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Supplier Document Management at the Heart of Automation

by Thomas R. Cutler   |   December, 2012

Manufacturing Insights

Suppliers must be ranked. Which suppliers are best is a matter of profitability, efficiency, and risk management. Automation must include the ability to identify riskiest suppliers via a supplier scorecard. Using technologies to determine risk trends for key problems as well as comparing risks across alternate suppliers allows for lean best-practices among all manufacturing operations, especially food and beverage.

The risks are many and the ability to quickly discern trouble spots can be accomplished by automatically illuminating suppliers with non-current documentation, highlighting potential supply chain disruptions from missing P.O.s, as well as pinpointing the suppliers and ingredients that are costing money (impacting margins.)

Beyond the risks, automation via supplier documentation identifies manufacturing efficiencies, finished goods quality and safety costs.

Heads of manufacturing, operations, procurement, sourcing, and purchasing, care about reducing errors or mistakes. The fewer errors throughout the manufacturing process, the less the manufacturing line gets upset and the more consistent the finished products. In the food industry errors can be avoided by using the right ingredient with the right specifications. Few technology solutions guarantee ingredients are within spec (attribute management). TraceGains, based in Colorado, creates supplier documents; a management solution which prevents "bad stuff" (out of specification ingredients) from arriving in the first place. Assuring that the correct supplier documents and certifications are on file, (such as allergen statement, kosher, SQF, and BRC) is also important to verify that the finished good food product is compliant with business policies and customer requirements.

Statistical Process Control (SPC) is used on the floor during manufacturing. The automaticity of Supplier Document Management provides the exact same benefits for ingredients before they arrive for manufacturing. TraceGains refers to this technology as a Supplier Compliance solution.

Whether labeled SPC or supplier compliance, Six Sigma or lean, all these concepts are about reducing and eliminating waste. Waste can be physical, but is often related to time and motion, as in not wasting time...ultimately, it is about being as efficient as possible. Lean principles have a positive effect on the balance sheet of a company, because companies ship more quickly and fewer materials will be tied up in work in process (WIP).

Automating Food Manufacturing

Transportation is one of the areas in which waste is frequently identified among food manufacturers. Each time a product is moved it stands the risk of being damaged, lost, delayed, it becomes a cost for no added value. Transportation does not make any transformation to the product for which the consumer is willing to pay.

Rather than an after-the-fact reaction to a recall, it is best when automated solutions prevent out of spec ingredients from being shipped in the first place. This results in fewer reverse logistics activities (which costs time and money, regardless of whether the supplier has to absorb the cost of the shipment).

Inventory, whether raw materials, WIP, or finished goods, represents a capital outlay that has not yet produced an income either by the producer or the consumer. Any of these three items not being actively processed to add value is waste. The best solution to address this inventory challenge is with a Purchase Order Acknowledgment module which helps companies' better plan inventory and production and manufacturing schedules. Knowing in advance what the supplier plans on shipping, when it will be shipped, and how much will be shipped, ensures an automaticity of inventory control.

Motion is in contrast to transportation. While transportation refers to damage to products and transaction costs associated with moving them, motion refers to the damage that the production process inflicts on the entity that creates the product; either over time (wear and tear for equipment and repetitive stress injuries for workers) or during discrete events (accidents that damage equipment and/or injure workers).

Supplier Document Management ensures that less rejected ingredients arrive prior to manufacturing, fewer rejections are required, and more quality ingredients are in inventory; the result is that fewer trips are required to get the right materials for manufacturing.

During audits, all the data are readily available, instead of multiple people needing to rifle through filing cabinets.

Waiting is what happens when goods are not in transport or being processed. In traditional food processing, a large part of a product's life is spent waiting. As with motion, better inventory (automatic reading and analysis of COAs) and allow for better planning of inventory shortfalls (P.O. acknowledgement). The direct benefit of having the "right stuff on hand" is less spot-market buying and better cash flow.

Since audits are speedy, they are less costly.

Over-processing occurs any time more work is done on a piece than required by the customer. This includes using tools that are more precise, complex, or expensive than absolutely required.

Overproduction occurs when more product is manufactured than required by customers. One common practice that often leads to superfluity is the production of large batches. Overproduction is often considered the worst kind of wastefulness by plant managers because it hides and/or generates futility throughout the entire manufacturing process. Overproduction leads to excess inventory, which requires the expenditure of resources on storage space and preservation.

Defects occur whenever extra costs are incurred reworking the part or rescheduling production. Fewer defects in manufacturing occur when goods are made using in-spec materials (as close to perfect as possible).

Supplier Document Management allows food manufacturers to better control the inputs assuring better outputs...finished goods.

A finished good that is compliant with regulations and industry initiatives is also cheaper and easier to manufacture. These compliant products have a higher profit margin and achieve quality consistent standardization. Product consistency meets customer expectations, requires fewer recalls, and allows for the continuous improvement of quality and profitability. Ultimately the result is automated comprehensive brand protection with fewer problems and happier customers.
Thomas R. Cutler is the President & CEO of Fort Lauderdale, Florida-based, TR Cutler, Inc., (www.trcutlerinc.com). Cutler is the founder of the Manufacturing Media Consortium including more than 4000 journalists, editors, and economists writing about trends in manufacturing, industry, material handling, and process improvement. Cutler is a member of the Society of Professional Journalists, Online News Association, American Society of Business Publication Editors, and Committee of Concerned Journalists, as well as author of more than 500 feature articles annually regarding the manufacturing sector. Cutler can be contacted at trcutler@trcutlerinc.com. See More Details.

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