How a company manages its manufacturing operations can dictate its success — or failure. This article provides details on managing manufacturing operations and recommendations on how to do it well.
Inside this article:
- Why manufacturing operations management is important
- Steps to set up effective manufacturing operations management
- Manufacturing operations best practices
- How software can help with manufacturing operations management
What Is Manufacturing Operations?
Manufacturing operations is the structure and system that produces a product that can be sold to a customer. The process includes assessing what customers want, obtaining materials and manufacturing a product. It also involves the steps to deliver products and maintain inventory.
- Manufacturing operations management can help your company reduce waste, make better products and increase customer satisfaction and profits.
- Companies that excel at managing manufacturing operations collect and use data well. They standardize vital procedures and make decisions based on continually monitored key performance indicators (KPIs).
- Manufacturing operations management software can help companies improve processes and products while increasing efficiencies and profits.
What Is Manufacturing Operations Management (MOM)?
Manufacturing operations management (MOM) refers to the work of supervising and optimizing production processes. The ultimate goal of MOM is to make the best products at the lowest cost as quickly and efficiently as possible.
Manufacturing operations management includes activities that improve production, inventory and staffing processes in manufacturing firms. People who perform manufacturing operations management use computerized systems and software. Sometimes, the “MOM” acronym refers to those systems.
Here are the main areas of manufacturing operations management and processes and software that can help.
It’s also important that services-oriented companies perform operations management. While that process will be similar to manufacturing operations management in some ways, the goal for service companies will be striving to please their customers not with better products, but with better services.
Why Is Manufacturing Operations Management Important?
Manufacturing operations management is vital to improve your product and increase efficiency and profits.
Here are some of the benefits of doing manufacturing operations management well:
- Reduced waste: Good manufacturing management helps your company better use raw materials and thereby ultimately reduce waste.
- Better product quality: By practicing manufacturing management, a company also minimizes damage to and waste of raw materials. That means better products. Increased efficiencies also improve product consistency and overall quality.
- Increased customer satisfaction: Providing higher-quality products increases customer satisfaction, which continues to grow as your company improves order taking and fulfillment accuracy. These steps also lead to ways of working with customers that are beneficial to both parties.
- Better use of employees: Manufacturing operations management aims to increase efficiencies in how your employees perform by encouraging different departments and teams to work better together.
- Better compliance with regulations: Effective manufacturing operations management ensures that your company follows all government regulations and avoids fines and other penalties.
- Increased profitability: The goal of manufacturing operations management is to ensure all of your manufacturing processes run smoothly and efficiently. When performed well and consistently, MOM helps increase your company's profits.
To learn more about driving up profits by lowering costs, read our piece on improving efficiencies in materials, overhead and labor.
10 Steps for Effective Manufacturing Operations
If your company needs to create or improve its manufacturing operations management, starting a pilot program can help. Set up a system to measure important metrics as you produce one product, and see what data that reveals.
Here are some steps your company might take to set up a pilot and eventually a larger system:
Pick an underperforming product line for the pilot. The pilot program should help you understand the core characteristics of manufacturing operations and set up a basic management framework. Unpopular products often suffer from a range of issues. Using one as an example can help your company understand how improvements to the manufacturing process might increase sales and profits.
Define metrics and KPIs that are most important for the products your company manufactures. Metrics and KPIs can show challenges your company may have in manufacturing operations. The tool you use for the pilot program should let you create a visual dashboard with those metrics and KPIs. Don’t pick dozens of metrics and KPIs. Focus on only a few crucial ones that can highlight the efficiencies of your processes.
Determine how your manufacturing execution systems (MES) software will capture the performance of your manufacturing equipment. The MES should also capture key performance indicators relevant to your manufacturing process. You’ll need this information to evaluate how well the systems you have in place are working.
Enhance older equipment with tools that can help you measure productivity. Your company may have older machines with limited digital abilities. Fit those models with programmable logic controllers or other add-on sensors to measure their performance digitally.
Define and test all the integrated points in your operations that your metrics and KPIs will track. It’s vital to understand the capabilities of current operations before implementing any new processes. Evaluating the key points in your existing setup gives you a baseline so you can monitor progress accurately.
