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Pro-Active Manufacturing
Reprinted from Freedman Publications, August 1994 (c) 1996 Thomas Publishing Company

GLOBAL COMPETITION, LARGE CAPITAL INVESTMENTS, escalating production costs and shrinking margins with no ability to increase prices are some of the challenges companies are faced with today. Organizations must find new ways to stay competitive and survive. This is especially important today with the increasing popularity of free-trade agreements and blocks, where a company's ability to exploit its capabilities to the fullest becomes critical and essential to its business. No longer can a company allow itself to defer business and operational decisions, make wrong ones, or be inefficient in delivering services or unproductive in utilizing resources.

The Pro-Active Manufacturing (PAM) concept focuses on the need to act in advance and manage the outcome in a way that will maximize a company's performance, rather than react to events as they occur.

The pro-active company takes the initiatives to plan and optimize all business and manufacturing activities in a manner that supports corporate strategy, business, philosophy and production objectives. It should also improve the quality of its business and operational decisions, both in the long and short range.

This complex task can be supported and enhanced through the use of smart "thinking" systems that have the capability to reason and analyze, much in the same way humans do.

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WHY IS PAM IMPORTANT?

ADVANCED EVALUATION AND ANALYSIS OF INFORMATION pertinent to the organization's business and manufacturing environment is key in enabling the organization to:

  1. identify and analyze business opportunities;
  2. make (the right) business decision at the right time;
  3. formalize and optimize practical plans and execution schedules;
  4. identify opportunities to improve operating efficiencies and reduce costs;
  5. measure performance against plan and modify behaviour if required; and
  6. effectively respond to changes.

For each of the above items, a certain "opportunity window" exists. This window is closed once the organization reaches a certain point in time, so the item must be acted upon while the window is still open. The PAM methodology helps the company crystallize the significant potential benefits and profits hidden within its business and manufacturing environment.

INCORPORATING PAM METHODOLOGY

ADVANCES IN COMPUTER AND SOFTWARE TECHNOLOGY have enabled systems to be much "smarter" than they used to be. Rather than simply documenting transactions and maintaining data bases, they now have the capacity to use this information not only for report writing, but also for decision making, which is the essence of PAM - making the right decision at the right time, both at the operations and business levels.

For example, instead of only asking, "How much inventory do I have?" (an inventory reporting question), we should ask, "What should the inventory be in the first place?" (a decision-making question). The answer may be very complex and, in fact, depends on many different parameters. It also impacts many areas of the operation, such as: customer service, production costs, profitability, ability to find new customers, equipment and plant utilization, production cycle time and throughput. And this is only one example out of many others.

The PAM concept improves the planning, scheduling and decision-making process in the organization and ensures more efficient and cost-effective execution of production.

PAM has a significant effect on profitability since it leverages the investment that the company has in plant, equipment, technology, and manpower and allows the company, to do more with what it already has. And this is directly reflected in the bottom line.

HOW PAM WORKS

DOING THE JOB RIGHT depends on the tools that are being used. The use of computers to enhance decision making is very new, but can provide significant benefits and almost unlimited capabilities.

To make the PAM concept possible and practical, one must use a system that will:

  1. Reflect the organization's true business philosophy and manufacturing environment in its logic and behaviour.
  2. "know" the organization and its capabilities.
  3. Use this knowledge and human-like reasoning to make business decisions, generate operating plans, schedule production and optimize other manufacturing activities and logistics.
This is a completely new class of product in its category, and application - one in which computers get involved in decision making, rather than information processing and reporting.

PAM SYSTEM STRUCTURE

THE PAM SYSTEM STRUCTURE should consist of three distinctive elements:
  • A set of parameters and data elements used as a "key" to define the strategic business philosophy and manufacturing environment of the organization.
  • A set of parameters and data elements used to define police? and operational constraints and their interdependencies.
  • A decision-making engine that uses the above parameters to improve the quality of the operational and business decisions, and deliver realistic operational plans and schedules.

The parameters should be user controlled to give the system the flexibility it needs to reflect various business conditions which the company may encounter.

The key to the system is its ability to reason - based on the parameters, setting - coupled with the computer's fast processing capabilities and access to vast amounts of information required to make an intelligent decision.

PAM technology enables the company to perform a more accurate and intelligent planning, scheduling and optimization not available using conventional technology and, therefore, significantly improve operating efficiencies and profits.

Ed Coben is president of ComMIT Systems Inc., which specializes in the development and implementation of advanced manufacturing, scheduling, optimization and decision-support systems. This article is based on the implementation of PAM technology at companies like Ford Motor, ITT and others.