Jürgen Thurner
Jürgen Thurner
Juergen Thurner brings 28 years of expertise in various senior management positions of companies like Hewlett-Packard, Sanmina, Multi-Fineline Electronix and Flextronics. Founder of xprts4xInc - Thurner Suadicani & Partner. He lectures International Operations Management at the European School of Business at Reutlingen University. One of his main subjects is Industry 4.0 and the Internet of Things.

Why would I want to have a smart factory at all?

Smart SMT Factories increase flexibility in electronic manufacturing

(image: © ASM)

Dear Smart SMT Factory Forum community;

In my recent blog titled “How to get started with the smart factory” I raised the question Why would I want this at all?
So let’s spend some time on this question today.

Why would I want a Smart SMT Factory?

Imagine it’s Friday afternoon and you are the head of SMT or even the manager of your entire manufacturing department, and you start thinking about next week’s production schedule. Your planners have done their jobs, checked the availability of the required material in your ERP system, checked the available capacity and the order pipeline, and finally came up with a production schedule for the next week. Kitting has prepared the feeder banks and whatever else needs to be set up for the production schedule. Everything seems to be ready for the upcoming week as you leave for the weekend in a good mood.

Then comes Monday morning. The early shift started as planned, and everything seems to be running smoothly – until you are notified that line 1 cannot finish the current production order as there is an unplanned shortage of a component due to an inventory difference. In addition, customer A, who’s order is running on line 2, has increased his order from 1,500 to 1,700 units at the last minute. This customer is a very important one, so you don’t want to let him wait by pushing his order back or by starting a second batch. Finally, you get the information that the oven in line 3 has had a breakdown because of skipped maintenance a week ago. It’s now clear that you have to rearrange your production schedule – at least for this day, if not for the entire week. And it’s clear that you will miss your weekly targets in terms of throughput time, delivery precision and customer satisfaction.

And you start asking yourself a few questions like these:

  • Why do I have to rely on ERP entries about the stock level of materials that every once in a while deviate from the real stock level?
  • Why can’t the warehouse itself not be smart and just report the correct levels?
  • Depending on my driving habits, my new car tells me in advance when it will need maintenance. Why can’t my reflow oven just do the same?
  • Telling a customer his delivery will be late is an unpleasant task. Why can’t I just provide him access to my production planning so that he can find out himself if and when an increase in order volume would be possible?

You see where I wanted to take you with this fictitious story. Since many of you have probably experienced such situations in real life, you know what I’m talking about. Imagine that all these problems could have been prevented if only the material would have been enabled “to talk” and hence tell the factory “who am I, and how many of me are there?” (just to become a bit philosophical). If the oven had been able to tell the factory it needs maintenance? If the customer had the ability to play the role of the production planner himself? If the factory, based on this information, would have been able to independently re-schedule the production schedule and re-route the production flow? What would have been the result, besides fewer headaches for the manufacturing manager?

It would have resulted in a shorter manufacturing throughput time (or lead time) and improved delivery precision, and ultimately in more customer satisfaction. These are major key performance indicators (KPIs), which most manufacturing managers are being measured and often even paid by. So, let’s talk about these KPIs for a while, as these are the hard facts.

There are too many KPIs

Most of us are being measured and paid based on KPIs, and many of us suffer from the fact that there are too many of them and sometimes even conflicting ones (at least I was when I ran the SMT department of HP Germany 25 years ago). But it could be so easy to apply the right KPIs and not too many. If you lean back for a moment and think about them, the really important ones are these:

  • Throughput or lead time
  • Delivery precision
  • Inventory turns

A combination of just these three KPIs is all you need, as it provides you with a perfect image of your factory’s performance. The challenge, however, lies in the fact that optimizing either one of them will cause the other to go down. So the art of managing a factory lies in the ability to bring all three of them up at the same time.
So, if you were to have a factory environment that helps you to increase delivery precision, shorten throughput time and optimize your inventory based on all kinds of structured and unstructured information automatically, the commercial success of your factory would be guaranteed. And that’s exactly why we should make our factories smart.

Best regards,

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