MANAGEMENT + SYSTEMS

SYSTEM DEVELOPMENTS AFFECTING THE FASTENER SECTOR Succession planning for the whole company

By Jason Bader, principle, The Distribution Team Succession planning is nothing new to privately held businesses. I was the second generation in my family business, and we started this process very early on. This is not always the case in family businesses, and I have seen a few horror stories that punctuate the need for better planning and not just for the top roles.

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rivately held entities tend to focus on succession for the owner or president of the organisation; but what about those key management positions throughout the company? Do we go through the same level of strategic planning normally reserved for the C-suite? I think we should.

One of the great things about privately held distribution is the longevity of the associates in our companies. In my family business alone, I can list off several employees that have been there for over 35 years. With most of the clients I have worked with, they take pride in the multi-decade team members that have chosen to stay loyal to the organisation. This is rarely the case in corporate America, but we have this phenomenon permeating the distribution landscape. This can be a blessing and a curse. On one hand, we have this amazing continuity of structure and leadership. On the other, their knowledge and experience can often be trapped between their ears with little chance of successful transition to the next generation. The transfer of knowledge is one of the keys to the long-term viability of any tight knit organisation. We need to do a better job managing this transition.

The first step to developing a programme is to do an assessment of the key positions in the organisation. Obviously, we can’t perfectly predict when someone is going to leave the organisation; but as some of our executives hit the last 10 yards of their working career, we need to develop a strategic succession plan for these individuals. Talking about retirement and succession isn’t always comfortable. These discussions need be loaded with respect and dignity. If the company has developed a culture of trust and mutual respect, these conversations can be a very positive experience. Be careful about having newly anointed next generation leaders start these discussions. You might be better off inviting the previous generation to sit in on the initial discussions to alleviate any fears or wrong intent. Sometimes, deferring to the wisdom of your elders is the best way to ensure the longevity of the company.

If you have been following my rambling opinions for any length of time, you will recall that I am a big fan of formalising a career progression in the company. There may be an unwritten one trapped between the ears, but I urge you to

Preparation and training as the associate ascends through the positions will help them be better equipped to take on key roles.”

Succession planning for the whole company

Strategic succession planning isn’t something to fear. It comes down to recognising a need and inviting the whole team into the process.”

get it down on paper. What is the logical career path for an associate entering the organisation? How do we help them move through the logical positions to where they can branch out into their speciality? Not everyone is suited for field sales. So why do we believe that the only way to the executive team is through this position? Don’t fall into this trap. Many of your best associates are better suited to operations and management. They need to have a strong career path offering. Truth be told, some of your most successful salespeople lack the ability to lead people. Yet, we have all made the classic mistake of promoting an amazing salesperson to sales manager. Create a logical progression, which focuses on the unique talents of the individual, and avoid the painful frustration of tradition.

Another reason to think about creating a formal progression is that it allows us to build bench strength. For those of you who don’t enjoy sports analogies, I am talking about creating an associate structure that fills key positions when that person moves on to another role either inside or outside the company. Building a bench is a form of strategic succession planning. Preparation and training as the associate ascends through the positions will help them be better equipped to take on key roles. While this is a solid first step, I would like to see this programme be augmented by formal mentoring.

Mentoring is where a senior associate agrees to spend time helping a newer associate navigate this progression and understand the culture of the organisation. This can be so critical for making a new associate feel like they are a part of the mission. Younger generations grew up with consistent feedback and guidance. When this isn’t present in their first working experiences, they can often feel disconnected and more susceptible to the greener grass of another company. Developing a mentoring programme doesn’t happen overnight.

Not all senior associates are cut out to be mentors. Mentors have to be other-centered individuals who gain personal satisfaction in the success of those they mentor. They need to be able to give their mentee time. They must be able to listen to the fears and frustrations of their charge. As you will discover, putting people together is an art unto itself. This is where personality profiles can really assist in this process. Detail oriented people will probably be more comfortable with other people of the same mindset. Extroverted salespeople may be better suited to those who share the need to be around customers. Again, not a perfect science; but the more time you take in the match-making process, the better chance for a successful connection. In the case of a planned retirement, we need to have several months to put together a successful transition. This is where some of that honest dialogue mentioned earlier in this article will give the best opportunity to transition. I have worked with individuals on transition plans in the past. In one organisation, I was brought in when the retiring general manager was leaving in 8 months. This isn’t a bad runway to work with. The retiring executive had no problem sharing information with their successor. Moreover, the challenge was to extract this 40 year body of knowledge in an organised fashion. With a little guidance, we were able to break the remaining months down to themes. Some of these themes included supplier relations, delivery logistics, pricing, inventory management, sales management, and finance. The rule was that we would only focus on the designated theme during the month. What this did for the relationship is it didn’t allow the knowledge transfer to be random or situational. The programme was intentional, and I am pleased to report that the successor felt very confident when the general manager finally hung up the cleats.