Secure senior management support. Executive support is vital to creating or improving a program to manage manufacturing operations better. You need their buy-in to ensure the overall work necessary can proceed without impediments.
Work with other departments during the pilot program. Ensure that a wide range of company departments are working to improve all processes relevant to how your company manufactures the pilot product. Gather data and insights from those different departments.
Create a strategy to implement manufacturing operations management. Use all the data you collect during the pilot to start establishing an overall plan for how manufacturing operations management will run in your company.
Figure out how to measure the financial impact of various components of your manufacturing operations. Be sure to measure the economic impact of components that your metrics and KPIs are tracking. You may also want to benchmark your results against industry averages.
Finish the pilot and evaluate results. Now is the time to analyze the data you’ve gathered during the program. Use that information to develop a timeline for rolling out a broader system based on findings from the pilot.
Manufacturing Operations Management Strategy
The goal of your company’s strategy to manage manufacturing operations is to make it more efficient overall. The plan should focus on capturing quality data in real time and using it to improve product quality.
Here are details on recommended goals for any manufacturing operations management strategy:
- It should reduce costs and increase efficiencies across all of your company’s manufacturing plants.
- It should ensure that raising the quality of products is a core part of operations at each facility. Don’t think of raising quality as a separate function within some other company department.
- It should ensure the company excels at collecting data from its machines electronically — and captures much of it in real time.
- It should make the metrics and KPIs that reveal how the company manages its supply chain and customer orders easily visible to anyone within the organization. The strategy should also show metrics on how it is manufacturing its products.
A 2018 study in the International Federation of Automatic Control PapersOnLine, "KPIs for Manufacturing Operations Management: Driving the ISO22400 standard towards practical applicability," details KPI standards in manufacturing operations management from the International Standards Organization. The study also discusses ways to improve those KPIs.
What Is Manufacturing Process Management?
Manufacturing process management is about figuring out how a company might build a product. Engineers assess the product and its design. They then decide on the equipment and processes needed to make the product efficiently.
In the process, engineers may also define and detail the necessary steps to produce the product. Those steps might include obtaining raw materials, product assembly and inspection.
What Is an Operations Execution System (OES)?
An operations execution system helps companies execute and coordinate tasks that are part of manufacturing and other processes. The system might also involve improving maintenance and inventory systems.
Companies may use an operations execution system to help them perform manufacturing process management. These systems also often deal with processes beyond manufacturing. For example, an operations execution system might deal with managing warehouses, supply chains and computerized management systems.
To learn more about the best inventory systems, read our article on how to improve your inventory control.
Manufacturing Operations Examples
Manufacturing operations cover four main areas: maintenance, production, quality and inventory. Workers analyze how the process works in each and how they can improve it.
Specific examples of manufacturing operations work include:
- Production planning: Managers decide a company will produce a product and determine details on the manufacturing facility.
- Production control: After the manufacturing process begins, managers continually monitor and make necessary changes to that process.
- Inventory control: Managers continually monitor inventory to decide when the pace of manufacturing needs to increase or decrease.
- Quality control: Managers continually monitor the quality of the final product. They must quickly make production changes to address issues before customer satisfaction is affected.
Best Practices in Manufacturing Operations
Successful, forward-thinking manufacturers take similar approaches in their operations. They use automation wisely. They make decisions based on metrics and financial information, and they are always tracking key KPIs.
Best practices that leading manufacturers follow include:
- Collecting good data about what’s happening on the plant floor. You may not be able to completely automate older equipment, but you can use tools like sensors and RFID to start collecting data.
- Standardizing their procedures, including how they track KPIs. Benchmarking internal processes can help managers find ways other departments are excelling at similar tasks. They can use this information to make existing manufacturing activities more efficient.
- Making manufacturing decisions based on metrics and financial data that they continually track in real time. Analyzing and acting on real-time information leads to decisions that help operations run more smoothly and cost-efficiently.
- Using manufacturing intelligence software. These systems use a range of your company’s manufacturing and other data to analyze how its processes are working. They use this data to evaluate how machines and people are performing and make adjustments as necessary. To learn more about artificial intelligence in manufacturing, reading our article on how to leverage artificial intelligence to improve your manufacturing operations.
