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How Digital Strategies are Driving Plastics Manufacturers’ Growth

by Louis Columbus, principal

IQMS

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Plastics manufacturing is increasingly becoming a digitally driven business in which analytics, mobile apps, quality management and real-time monitoring are pivotal technologies in enabling faster growth. This evolution was highlighted in a survey of 151 North American manufacturers conducted by IQMS and TechValidate in May 2018, which provides insights into how these technologies are enabling more profitable revenue growth while reducing costs and time-to-market, and improving quality.

Notably, 27 percent of the respondents are high-growth plastics manufacturers that are attaining 10 percent or greater revenue growth per year. What most differentiates these high-performing plastics manufacturers is their ability to assimilate analytics, business intelligence (BI), mobility – including mobile enterprise resource planning (ERP) access – and advanced manufacturing intelligence into their daily operations. As a group, they excel at gaining insights into the market and their own operations that competitors miss. They’re also excellent at translating real-time monitoring and analytics insights into solid operations performance, all contributing to faster revenue growth.

This article examines the technologies that plastics manufacturers report they are using to improve their operations and decision-making, as well as the implications for other manufacturing firms in the industry.

A majority use analytics and business intelligence

The majority of plastics manufacturers are looking to analytics and BI applications to gain the insights they need to improve the performance of every aspect of their operations. Among respondents, 73 percent consider analytics and BI applications essential for increasing production capacity with better resource planning. Additionally, 68 percent are combining these technologies with real-time monitoring to anticipate problem areas better and address them faster. Meanwhile, two areas where manufacturers are making the greatest impact with analytics and BI are in maintaining and improving product quality by continually compared finished goods to quality standards (63 percent) and improving demand forecasting from channels (63 percent).

The survey also found that plastics manufacturers leading their industries in analytics and BI adoption are moving beyond using these applications for reporting and historical analysis. These early adopters are discovering new ways to use predictive analytics based on broader data aggregation than their industry counterparts. Leading-edge manufacturers are piloting and launching Hadoop applications to streamline every phase of production, including quality assurance and maintenance, repair and overhaul. The greater a manufacturer’s maturity in working with large-scale data sets and using analytics to predict machinery performance, supply chain risk and stability, and plant productivity, the more competitive time-to-market and cost advantages the business has. The graphic on page 10 quantifies the importance of analytics and BI to plastics manufacturers today.

The demand for data quality is driving mobile ERP access

The majority of manufacturers, 80 percent, say they have adopted mobile access as part of their ERP platform to improve data quality. Comparing those manufacturers with the compliance and quality management methods they use today yielded interesting results.

Most notably, 67 percent of respondents rely on mobile ERP platforms that also support analytics and BI apps to stay in compliance with federal and regulatory requirements. Moreover, manufacturers in the most regulated industries rely on their mobile ERP platforms, analytics, and BI apps to provide predictive alerts of when specific machines will potentially fall out of compliance, using a combination of original equipment effectiveness (OEE) and advanced algorithms that predict meantime between failures (MTBF) and potential slowdowns before they happen.

A core component of data quality is the accuracy of supplier data, with 56 percent of manufacturers relying on mobile ERP platforms to aggregate, analyze and provide real-time updates on supplier quality management performance. Plastics manufacturers that supply the aerospace and defense (A&D) industry rely on the combination of mobile ERP platforms, analytics, BI, compliance and quality management apps to know their contributions to good cost of quality. They also concentrate on how they can contribute to keeping the costs of poor quality (COPQ) low for the Tier 1 A&D manufacturers they serve. The survey also revealed that the highest performing plastics manufacturers concentrate on reducing the time it takes to get back to customers, sales teams, partners and resellers by letting every member of the production team access real-time production data from their mobile devices and tablets. Looking for a speed advantage vs. competitors, many companies are making an abbreviated series of status updates available directly to the field. The graphic on page 11 quantifies the importance of mobile ERP access.

Real-time monitoring improves manufacturers’ businesses

The majority of manufacturers today have adopted the basics of real-time monitoring, with many of them using light sticks, programmable logic controllers (PLCs) and material handling technologies, including barcodes, to monitor production. Among survey respondents, 80 percent said that real-time monitoring is improving their businesses, with the companies growing 10 percent a year or more being early adopters of advanced real-time monitoring technologies, RFID tags and Internet of Things (IoT) sensors.

More than half of plastics manufacturers (52 percent) rely on real-time monitoring to improve scheduling accuracy, and survey respondents across all industries are gaining multiple benefits from it. These include attaining better levels of inventory control (48 percent), improving production plan performance (40 percent) and gaining greater flexibility in managing production lines (29 percent). Looking ahead, 72 percent of all manufacturers say that streamlining and making inventory reconciliation more efficient is the most important future benefit of real-time monitoring. And, 69 percent say real-time monitoring will enable greater accuracy tracking of their most important supply chain, production, service and aftermarket support metrics and key performance indicators (KPIs).

