PLM for Profit: Measuring Business Processes for Effective Decisions

BRIAN HUNTER: Hi, ladies and gentlemen. Thank you for joining me this evening. My name is Brian Hunter. As you can see, this is "PLM for Profit." I'm here to introduce you to a case study that we did at our factory to expose some things that we were doing wrong, expose some things that we were doing right.

And I hope, as you take this journey with me, you'll be able to see some of the practices we've used, some of the strategies we've used. And before we get into the meat of the story, I've got about an hour with you. So let me introduce myself. As I mentioned, my name is Brian Hunter. I'm a Chemical Engineer and ISO Quality Auditor.

I also like to use PLM a lot. And in my past life, I was also a professional pole vaulter and a national champion with the University of Texas, hook em horns. And I'm also a USDA-certified farmer. I have a 14-acre farm that's out here, just about 40 miles East of San Antonio, where we produce culinary herbs and we raise livestock like longhorns. That's me in a nutshell.

When you look at this world that we live in, oftentimes, we see waste everywhere. And in my career, when I was pole vaulting, I was not very good when I started. In fact, before I got to college, I was ranked probably in the bottom quartile of US pole vaulters. But within about a year, I managed to get to the top of that list.

And I did it by learning how to use effective methods, efficient methods at limiting waste. And I learned pretty quickly that by doing that, I could make tremendous gains over my competition while they were sleeping, while they were engaged in chitter chatter. Whatever they were doing that was not pushing them toward the outcome they wanted, I seized on the opportunities that I had to make up any shortfalls that I had.

And within a year, I won my first national title. Well, flash forward to now, I am working at a company where those particular skill sets came in handy. And I'd like to share how we did that. It's a bit of a story. But we can't go too far down the rabbit hole.

So for a super in-depth look at the strategies and methodologies used during this case study, I want you to go check out my handout for this class. I'm confident you'll find something in my breakdown that will illuminate your path toward measuring business processes and making qualified decisions for your respective industry.

So let's get going on our journey. We're going to start this story by introducing you to its antagonist. Well, meet our villain, Mr. Waste. We all have waste. It's our common enemy. We see it everywhere in our lives, wishing that once we involve in a waste activity or if once something is wasted, we can somehow salvage it.

But what is "it," you might ask? Well, it's the thing that you want back but you can't salvage without some measure of proactivity. You've got to learn not to make the same mistakes over and over and over again. You don't do that, you're going to repeat patterns.

And we see these patterns of our businesses every day, every week, every quarter, we see the ebbs and flows. We know that we can dial in, cruise control almost at will because we've got the proficiency to recognize those patterns. We also can recognize the disruption. There are thousands, hundreds of numerous microtransactions that we carry out every single day that we're just accustomed to that make our businesses unique and competitive.

Because businesses are machined, they have a lot of processes involved. And we recognize the patterns within those processes. We live them every day. Well, then, where's the waste in those processes? What's the thing you've been overlooking and embraced that's collateral damage or, better yet, acceptable loss or even still, the devil you know.

We know them. We get in our business meetings. We get in our breakouts. And we start talking about the ifs-- if we had this, if we had that, it wouldn't be this way. Or if we fix this, we wouldn't be susceptible to this. Well, this is the story of how PLM helped shape and prepare a business for growth and profitability by creating a qualification framework for making business decisions. This is "PLM for Profit."

So how does our story begin? It starts in a little, small, quaint town called Seguin. It's about 40 miles East of San Antonio on the I-10, right between Houston and San Antonio, pretty neat little town. I was farming there prior to COVID. When COVID happened, I kind of hunkered my family down in the farm. And we lived off the land.

And everything was really great. And then, everything started opening back up. And so I started to poke my head out of my shell and decided to go into the economy again and try to apply my forte. And my forte just happens to be finding waste and finding how to streamline processes. So here's a guy who knows how to fix processes. I run into a guy who happens to own a sheet metal factory, family's owned it for 30 years.

So when we met, we talked for a little bit. He described some issues he was having-- lots of waste, a lot of broken processes, low accountability. He asked me to come in and say, how can I better improve upon the processes that I'm doing right now? I didn't have a whole look at this portfolio. I didn't have a whole look at what he was doing.

But essentially, he asked me to audit everything he had-- his employees, his processes, everything you can think of, his customers. He wanted to know how to get more efficient because his plan was to grow his valuation, retire after selling his company. And he wanted to expedite that trip. So handshake deal, I joined the company and walked in on my first day.

What did I, pray tell, see? Well, saw a lot of things, a lot of broken processes that I've already mentioned. But this is the main thing I saw, profit and loss. I saw a lot of waste everywhere. And no one could describe what was happening with this waste. No one could tell me how it got there. No one could tell me what the profit looked like.

No one could tell me what the break-even lines looked like because that whole left side of that chart you see there was completely ambiguous. It was unknown. It was covered up by anecdotal evidence. But the physical waste still remained. So I thought to myself when I came in, this doesn't seem too terrible.

