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Production and Service Provision

Both the production and provision of services requires meeting customer specifications through an understanding of the customer's requirements. For the shareholder it is producing products at a competitive price, meeting budgetary requirements. Organizations want to be world-class suppliers.

To control production of products and services, the organization will have identified all processes, their sequences, and equipment used to produce the product or service to ensure that all risks have been identified tied to quality, environment, and health and safety. This identification is usually completed through process control flow diagrams and control plans.

a. Outsourcing

The organization needs to identify the provision of external goods and services that it outsources and then will require a risk- based approach tied to these external resources.

Many companies outsource functions in order to have specialized service providers who can provide world-class capabilities for the organization. It could be due to insufficient internal resources or time-consuming activities. These providers become valuable business partners in the management of their business and can provide support to senior executives.

It is important to understand the risks tied to outsourcing, as well as the benefits. Consider confidentiality when dealing with external services and ensure your data or know-how is protected. If you are outsourcing a key process for manufacturing your product and the company cannot deliver on time or provides nonconforming materials, this impacts not only you but also your customer and maybe your bottom line.

Ensuring that your provider has a management system in place meeting international standards enables you to know that they have systems in place to manage nonconforming products and corrective actions. You will know that they take pride and ownership in a quality product or service provision.

b. Post Delivery Activities

Your organization's post-delivery activities, under ISO, include: risks associated with the products and services, requirements, warranty provisions, contractual obligations, such as maintenance, outsourcing processes, such as packaging, or services, such as delivery, recycling, or disposal. These activities are important for customer satisfaction.

c. Production Planning

Production will include the scheduling requirements taking into consideration production capacity and capability, customer delivery requirements, material and personnel availability, storage, etc.

The use of appropriate tools, such as material requirements planning (MRP) and enterprise resource planning (ERP), will assist in controlling production of goods and provision of services.

The revised ISO 9001:2015 international standard requires the need for “documented information” that describes the characteristics of the products and services and the activities to be performed and results achieved.

Documented information from everyone is essential, from the CEO and CFO to administration clerks and production, to get information on the key performance indicators (KPIs) and reports for their roles.

Documented information is necessary under operations, as outlined by the revised quality management system meeting international standards, to have the confidence that the processes have been carried out as planned:

• Evidence of the review of requirements of products and services prior to commitment to supply

• When amendments are made, evidence of relevant personnel are made aware of the changed requirements; results of evaluations of external providers (suppliers)

• Documented information to be provided to external providers

• Evidence of application of development processes, the outputs, and their suitability

• Information that describes the characteristics of products and services and describes the activities performed and results achieved

• Traceability requirements

• Results of review of changes, personnel authorizing change, and any necessary action

• Person authorizing release of products and services for delivery to customer and nature of nonconformities and any subsequent actions including concessions obtained

d. Capturing Real-Time Information

i. Enterprise Resource Planning (ERP) – Business Management Software

The key to managing today's dynamic business operations is to have systems in place to capture real-time critical information to make quick analytical decisions to gain efficiencies so that all necessary personnel are connected to the process.

Top management needs to spend monies wisely with accurate access to documented information, eliminating spreadsheet-based reporting. They need to manage business processes, from product planning and development to manufacturing, inventory, shipping, marketing, and sales to improve operations and productivity.

ERP integrates and consolidates core business processes using a database management system to track business resources, from the financial performance to streamlining materials and production capacity, the status of business transactions of sales orders, purchasing, and payroll.

Real-time data is available across all departments (supply chain, manufacturing, sales). ERP systems are based on best management practices and are usually used as is; however, vendors do offer configuration options for system customization, but these can be costly.

ii. Manufacturing ERP Index

There are many systems on the market. Choosing an operating system can be a complicated task. One of the sites on the Internet, ERP Software Systems Index for Manufacturing, outlines the top systems. It has an advisory council, which contributes to the selection and review process.

Comparisons are sorted by manufacturing modes, such as discrete, process, mixed mode, engineering to order (ETO), made to order (MTO), job shop/shop floor, light assembly, industrial and wholesale distribution, and professional services.

You can compare according to the industry as well, in such areas as aerospace and defense, agriculture, apparel, automotive, chemical, computers/electronics, consumer packaged goods, distribution, energy, food and beverage, health care/medical devices, high-tech, lumber, mining, transportation, pharmaceutical, plastics and rubber, petroleum/coal, ship building, other, and professional services.