All told, high-performance plastics manufacturers rely on real-time monitoring for the combined benefits of better scheduling accuracy of orders, improving process quality and making inventory reconciliation more efficient.

How technology is helping improve product quality

Across all industries, manufacturers commonly rely on several different quality management techniques, with tracking scrap by type and cause being the most popular. Among plastics manufacturers, 64 percent specifically rely primarily on an analysis of scrap by type or cause as their primary quality management metric. Meanwhile, 59 percent analyze return material authorizations (RMAs) on a consistent basis, and 53 percent utilize non-compliance/corrective action (NC/CA) to reach and stay at the quality levels they need.

Supplier quality management continues to gain momentum across the entire manufacturing industry, and many of the survey respondents are suppliers themselves. Looking at all manufacturers in the survey, 42 percent are monitoring inbound quality levels today. When the plastics manufacturers growing at 10 percent or higher per year are analyzed, their adoption of supplier inbound quality management increases to 59 percent.

The 27 percent of manufacturers growing at 10 percent or more per year are more likely to track yield rates by machine (38 percent), have an engineering change order process in place and use it (37 percent) and rely on OEE (35 percent).

The graphic on this page compares all methods currently used by manufacturers to measure and manage product quality.

Among all manufacturers, 54 percent say OEE is extremely or very important to their future production performance, and 46 percent say the same about tracking OEE in real time. This figure increases slightly for high-growth plastics manufacturers, with 62 percent saying OEE is extremely or very important for their future production performance. Comparing OEE adoption across industries and factoring in those plastics manufacturers growing 10 percent or faster per year finds that the most advanced businesses rely on real-time monitoring to improve machine-level performance first with OEE. The fastest growing manufacturers are doing this by reflex today; analytics and BI use are part of their DNA, and their operations reflect it.

Implications for plastics manufacturers

Plastics manufacturers growing 10 percent or more per year are setting an example of how to successfully integrate multiple technologies to fuel future growth. Three of the most important lessons we can take from these innovators are as follows:

  • Orchestrating real-monitoring monitoring as a data source to improve every aspect of production monitoring and ongoing operations management is a must-have. Add in the ability to gain competitive insights using analytics and BI apps, and the implications of greater speed, scale and effectiveness are clear. Fast-growing plastics manufacturers know how to turn data and insights into action quickly, and their cultures resonate with those core values, making them part of their DNA over time.
  • Finding new ways to continually improve sourcing, production and service process workflows to earn customer loyalty is a hallmark of the fastest growing plastics manufacturers. As a group, they are able to gain seven percent to 10 percent more production scheduling flexibility, giving them the opportunity to do more short-run production as well. They also are exceptionally good at launching new products and services, and they credit their sales and marketing teams for fueling growth.
  • Taking a deliberate, focused strategy to combining quality, manufacturing operations and machine-level metrics – all capitalizing on an accurate stream of data generated from real-time monitoring – opens new growth opportunities. A secret of success for the highest growing plastics manufacturers is how deliberate they are in the analytics and metrics they choose to measure themselves. One CEO said that the metrics they choose today will be the company they are tomorrow. Those are wise words from a manufacturer that is growing 15 percent annually and has won product quality awards from its top customers.

Conclusion

It is clear from the survey that the highest-performing plastics manufacturers take a deliberate approach to orchestrating all available technologies to enable faster growth. They rely on analytics, BI and real-time monitoring to provide higher production quality, allow more short-run production flexibility and earn more customer referrals than last year. Moreover, these manufacturers are going beyond reporting and using analytics and BI to plan and predict the probability of future events and make the most of new opportunities.

Real-time monitoring now is a core aspect of any growing plastics manufacturing operation. Additionally, the highest performing plastics manufacturers are combining mobile ERP access with analytics, BI and quality management. Not only do they get a 360-degree view of each plant floor; they also keep customers, sales teams, distributors and service partners informed with the highest quality data possible. As a result, they are able to alleviate slowdowns, maximize customer satisfaction and quickly move on new opportunities for growth.

Louis Columbus is currently serving as Principal, IQMS. His academic background includes an MBA from Pepperdine University and the Strategic Marketing Management and Digital Marketing Programs at Stanford University Graduate School of Business. Columbus also teaches MBA courses in international business, global competitive strategies, international market research, strategic planning and market research. He currently is a member of the faculty at Webster University and has taught at California State University, Fullerton: University of California, Irvine, and Marymount University.

More information: 714.865.5878, LColumbus@iqms.com or www.iqms.com.