- Employing Lean manufacturing processes. The goal of Lean is to have zero waste of human effort or inventory.
What Is a Manufacturing Execution System?
A manufacturing execution system (MES) tracks how the process of manufacturing turns raw materials into finished products. An MES helps manufacturers decide on how they might improve their processes.
What Is the Difference Between MOM and MES?
Manufacturing execution systems focus mainly on what happens on the manufacturing plant floor. The term also often refers to software that helps track the manufacturing process. Management operations management, or MOM, includes manufacturing execution systems and efforts to analyze manufacturing processes.
MOM also encompasses related areas, like warehouse management, total production capacity and inventory analysis. Software may use the term “MOM” as manufacturers use software to help them perform manufacturing operations management. But the phrase on its own refers to the overall business process.
MES vs. MOM: What’s the Difference
The term “manufacturing execution system,” or MES, was coined in the early 1990s. AMR Research used the term to describe a system that would be a successor
The term “manufacturing operations management” was first used in the early 2000s. It described a system that was like MES but broader.
|MES refers to collecting production data in real time. The data helps manufacturers optimize how they produce goods.||
The work of MES is part of MOM. But MOM goes beyond the manufacturing floor to:
|The term “MES” often refers to the software that helps manufacturers do their work.||Companies have created a variety of MOM software that accomplishes the work. But the term “MOM” usually refers to business processes, not just software.|
What Is Manufacturing Operations Management Software?
Manufacturing operations management software helps improve your operations by tracking how you build and process products. It can help managers improve and make processes more efficient.
Examples of manufacturing management software include:
- Production management software: Includes data about jobs, orders, machine status and other production processes.
- Performance analysis software: Helps measure performance of machines and people and analyzes changes in performance to determine if they represent something you should address.
- Quality and compliance software: Use it to track production processes to ensure they're meeting your company’s specifications and any government regulations.
- Human-machine interface software: Aids managers and workers in coordinating and controlling specific machinery.
- Manufacturing execution systems: Tracks the manufacturing process.
- MOM intelligence software: Helps managers analyze overall operations and highlights areas for improvement.
Benefits of Manufacturing Operations Management Software
Software can help companies improve how they manage their manufacturing processes and improve their products. Software is also useful for increasing efficiencies and profits.
Here are some ways software can help manufacturers:
- Increased plant floor visibility: The software provides information on all aspects of manufacturing processes and how to improve them.
- Single source of real-time data: Managers can have a single source of all data that shows how manufacturing and other processes are working. The data should be as close to real time as possible.
- Less waste: Software can analyze inventory and other processes and find ways the company can reduce waste — whether by not carrying too much stock or finding better times to service and repair equipment.
- Leaner operations: Workers can do their jobs more efficiently by using electronic communications and work coordination.
- Improved product quality: The data that the software collects can highlight the best ways to minimize variances in the final product and improve overall quality.
The ARC Advisory Group, a research and advisory firm that serves the manufacturing industry, found in its survey of MOM software users that the technology helped manufacturers in various ways. ARC reported in its "Executive Guide to Real Time Operations Profitability: Benefits Manufacturers Can Expect" that MOM software tracking processes in real time could bring:
- As much as an 80% decrease in decision-making time due to improved operational visibility.
- Overall productivity improvements ranging from 15% to 20%.
- More consistent quality in products, with 10% to 20% in cost reductions.
- Up to 50% reduction in equipment costs and increases of 30% in uptime, when equipment is operational.
NetSuite’s Manufacturing ERP Cloud Is Designed for the Modern Manufacturer
Whether you’re ready to start a pilot program for your manufacturing operations or automate the plant floor, NetSuite’s Manufacturing ERP Cloud product can help you make the transition to more efficient operations. NetSuite became the No. 1 cloud Enterprise Resource Planning solution for manufacturers by meeting the always-changing business requirements of the manufacturing sector. NetSuite empowers public and private manufacturers of all sizes by streamlining mission-critical business processes for manufacturers. Unified business insights break down the silos frequently seen in the manufacturing industry.
NetSuite Advanced Manufacturing empowers manufacturers of all sizes by streamlining mission-critical manufacturing and business processes. There are also special solutions for fast-growing manufacturers.