Tom Rovtar

Evolving systems mean NPI and show floor production can be “Leaned.”

In the ’90s many companies started Lean journeys by posting signs that heralded No ERP! The intent was to highlight the fact that computerized planning systems often hid waste and inefficiency, in part because those systems reported history rather than reconciled data in real time. The more visible work-in-process (WIP) material in wait state throughout the production pipeline became, the more it could be minimized.

Systems today have evolved. Data are collected and viewed in real time. It is much easier for suppliers, contract manufacturers and original equipment manufacturers to align and automate critical information transfer in real time. Manufacturing execution system (MES) and enterprise resource planning system integration is also more common, and value-stream mapping looks at information flow, as well as material flow. The Internet makes it easier for teams to view a variety of real-time data and make critical decisions faster. And, systems can even be set up to provide automatic notification when the processes they monitor go outside of control limits, reducing the need for management oversight. In short, Lean manufacturing best practices are enhanced by an accompanying Lean systems strategy.

In contract manufacturing, having an IT strategy that supports a contractor’s Lean manufacturing focus is even more critical because of the sheer number of customers and projects. An OEM can standardize and optimize its product realization process when it has complete control of product design, supply chain, production resources and strategy for stocking its distribution channels. However, a contractor must support the varying needs of many customers, which often haven’t optimized any element of their product realization process. Without good systems, even the best program management teams have difficulty keeping up with the pace of change or evolving trends typically found in electronics manufacturing services production environments. In short, a robust systems strategy is critical to reducing the natural chaos inherent in a shared resources business model, by helping to eliminate non-value-added activity and drive faster response when processes exceed control limits.

What are some key areas where a strong systems strategy makes sense in supporting a Lean contract manufacturing organization? Here are four:

New product introduction. NPI is a point where automated data transfer eliminates both non-value-added manual programming and verification activity, plus the quality issues that can occur when errors are made in a more manual process. SigmaTron International uses a combination of off-the-shelf and internally developed systems to support this. All facilities utilize Agile Product Lifecycle Management tools to automate data transfer and creation of manufacturing documentation. Design for manufacturability recommendations are developed using Valor tools. The documentation review process also uses a Valor parts library to verify the footprint of all the components specified in the bill of material to match land patterns used in the layout.

Supply-chain management. Supply-chain optimization can be a challenge in contract manufacturing. Lean the supply chain too much and production will be disrupted quickly when unanticipated supply interruptions or demand increases occur. Keep too much “just in case” inventory and inventory carrying charges build. A robust systems strategy can help bridge the gap, plus provide rapid response to changes in demand with minimal transaction activity.

SigmaTron uses an industry-standard ERP system enhanced by an internally developed suite of software tools. Via its proprietary iScore system, each operation and its international purchasing office has visibility into forecasted demand, actual demand, inventory in each facility and inventory on order. The IPO and distribution partners in each region act as “single” suppliers for most materials, increasing efficiency by consolidating orders. Auto-replenishment tools supported by an MRP share system take the “touches” out of this process. Vendor-managed inventory ensures onsite materials availability.

Auto-replenishment strategy has also been carefully developed. Distribution and other strategic suppliers have linked their systems with SigmaTron’s and receive pull signals via our Production-Driven Replenishment (PDR). PDR is triggered automatically when iScore checks inventory for shortages as shop orders are released. If a shortage is detected, a PDR pull signal is sent to the supplier, and parts are received in two to five days. The Automatic Replenishment System (ARS) tool is used with MRP share for the lowest-cost products suppliers typically have on the shelf.

The result minimizes inventory levels and manual ordering, while maximizing response to variations in demand.

Project status visibility. The more facilities a contractor has, the more physical visibility into project status is reduced. However, evolution in systems technology ensures that project status can be updated in real-time throughout the organization. SigmaTron developed its proprietary iScore and Score systems to ensure visibility among its operations and customers.

Materials systems are linked globally to provide company-wide visibility into inventory levels and materials status. The tools are also linked to customers and program managers. If a production schedule is changed in Chicago, the IPO in Taiwan can see the requirements up on the system, view the AVL, the stocking levels and demand. This lets them determine immediately how urgent the part requirement is and whether air or sea is the best shipping option.

Customers also have the same level of visibility 24/7 via the Score system. This provides a dashboard for monitoring forecasts and inventory/material-on-order levels, and adjusting as needed.

Tools that increase visibility facilitate a leaner supply chain by reducing the amount of guesswork about how much material, WIP and finished goods are in the pipeline. They also help identify issues early enough in the process to make adjustments with minimal transaction cost.

Shop floor control. Shop floor control is the core of a strong systems strategy, since it ultimately provides real-time feedback on WIP status during production. For optimum efficiency, this system should also support data collection for traceability and device history recordkeeping.

SigmaTron’s team developed an MES system known as Tango to enhance capabilities already in Agile. Product is barcoded and tracked through each operation. Real-time production status monitors display data in each work area, and customers can access production status remotely via the Score system.

In today’s real-time IT environment, systems are no longer the antithesis of a Lean philosophy. Instead, they are tools that help reduce non-value-added activity, process variation, transaction cost, overproduction and materials/WIP “wait states.” A systems strategy that matches tools with critical processes, and then integrates the tools to provide optimum management visibility, maximizes throughput and supports organizational improvement.

Tom Rovtar is vice president, IT at SigmaTron International (;

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