Welcome to the Make edition of our FMCG supply chain guide, a centrally located room in the Enchange Supply Chain House. Previously we have looked at the Planning and Sourcing functions and those overview articles can be found here.
The Make function is possibly my personal favourite function after having managed large FMCG factories over the years and thoroughly enjoyed the experience. In manufacturing you literally get your hands dirty and at the end of every shift, day, week you know you have produced something tangible; a detergent, a shampoo, a food, a paint or a polish.
From the dictionary we see some definitions of Make as a noun and as a verb:
Having your own factory provides you with competitive advantages over reliance on 3rd parties and here is a selection.
Make in the Enchange Supply Chain House
In subsequent articles I will take you through more detail but for now, here are a few words on some of the important elements.
Manufacturing Footprint
As discussed earlier, do you need a factory or factories? Is the factory a sensible logistical distance from your key market(s) and suppliers? Are the required skills available in the local workforce? Decisions on your manufacturing footprint involve macroeconomics, tariffs and trade agreements in addition to standard business analysis.
Asset Utilisation
Once you have taken the trouble and expense of investment in manufacturing assets, they have to start paying back. This is a measure of how accurate your business case was as this is a true measure of how well you are using your installed capacity. Are your manufacturing teams operating the equipment at name-plate output or is this suppressed for an easier shift? Do you have the capability and capacity to accommodate new product innovation and sales volume increases?
Maintenance Planning
Equipment wears out eventually but to get maximum benefit from the investment you must have a maintenance resource (internal or 3rd party) and a plan. Is maintenance carried out by a suitably qualified workforce? Is this a dedicated team or multi-skilled operator roles? Is a training plan agreed with HR? Is the maintenance team trained on new equipment BEFORE delivery and installation? Are breakdown losses measured, investigated and corrected in a timely manner?
Factory Scheduling
Factory Scheduling is the production management process by which raw/pack materials, semi-finished goods and the labour force are allocated to match the finished goods demand signal. Do you know your production bottlenecks? Do you have a set of 'Golden Rules’ to optimise the factory operation? Do you have a system for considering and accommodating urgent plan change requests?
Materials Management
Materials management is a core function of a factory, controlling and regulating the timely flow of raw and packaging materials. Have you defined inventory levels for each item depending on consumption and supply lead time? Do you have a documented process for bringing materials to the production line? Do you have people and processes to manage excess materials not consumed during production?
IWS, TQM, TPM, LEAN, KAIZEN
These (and more) are systems designed to improve manufacturing performance. They are not all the same as some focus on product quality while others target losses, efficiency and cost reduction. Do you follow a performance improvement process whether internal or external? Does your system improve cooperation and teamworking with management, engineering, maintenance, and operators? Do you measure production losses and apply a ‘why-why’ or other technique to apply a ‘100 year’ fix?
CapEx Planning & Execution
CapEx planning is the process of budgeting money required for investment in replacement or new equipment in line with future business plans. Do you have a process for evaluating and approving expense requests whether in or out of budget? How far into the future do you plan CapEx? Is CapEx execution planned well in advance to avoid downtime and market disruption?
Despite the length of this article this is only a snippet of what you should expect from your Make function. In subsequent articles we will look in more detail at those specifics you need in place to support and fuel the extended supply chain.
Read all posts in my series on the Supply Chain Excellence page of our blog where you can also subscribe to our updates.