I've just got to shift that break-even line to the left, move it to maybe that dotted line where it's green. And I can improve the profit. I can change the slope of total cost. I can change the slope of the total revenue. I can change how I can reduce, actually, the variable cost. It sounds pretty straightforward. But as we all know, waste can do some pretty strange things. It can present itself in some very strange, strange ways, especially if it's left unchecked.

And as I was walking across this floor, typically what I saw, waste was just jumping out at me. Similar to this guy, just be walking, find waste. You walk around another corner, see another piece of waste doing the Electric Boogaloo. While I was watching this whole thing transpire, I looked at the problem and said, well, the waste is not the problem.

You see, I saw it. But I wasn't observing. So I had to become a detective. So this is where you break out your five why. You break out your eight Ds. You start going through everything you got to try to characterize what you're seeing. And I know I see waste. And I don't know if it's training.

Maybe the guys don't know how to make parts. I can't tell if it's just a mismanagement. I can't tell if it's not being tracked. I can't tell why it's everywhere. Why is it everywhere? So like my favorite author, Sir Arthur Conan Doyle and just like Sherlock Holmes, I jumped into it. And here's what I found. You know what I found?

You'll never believe it. But the root cause of all these issues was this DMR. Is called a discrepant material report. Yep, this pink piece of paper, this thing had the largest contribution of waste at EPMP. The largest contribution, hands down, this single sheet of paper-- it was capable of spawning waste cycles beyond measure, formidable against any 5S.

And it was birthed out of an earnest desire to fulfill an ISO requirement, this deal. You don't say? You don't believe me? Well, let me show you how. Here's the process.

An operator makes a bad part. Something goes wrong. Something goes south. The operator makes a bad part. Well, the process is that DMR now comes out. That DMR finds its way. The operator notifies the supervisor, gets it delivered to the supervisor from the operator so the supervisor can fill it out. Well, they're going to fill it out, maybe, and then hand that to the quality department.

That piece of paper is going to go through three different hands. It's going to go through the quality inspectors. They're going to check it for veracity. And then, once it's verified for veracity, it's going to be handed up to the quality manager. The quality manager is then going to take that information and check it again. And then, he's going to deliver that information, once he's considered it accurate and valid, to the MRB, who's going to apply some level of corrective action.

Well, I think we've got to go back to the DMR because if I keep explaining what's going on with this process, you'll get lost in the sauce too, just like everyone else did. Let me show you the DMR. Let's get back there before we digress. Because I could draw on this example for several days because it's a small thing. It's a piece of paper.

It doesn't seem like it would be entrenched into a business process. It's commonly overlooked because it looks non-threatening. But here's a neat and short of all this-- the DMR wasn't getting filled out. It was just getting attached to material and partially filled out sometimes. So we've got all these blanks that need to be filled out. If you look at that, it's pretty intimidating.

I mean, new hires to seasoned guys, girls, they're all having to fill this paperwork out in the midst of production. And you can imagine, not everybody has all the details required to fill out this paperwork. Not only that, they don't have any lockdown situations that they can fill them out and so that can be Pareto'd or binned out later. These are all manual transcribed processes.

And they get transcribed in triplicate into an Excel spreadsheet. So there's nothing gained in the building by using this particular device to track the scrap because we can't get corrective actions out of it. People are walking around trying to deliver this material to the next stop for veracity check. And then, by the time it gets all the way, if it ever makes it, to the MRB, the situation's long gone.

Everyone's been playing detective from now until the time it's gotten to the MRB to get all the data they require to fill out this document. Well, that's a problem. I'm wasting time. So that means by the time this hits someone that can make a corrective action, we've probably got several more fires that have emerged behind this one. So we've got a train of growing fires, none of which get extinguished in a timely fashion-- but again, birthed out of an earnest desire to fulfill an ISO requirement.

Well, here's something else you should know. If this isn't filled out and there are blanks left on this document, that's going to be a non-conformance when we get around to an ISO audit. So even though this was birthed to solve a problem with ISO and fill in a gap and give us some information, what it was actually doing is leaving us exposed. It actually presented another risk. So you have to manipulate this DMR a little bit because, to be quite honest with you, it metamorphosized it.

It had this Kafkaesque metamorphosis, where it just turned into Mr. Waste's guard dog. He set it loose into our factory. It ran around. And I'll tell you, it was a nightmare. We had a sea of pink paper all over the factory. People couldn't keep up with the pace of failures because you'd have one, two, three, maybe even 10 an hour. The quality inspectors were gummed up.

No one was getting the job done. All the processes were frozen. This document had the potential and the ability to freeze every single continuous improvement process that we had in the entire building, this single sheet of paper. Well, how do we combat it? For every antagonist, there's a protagonist in the story-- PLM.

So PLM allowed me to immediately digitize and customize the DMR and introspective process. Our hero looked right at the DMR and said, what is meant for downfall, I will turn for the good. Well, how did he do that? How did PLM help us turn the situation around that it was going to be something that was advantageous to us?

Well, we went from very simple scripts to managed outcomes. Remember, nifty scripts were written to streamline this data collection from lessons we had learned before. All those fields that weren't being filled out on the DMR, those were things of the past after we put these scripts in place. Those red arrows point to some of the areas where we have made improvements.

