inventory tracking information (such as raw material usage and finished product counts), used to issue timely financial information as well as lot controls and product serials, often crucial to automate shipping and invoicing documents.
GAP #3. Reviewing production results daily
For a plastic processor, generating automatic daily profit indicators from production, such as total daily dollar contribution over material costs, on time deliveries, production speed efficiency, downtime, rejects, and raw material efficiency, is essential in making corrective action decisions quickly. Contrarily, having to resort to manually compiling entries and reports in order to generate these daily measurements is costly, redundant and often results in month end variances.
GAP #4. Manual work performed from handwritten documents or side spreadsheet files
One off exception aside, recording core company data or performance via paper or even spreadsheet is an indicator that the technology was not implemented to satisfy the needs the business is facing. This often points to data not being shared or leveraged that could significantly improve in management decision making.
GAP #5. Making photocopies, faxing, scanning, and manual emails
In most environments, photocopies and faxing technologies have already become a thing of the past. Yet many are still tied to manual processes such as manually sending emails as part of the order confirmation or execution process or even scanning post production documentation. This is an indication that the system doesn’t possess email communication capabilities integrated as part of the core process and likely results in reduced customer service capability with an elevated cost.
GAP #6. Relying on physical counts and how you locate inventory
Having to frequently perform physical inventory counts is a clear sign of lack of reliable material deduction and control. Plastic processors must content with recipes and contend with regrind usage and sometimes complex co-extrusion or multi-layer recipes adding further complexity. Proper automated material deduction on the line will provide reliable visibility into material on hand and even inventory by location systems will track inventory quantities by serials and sub location automatically, saving time and providing accurate sound financial, purchasing, shipping and invoicing information.
GAP #7. Long Month End Closing Procedure
Automated GL repetitive entries, automated GL accrual entries such as material received and not yet invoiced by suppliers as well as bank reconciliation and sub ledger control accounts are vital to a quick month end (This naturally requires a good inventory system). Best practice is that financial statements should be generated within 5 working days of month end.
GAP #8. What’s the Shipping, Invoicing, and Receiving Procedure?
Do you have to manually create shipping documents such Packing Slips, Bills of Lading, Commercial Invoices, ASN Notifications or Material Certs? Are shipments scanned? Do invoices auto generate? These manual tasks steal resources, are error prone and increase overhead.
GAP #9. Scheduling and Planning Production
Using whiteboards and spreadsheet might do the job but they are very time-consuming and a very poor way of sharing planning information across the company with your production and customer service team. They also cannot take into consideration actual performance overruns and its impact on downstream equipment, resources and material.
GAP #10. Who and how internal process improvements are determined
Probably the most important gap in plastics manufacturing companies is not having a continuous process improvement plan with key experienced members of your team assisted through external expertise that can provide an insight into best practices and how to properly implement them.