An excellent resource is top10erp.org. Many of the names are well known in the industry, such as Batchmaster, Microsoft Dynamics, Infor, Sage, SAP, and Syspro. The service outlines the price range, financial options, user range, etc.

iii. Business Edge in Analytics

These IT methods combine dynamic operational analytics, to help the top management have a business edge in: planning, budgeting, providing tools for query, reporting, visualization – dashboards to improve bottom lines through supply chain management (order tracking), sales forecasting, improving inventory efficiencies, data analysis tied to production, document management, customer service, and ultimately to revenue tracking and profits. They also ensure people are connected to the processes with real-time information so they can deal with in-house changes and changing customer demands.

ERP has supported business growth for some companies up to 300 percent and integrated systems to improve order times for some clients, from 8 to 20 minutes down to 30 seconds. Additional savings were found in the area of IT development and customization utilizing an ERP system.

iv. ERP Successes

To review company stories tied to ERP, go to netsuite .com. Magellan GPS is quoted on its website as saying, “We have tripled our productivity, enhanced our risk management and reduced our overall Ecommerce IT expenditures by more than 20 percent"

e. Automated Control Risks

Automated control systems are evolving so that they are more integrated and scalable and can incorporate new technologies. There is networking of devices to communicate and track performance, managing process and safety controls.

Automation for industrial control systems (ICS) used in industrial manufacturing processes for Supervisory Control and Data Acquisition (SCADA) may include: Distributed Control Systems (DCSs) – controlling electric power generation, oil and gas refineries, water and wastewater, chemical, food and automotive production, or Programmable Logic Controllers (PLC), a digital computer used for automation of electromechanical processes, such as machinery on assembly lines or lighting.

It is key to identify risks tied to automation as well, such as process control security, as destruction of the systems could impact areas of society removed from the original area when tied to electric power, oil/gas, and water/wastewater and impact the health and safety of the public. These critical infrastructures are managed remotely, such as the process and distribution of water, management of electricity, operation of chemical plants, or the flow of gas and oil through pipelines, or transportation systems, like railway signaling that could malfunction.

If the automation is a software program, then access to the software would need to be controlled, as would viruses and other software threats on the host machine, with systems such as cryptographic security so an attacker does not get control of the network. There may be security needs for cyber, personnel, or physical security.

f. ISO 20000 – Information Technology Service

The Information Technology Service Management international standard, ISO 20000, would help ensure controls and a framework were in place to manage security issues and to change an IT-driven culture into a business-driven culture with cost- effective services. The standard promotes the adoption of an integrated process approach, identifying the numerous linked activities and providing ongoing control, greater efficiency, and opportunities for improvement.

g. Resources – Automation

Leaders in automation include ABB and Rockwell Automation, as well as publications Automation Today Asia Pacific, The Journal, and Automation World.[1]

The following resources are tied to automation – organizations, webinars, publications, and trade shows:

• ISA – International Society of Automation – is a nonprofit organization setting standards for automation worldwide and certifying industry professionals, providing education and training.[2]

• The Control System Integrators Association (CSIA) is a nonprofit organization working to advance business practices of control system integration since 1994.

• The Centre for the Protection of National Infrastructure is also a good resource.[3]

• Trade shows to attend include the ABB Automation & Power World Automation Fair, where thousands of people attend.

Many government bodies are supporting innovation and productivity to help increase productivity through project initiatives. Check with your local/federal/state/provincial government to see what incentives are available.

For example, in Ontario, Canada, there is a voucher for innovation and productivity, as well as a voucher for industry.

The Inland Revenue Authority of Singapore has a list of IT and automation equipment that would qualify for enhanced deduction/al- lowances under its Income Tax (PIC Automation Equipment) Rules 2012, which was effective in 2011 and expanded in 2013 to qualify for 100 percent, accelerated write-offs for capital allowances.

  • [1] Automation World. Available at automationworld.com.
  • [2] The International Society of Automation. Available at isa.org.
  • [3] Centre for the Protection of National Infrastructure. “Supervisory control and data acquisition (SCADA).” Available at cpni.gov .uk/advice/cyber/scada.
 
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