Building a Harmonious ECOsystem in Manufacturing Pt. 2

Part 2 of a 2 part series covering best practices in alleviating tension surrounding Engineering Change Orders (ECOs)

The Solution: Managing the ECO Impact

Oftentimes, high costs stemming from iterative engineering are deemed necessary for project completion. But what if this was not entirely true? What if, we could make adjustments to lower the costs and risks associated with change? Well, we can.

At HSO, our solutions are designed to help you organize and streamline your ECO environment and increase time to solution while reducing costs.  A streamlined administrative process can beautifully complement the engineering and production departments in efforts to avoid and/or front load ECOs.

There are 4 major principles suggested by INSEAD (see Pt. 1) for ECO management in efforts to create smooth, cost effective, efficient processes:

1.       Reduce Impact
2.       Avoid Changes
3.       Detect Problems Early
4.       Speed Up the Process

First, reducing impact can be achieved through increasing interconnected modularity. Interconnected modularity allows for differently classified parts of a larger, complex engineered object, to be less dependent on one another. Modularity would, therefore, reduce the snowball effects of coupling (See Pt. 1 for explanation of coupling and related snowball effects). Second, it is imperative to reduce unnecessary changes, and at some level, stop fine tuning in multiple, separate steps. It must be internalized that each change costs money!

Organizations must have the right systems in place to detect problems early. In order to accelerate the ECO management process, orders must be front loaded if, and when at all possible. This can be achieved via technology, i.e. having the right modeling and simulation tools accessible to engineers in design and production. It is also achieved via continually working toward organizational Best Practices. This is where HSO’s wealth of knowledge comes in- based in a harmonious union of technical and industrial expertise.

Finally, management systems must speed up the ECO process. Bottlenecking is commonly the culprit, often resulting ECOs being ignored, forgotten, or delayed. Reducing response times for sign offs and reviews would go a long way in cutting time off of the entire ECO process. As INSEAD states, “most of this is waiting time, thus the ECO is on someone’s desk, pending further processing.” The goal is to provide more transparency and efficient communication to support improving these processes.

We Feel Your Pain

HSO understands the challenges that managing the ECO area can pose to the efficient, cost effective execution of projects. Our Microsoft Dynamics AX ERP solutions aim to incorporate best practice ECO management principles, which cannot be update in legacy systems due to the limitations previously discussed.

  • Consolidation and Interconnection within a comprehensive, enterprise ERP system
  • Collaborative Workbench necessary to Review and Coordinate ECOs
  • Implementation Expertise to create scalable system with minimal impact
  • Work Flow Automation and Incidence Detection Protocols

Managers must be able to account for multiple, lengthy data sets at once. To do so, they require enhanced control and transparency of key records relating to the product lifecycle. Our ERP solutions incorporate working silos of knowledge together in single network to provide managers with this swift, increased access. Collaborative workbenches significantly speed new product introduction and delivery of product information.

Documentation regarding parts and process steps, as well as potentially related processes can help plan out smooth execution when implementing changes. It is significant for management capabilities to incorporate additional BOM types, lifecycle phases and other product information to adequately document and control production projects.

Benefits Speak for Themselves

ERP integration attacks the heart of the resource drain associated with ECOs: mismanagement. Early adopters of technologies incorporating ECO management show 30-60% reduction in the number of ECOs that originate in manufacturing.

ERP systems use electronic workflow and signatures to streamline the review process while maintaining the right level of control for all stakeholders. This allows for easy distribution of sign offs required for compliance and permission necessary to institute production changes. A shared system also provides a sense of accountability when trying to adhere to strict project timelines or production plans.

ECO management within ERP directly shows reduction in cycle time. Collaborative, integrated systems allow multiple parties to review an ECO at once, giving each one of them access to edit a single version (no consolidation necessary!). Sharing this information via a cloud network allows the review process to be shortened from weeks to days.

Most importantly, ERP automatically registers and captures the information of several critically related business areas. This is crucial in performing cost impact analysis, which is especially vital in limiting the number of ECOs submitted. The system allows for easy linkage to initial estimates made, thereby providing great value in summary analytic reports.

An organized structure minimizes unnecessary risk and inefficiencies that often plague ECO mismanagement. HSO consultants and solutions have helped clients reduce potential errors, minimize development delays, and share input across all related channels, including suppliers, manufacturers, and engineers.

Always Keep an Eye on Supply

In today’s hyper connected, globalized society product teams may be scattered across multiple locations, whether nationally or overseas. It is key to formally track the progression from Engineering Change Requests (ECRs) through change integration in manufacturing and supply chain processes. Cost snowball effects are only bound to increase on a global scale if left unchecked.

Engineering may encounter a breakdown or inefficiency during testing phases. In these scenarios, technicians may realize they need something they did not originally anticipate. Resolving this may require a part to be ordered- one that is crucial to project completion. However, without immediately communicating that message with the purchasing department, costly delays; very costly expedited shipping services; incorrect purchase orders; or perhaps even worse, improper product builds can result.

Supply chain visibility helps to greatly improve forecasting. Workflows will prepare manufacturers for the snowball effects relating to the ECO process. Trigger events or conditions create suggestions for alternate suppliers, backup vendors, etc. This acts as a fail-safe for every purchase, in case of emergency. Incorporating multiple suppliers in the mix enhances competitions and helps to take some of the long term pressure off of prices.

It All Comes Back to Sales

Manufacturing organizations must strive to forge camaraderie between sales, engineering, and production departments. Optimum operational results hinge on an interconnected internal network. There must be joint efforts between sales and production departments, who together, correctly design a solution that can be delivered. Estimates and quotes must reflect accurate costs and realistic terms and conditions for delivery. Sales must ask the right questions so that engineers can design the right products. Questions- for example- surrounding the planned usage of a product in the context of the client, planned duration of use, specific configurations that might be necessary to do its job. Questions that truly, fully scope the project. Collecting and analyzing production data may show trends in designs, models, resources, that ultimately help maintain lower project costs and avoid unnecessary ECOs or dissatisfaction.

All efforts must be aimed at reducing risk in manufacturing operations- i.) Risk that a project was not properly quoted; ii.) Risk that the project may not be completed given the current resources/timeline. Sales, estimators, and engineers must collaborate to appropriately determine the initial scope of the project.

Sell Right: Estimate Right, Build Right, Deliver Right

Given better estimations and project scope, engineers can do a better job designing the project and accounting for various potential pitfalls, as well as properly being able to respond to emergencies in a cost effective manner. Misguided efforts in estimating, quoting, or design, snowball into increased ECO headaches not too long after. Contact HSO today to learn more!

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