Using concurrent scheduling, The Johnson Corporation has improved on-time deliveries above 99% -- while decreasing overtime. This advanced planning and scheduling (APS) method combines material acquisition requirements with capacity planning to optimize production.
Prior to adopting this technique, Johnson used older software with basic manufacturing resource planning (MRP) capabilities. While it helped solve material problems, delivery could still be late due to bottlenecks in production that the software didn''t consider. Installation of new enterprise/supply chain management software, however, brought Johnson the ability to do concurrent scheduling, which shows whether a delay is related to materials or to production. "With this tool, we know exactly where to focus our attention to solve a problem," explains Heather Butcher, systems support manager at Johnson Corp.
Based in Three Rivers, MI, Johnson is a global manufacturer of products used for conductive heat transfer and the movement of steam, air, water, and thermal oil. Examples include rotary joints, siphon systems, dryer drainage systems, and related equipment. The company''s products are used in papermaking and paper converting, as well as for continuous casting metals, printing, food processing, and making rubber, plastics, textiles, and chemicals. In business for more than 65 years, Johnson operates 26 business centers located around the world, including six manufacturing facilities -- in the US, Holland, China, Canada, Japan, and Brazil -- as well as service centers and engineering consulting groups.
Seeking Global Standardization
Previously, each of Johnson''s manufacturing centers had its own system for managing production -- paper based in China, while each of the other facilities used a different ERP program, running their software on IBM AS/400 or UNIX computers. In 1999, Johnson needed to upgrade or replace the ERP program being used in the US because it wasn''t Y2K compliant, and needed a new system in Holland because the company had outgrown its program there. Management decided to take the opportunity to upgrade all the manufacturing centers to a single enterprise/supply chain management system running on the same hardware platform.
"With one system worldwide we would be able to do things that we couldn''t in the past, such as tracking customers globally," explains Butcher.
As a first step in its exhaustive search for a new system, the company identified key selection criteria. High on the list was the ability to handle multiple currencies and multiple languages. Second, Johnson wanted to run the new system on Windows NT Servers. "This would help keep costs down and provide a familiar environment for most of our users," says Butcher.
The search process began with about 50 ERP software vendors, but the list was quickly narrowed to six because most programs did not support multiple currencies or languages. Next, those six vendors were invited to Johnson''s Michigan headquarters to demonstrate their programs and discuss their support policies. Four vendors failed to convince Johnson that they could provide strong support in all of the countries where it had operations, so the field was narrowed to two: a tier one ERP supplier and Lilly Software Associates, Hampton, NH. (Pictured here, the global implementation team: Norm Beckwith, Marcel Oudmayer, Fred Westerhout, Bruce Monroe, Dick Lilly, and Heather Butcher.)
Johnson chose Lilly, supplier of the midmarket system VISUAL Manufacturing, because its software offered all the functionality they needed with a faster implementation time.
"Because the Tier One program was trying to do so many things for so many different industries, it would have been very complex to implement," explains Butcher. "There was a lot of setup involved and the vendor was estimating a minimum of nine months for the implementation, even with a lot of involvement from us. We felt that was more than we wanted to handle so we went with VISUAL Manufacturing. With a very aggressive schedule, we were able to get it up and running in the US and Holland in less than four months." Johnson implemented the software in additional sales offices in the US and Europe as well as in the China manufacturing center a few months later.
Optimizing the Production Schedule
Once VISUAL Manufacturing was online, Johnson adopted Lilly''s Commonsense Throughput, a methodology designed to optimize production based on the idea that overall capacity, by itself, is not a useful basis for scheduling jobs that are competing for a limited set of resources. It is very easy to have enough overall capacity yet still not be able to schedule all of the jobs because certain resources are not available when needed.
The practical application of Commonsense Throughput comes with its concurrent scheduler, which goes beyond the materials forecasting functionality of Johnson''s previous ERP system. As Butcher explains, "With our previous system, we would run the MRP module and it would tell us when to make work orders and purchase orders. Then we used a different, manual method to manage production. The ERP system actually had a production capacity planning module, but we didn''t use it. Even if we had, production capacity and material planning would have been two separate functions. Whether on paper or in software, we would have gone through endless iterations to optimize both aspects of production." (Photo shows final assembly/testing area.)
"In contrast, VISUAL checks material availability and production capacity at the same time and makes a schedule based on both," Butcher continues. "With our old system, we would get messages from the MRP module telling us to adjust certain purchase orders but we didn''t know which of those were critical to getting orders out," she continues. "We might expedite a purchase order but not be able to get the product out because we were missing something else. Now, with concurrent scheduling, and in particular a report called the customer service impact inquiry, we can see the key thing that''s stopping us from making a delivery. It could be a problem with a material or a bottleneck with a machining operation. Now we know where to direct our attention in order to resolve a delivery problem. It''s a phenomenal tool."
Johnson runs the customer service impact inquiry several times a day. This helps them spot problems that can delay deliveries and remedy them quickly. They also run other reports with the concurrent scheduler that help optimize production: one report, for instance, shows the top 10 material problems; another shows projected throughput versus historical throughput. The concurrent scheduler can also create test schedules to simulate various production scenarios. "If you see that one machine has a capacity problem, you might try adding four hours of overtime each day. You can rerun the schedule in test mode to see if that solves the problem," says Butcher. "It might not help because certain parts that you need are not available -- but the concurrent schedule lets you see that immediately."
Since implementing VISUAL Manufacturing and its advanced scheduling capabilities, Johnson has improved the on-time delivery average to over 99% at the US manufacturing center. "With our old system, we would have had a difficult time reaching this," says Butcher. The on-time average has increased without an increase in overtime. According to Butcher, overtime has actually decreased since the new software was installed.
The new software is saving money in other ways as well. First, the company is paying a lower maintenance fee for all of the global offices that are using VISUAL than it was previously paying for software maintenance in the US alone. "Currently we have about 120 people using VISUAL around the world, with 60 of them here in the US," says Butcher. "With the new software we''ve doubled the number of users but lowered the maintenance fee." Second, Johnson is paying quite a lot less for hardware now that it is using Windows-based servers instead of high-end UNIX and AS/400 models.
The Windows interface also makes it easier for Johnson to access information from the database. "We are able to search and sort and print things off the screen, which is much easier than trying to prepare reports with the old system," says Butcher. For example, one day a purchasing person got a request for a list of all parts provided by a certain supplier. "With the old system it would have taken a long time to figure out how to get just that information into a report," she says. "With VISUAL, she did a simple query on the screen and had a nice, multicolumn report ready in 15 minutes."
Once Johnson implements VISUAL Manufacturing at its manufacturing centers in Canada and Brazil, the company plans to install additional capabilities from Lilly Software: the Customer Relationship Management module and VISUAL Quality. For now, they are learning to take advantage of the capabilities within the software as well as how to benefit from having a global ERP system that is consistent worldwide.
"This software is so powerful that we fine-tune our use of it and then share the knowledge with the rest of the company," says Butcher. She expects that all manufacturing centers will exceed the 99% on-time delivery level when the software is completely implemented, and that Johnson will take advantage of the new system to achieve new heights of customer service worldwide.