Take a critical look at your company. Do you have senior associates that might be close to retirement? Do you have a plan in place to fill those shoes? Identify successors early so that you have the time required to facilitate a transfer of knowledge. Develop a culture that champions progression and the desire to foster success in others. Strategic succession planning isn’t something to fear. It comes down to recognising a need and inviting the whole team into the process. Good luck and know that I am always here to help. jason@distributionteam.com

MES and ERP systems – how they relate

MES and ERP are two of the most widely recognised acronyms for digital systems in the manufacturing world; yet defining the interrelated roles of these two systems is challenging. Here, Siemens Digital Industries Software looks at why the interaction between MES and ERP software is critical to a manufacturer’s productivity.

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ntegration of Manufacturing Execution System (MES) and Enterprise Resource Planning (ERP) systems enables their complementary functionalities to bring greater benefits to a manufacturer than siloed systems. A basic understanding of the relationship between these two systems helps customers get the most out of digital investments.

At the broadest level, the relationship between a MES and its ERP counterpart has been defined since the 1990s by ISA-95, the international standard for the integration of enterprise and control systems. ISA-95 incorporates a layer model of technology and business processes for manufacturing enterprises. According to this standard, ERP is a Level 4 system, focused on business logistics, while MES, as a pillar of Manufacturing Operations Management (MOM) software, is a Level 3 manufacturing operations system. ERP software, then, provides business related functions needed to manage a manufacturing operation, while MES software orchestrates workflow operations needed to produce the desired end products.

ERP and MES systems complement each other in terms of their different functional purposes and points of focus, as well as the context in which their data supports the manufacturing endeavour. An ERP system brings together business strategy and operations, while MOM software, including MES, enforces and executes the manufacturing plans and bridges enterprise level ERP information to the automation and control systems on the manufacturing floor.

It should be noted that ERP and MOM systems (including MES) represent two of the three key functional hubs within a manufacturing company’s data infrastructure. The third is product lifecycle management (PLM), an ISA-95 Level 4 system, which focuses on product creation and engineering data.

But how do the differences between ERP and MES systems enable them to work together and bring the greatest benefits to a manufacturing floor? ERP software manages the business of manufacturing, often over a time horizon ranging from hours to years. The ERP integrates and acts as a data pathway for all parts of the business, from purchasing and inventory to finances and human resources. An ERP system gives decision makers a single point of access to pertinent information from disparate departments.

As it relates to production execution, an ERP system mostly addresses pre-production issues as well as post-production analysis. These may include product strategy, reference product information, production demand, master data, Bills of Materials (BOMs), Standard Operating Procedures (SOPs), change orders, as well as inventories.

Much of an ERP’s functionality is prompted by financial transactions, such as sales orders, supplier invoices, or payroll. Functions of the MES, on the other hand, are prompted by production orders and manufacturing processes. The MES orchestrates actual production in ‘real time’. It oversees and proactively enforces ‘live’ operations and performance and its functions generally focus on much more immediate time frames than the ERP.

MES functions include monitoring, controlling and adjusting variables that impact production efficiency, as well as synchronising various aspects of production to ensure lean operations. To perform these functions effectively, the MES must have the capacity to anticipate, align and adjust production and business parameters in ‘real time’.

Data shared between ERP and MES systems flows in both directions – the ERP system collects and/or generates information that serves as input to the MES, and as production operations take place, the MES gathers and generates information and sends it back upstream to the ERP. As the business hub, the ERP system interacts with departments and systems across the enterprise. It aggregates and contextualises data, then distributes it as needed to departments for use in their functional responsibilities.

An ERP system’s production related data is needed as input for the MES to coordinate production operations. This is the first aspect of the relationship between the two systems. ERP data feeds downstream to MES. The MES software receives and regroups this information to focus on manufacturing decisions, such as which plant or production line to use, which operators have the qualifications and availability to run production tasks, and where and when to deliver raw materials and supplied components to the production line.

