How much does a Lack of Production Visibility Cost?

by Tim Doyle on February 3, 2020

Data and information are the fuel that runs production, especially metals manufacturing.

You need to know how to process the ore, the right mix to make alloys, the smelting time and the cooling processes. You need to track production, need to track an order through the process – what steps are left and what has been completed. It’s a symphony of motion and information.

Successful production requires connecting physical objects with process data. It requires insight and information, or visibility, into production processes. In the past, this is where many manufacturers have struggled. Without visibility there’s a lack of efficiency, costs increase and output suffers.

What is Production Visibility?

As employees work, they are collecting and using data.

The amount and accuracy of data collected is a measure of production visibility. Many times, there are insufficiency in collecting this data, leaving gaps in visibility. For example, a chalk number on a cart should link the objects on the cart to data, but if the chalk gets smudged the connection is lost. There is no way to link object and information.Job site safety and productivity. See what RFID for Manufacturers can do.

Manual data collection can be even more problematic. Employees may pencil whip a data collection or get the wrong materials from their pick list. When problems happen, employees struggle to keep production on track. Mistakes happen. Time is lost, costs go up and output suffers.

Here are 6 ways your lack of production visibility may be costing you and your business.

The Cost of Poor Production Visibility

  1. Increase Labor Costs: Face it, walking around with a spreadsheet and filling in numbers is not the best use of anyone’s time. Collecting data can reduce the flow of production and cause the employee to stop what they are doing to record numbers. This is a time consuming task that can create bottlenecks. Upstream work can grind to a halt and overall production numbers dip.

Take a moment and consider how much time is spent by employees collecting and gathering data for a single order. With this estimate, you can speculate on the total cost of data collection for your business.Reduce Cost. Improve Effciency. See what RFID for Manufacturers can do.

  1. Human Errors: How much does a mistake in data collection cost your company? What about a picking error before production starts? While some errors may be harmless, it may also mean an order that has to be scrapped, or even worse, one that can lead to a charge-back, especially in the automotive industry where a single charge-back can be $1 million or more. You can do much to prevent errors, but accidents do happen and can lead to increased costs, but containing those costs is critical for the success of your business.

Look at the cost of scrap and returns. While problems do happen in production, consider how many of those errors were preventable with better data collection.

  1. Inventory Problems: Many companies are looking to increase efficiency and reduce costs with just in time (JIT) deliveries. It’s an important component in Toyotas Lean Manufacturing principles. The problem is JIT inventory requires accurate inventory management. It requires seamless execution between ordering and asset tracking.

Many companies compensate for inaccurate inventory by ordering additional materials and keeping additional stock on hand. This is a costly solution that can lead to higher storage costs and materials that creep into obsolescence. It drives order costs up and profit down. Look at your inventory costs as you calculate the cost of production visibility.

  1. Redundant Data Entry: While you can consider this a labor cost, it goes deeper than that. Redundant data entry is not only a waste of labor, it is source of errors. It creates data silos and can increase the overall inefficiency of the business. If you are maintaining multiple data bases that separately gather data – one for production, for example, and one in your ERP for ordering and billing – you are exposing your business to risk as you struggle to align data across systems.

Look at the systems where data is stored for your business and consider how data is collected. Calculate the cost of moving and inputting data, and how an error in data entry can impact the business.

  1. Production Inefficiency: Without accurate, real-time data, it is difficult to manage production. KPIs become windows to the past, rather than an opportunity for optimization and efficient management. It is difficult to accurately predict shipping, or schedule work. Performance improvement is guesswork rather than science. Accurate asset tracking and data is critical for efficiency improvements.

This estimate is a little more difficult. Look at the symptoms to estimate the costs, like the cost of late shipments or out-of-stock inventory. These are all signs of production inefficiency, and are directly impacting your bottom line.

Barcode Scanning and RFID for Asset Tracking

Making a move toward better production visibility using barcode and RFID is easier than you might think, with additional benefits across the company. Often, implementing RFID or barcodes doesn’t require a change in processes, it’s just swapping in a more efficient label – one that is designed for manufacturing.

Labels today can track almost anything in production, and with the right system you can have real time access to accurate data – the data you need to eliminate problems and increase efficiency.

Contact GO2 today to consult with a label and asset tracking expert about your production needs.

Topics: RFID tags, RFID Labels, asset tracking, metal manufacturing