The second aspect of the ERP and MES relationship flows in the opposite direction – with data from the MES providing the ERP with input for the many business operations that the ERP manages. For example, the ERP may route information about an operational bottleneck to the finance department, where decisions about capital equipment investments are made. MES may also share material consumption, scrap or completion information with the ERP to track costing and inventory.

Manufacturing companies that successfully integrate their ERP and MES systems stand to reap numerous benefits, including increased overall equipment efficiency, reduced cycle times and data entry, data consistency, as well as leaner manufacturing. Siemens has designed Opcenter Execution MES systems to interact effectively and efficiently with ERP systems to maximise production efficiencies and minimise time to delivery.

TFC launches VMI Smart Solutions

To help manufacturers in growing industries innovate, disrupt, and create value, Vendor Managed Inventory (VMI) provider TFC has partnered with Inventor-e to launch VMI Smart Solutions.

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his customisable portfolio of solutions leverages Inventor-e’s ‘real time’ technology to complement TFC’s decades of experience delivering VMI solutions, ultimately giving manufacturers better visibility and control over their supply chains.

VMI Smart Solutions are enterprise level, Cloud-based supply chain management solutions. They give customers ‘real time’ visibility over who is using what and where in a manufacturing facility or warehouse, to vastly improve health and safety, security, compliance and part availability.

The solutions are powered by technology from Inventor-e, including state of the art Cloud-based software, Sourcerer™, which controls the supply chain for Inventor-e’s range of patented inventory management solutions. These include stores management, industrial vending, asset management, van stock management and point of use solutions. The equipment uses technology including weight sensors, near field communication (NFC), passive Gen2 RFID, Bluetooth Smartie™ tags and smart Apps.

Customers will benefit from on time production, smarter stockholding and local support from TFC to bring about positive cash flow benefits, facilitate growth and enhance profitability. By keeping equipment in a secure and controlled location that can be easily accessed by authorised personnel, VMI Smart Solutions gives employees the right equipment, at the right time, so they can efficiently do their jobs. All systems are flexible, so they can be easily scaled up or down based on demand to reduce overstocking while preventing stockouts.

“This partnership will make product availability easy in even the most unpredictable manufacturing environments,” explains Dean Henry, owner of Inventor-e. “Inventor-e is a progressive business that builds disruptive VMI solutions for customers to use as an engine for growth. We’re excited to be working together with TFC Ltd to facilitate profitability, productivity and peace of mind for manufacturers by bringing VMI Smart Solutions to the market.”

“TFC recognises that with VMI, a ‘one size fits all’ approach is never the answer,” comments Chris Billinge, business development director at TFC. “VMI Smart Solutions are tailored to an individual customer’s need, drawing on our decades of experience in supply chain management – combined with industry leading technology from Inventor-e. For customers where traceability, control and visibility are a priority, we can give manufacturers exactly what they need.”

Körber automates binder’s new warehouse

Körber is building a new central warehouse for binder in Germany, as part of its new headquarters. The new warehouse is a modern logistics system with the highest level of automation in the company’s history – including control of processes through SAP EWM.

he new central warehouse combines the previously structurally and spatially separate shipping and parts warehouse. It is T directly connected to the three existing plants, which will be gradually merged in the next construction phase. As a general contractor, Körber built the automated, state of the art logistics centre in close collaboration with general planner TKS Unternehmensberatung und Industrieplanung. It consists of a single aisle pallet warehouse with double deep storage and a capacity of around 1,500 pallet locations, as well as a quadruple deep shuttle warehouse with around 45,000 box locations in three aisles and 58 levels. Storage and retrieval of the pallets is carried out with a fully automatic stacker crane with an output of 35 double cycles per hour. Four highly dynamic shuttle vehicles are used in the shuttle warehouse per aisle, providing an output of 450 double cycles per hour in total.

Additionally, Körber implemented the entire logistics IT on the basis of SAP EWM (Extended Warehouse Management) and SAP EWM/MFS on the basis of SAP’s most recent technical platform SAP S4/HANA. The processes of incoming goods, production transfer and storage, as well as commissioning and dispatch, are mapped in SAP EWM. SAP EWM/MFS controls the material flow in the automatic warehouse areas.

With its high-level of automation, the new central warehouse is a milestone for Franz Binder GmbH & Co Elektrische Bauelemente KG. Given this, it was important to accurately map and check the performance of the warehouse and processes in advance. As a result, the full system and design were run through and enhanced several times with Körber’s warehouse design and simulation software.