And as you can see, the DMR was this long form where everyone could put kind of their own footprint on it because they had to write in manually. So there was no way to bin that information out later because it was entered in the uniqueness of every person who ever filled one out. We needed something that was homogeneous, that could align everyone with the same mission, the same data the same capability, to bin out strategies.

We needed to feed-- like my livestock, we needed to feed PLM nothing but the best data. And so what we did is we started lock things down. We constructed workflows that made things easier for us. We had revisioning was now controlled by PLM, part revisioning. You can see that first line there.

The effective quantity, when it was a fallout, we knew. We could tally that immediately. We could track part performance. We knew the scrap total. We were asking our operators to do complicated math, no pricing for parts, to know what revision it was. Sure, they were on control documents and routers. But we're getting into transcription.

And transcription always involves extra time, which is waste, and error, which is more waste because you're going to have to go back and correct it. So we fixed that. We scripted in the ability for the DMR-- once it had the requisite information, which we locked down by putting in validations-- once it had that requisite information, it was able to calculate scrap totals, start collecting information on part performance.

We had microtransactions that we were doing every day that started to get captured by PLM that we no longer had to do. You see the workflow? We had delegations and notifications. So there was no more watching employees chase down the next step on the DMR process train. We had employee and tool performance. We had all that now.

That's that last arrow right there. We knew which tools were failing us and which operators were failing us. We knew which tools were better at making certain parts. We knew what operators were better at making certain parts. So it was a really, really, really advantageous approach to take when we started looking at this.

The dispositioning was achieved with a single click of a button. And leading the charge in all of these activities were our quality inspectors because every good hero needs a sidekick, right? So a big shout out to my quality inspectors. These were the guys who were deputized to inspect and document all part performance metrics. Remember, I mentioned before, we had some serious, serious issues with documenting part failures, corrective actions.

And we had operators perform the actions and supervisors who were supposed to be engaged in production activities. That's counterproductive. We were involving ourselves in a wasted process. So we deputized them because we knew they would be unbiased. We knew they would come to the table and report true failures, not blaming an operator or trying to blame it between shifts, which routinely happens.

We armed them with tablets. We allowed them to collect live data that the management team could use. They could apply immediate corrective actions. And we got notifications on our watches and our mobile phones. We got them in real time. And that was really, really cool and really beneficial.

Collecting real-time data got the management teams used to not only responding in real time, but having an effective means to prevent unwanted patterns from re-emerging. And all that metadata was documented and searchable at a moment's notice. External and internal inquiries, no longer a problem. That was critical. We started to not only outpace the competition. But we outpaced our customers.

So here's the year in review. We got acquired in Q4. That's pretty pivotal. But what happened with us in Q3 of 2022, we launched PLM. It took us about two months to get some verified data, some qualifiable data. But once we got that data in Q4, we applied the analytics. We applied the analytics.

By doing so, we were able to identify patterns of behavior for our factory, good and bad. We had Paretos and instant reporting. They were ours to wield indiscriminately. We knew which operators, as I mentioned, were best on which tools and making which parts. We knew which tools were failing. We knew how to predict all these things.

We knew which employees could benefit from additional training. And we could predict those who posed an operational risk based on statistical performance. We knew how much time we were wasting because of the cost of poor quality, which led us to improve efficiencies. Coinciding with our enhanced understanding of our factory, I'll mention again that we were acquired. So all this is going on during the acquisition.

Well, capital groups started to notice us pretty quickly because there were certain things happening in the underbelly of our factory that were allowing us to make continuous improvement efforts at a much faster rate than these people had ever seen. And these guys were acquiring many companies over the last year. They've acquired 13 within the last year. So they had seen several paradigms for what it looks like to continuously improve.

I want to jump forward to quarter one of 2023. Now, we've flipped it on its head. By applying those proactive measures, by going in and applying everything that we had learned and attacking those 80/20s out of our Pareto, we flipped it from little p and big L to big P and little l. We had our highest grossing year on record, 33% increase over the last year. We also went down from almost a half a million in lost revenue due to scrap to $46,000, an order of magnitude in change, less than a year.

And as we head into Q2 of this year, we decided, hmm, it might be a good idea for us to roll this out because back when we launched, we only had three users, just three-- myself and the two other quality department employees. That was it. Looking forward to now, we've got 75% of the company using it daily, pulling information out of PLM. And now, we're rolling out the PLM QMS to other CADWorx facilities to homogenize the way we communicate and report quality and safety metrics.

So all in all, it wasn't a terrible thing. This DMR filled with all of its risk and all the things that happened in our factory and all the impacts we faced because of that particular piece of paper, once we digitize it and use PLM, we got some pretty good triumphs out of that. We got enhanced DMRs, meaning we got DMRs that could tell us what is going on with the part through its entire life cycle.

We no longer had the death of a part, we actually had its life. We were doing live inspection logs, so we knew what was happening-- fallout rates, failure rates, pass rates, critical dimensions that weren't panning out very well for us. We were able to address those and not get lost in the sauce. We were able to enhance our employee training records.

We started tracking everything through relationships within PLM. So when we had safety events or we had a fallout or we had any type of improvement to a process, the employee's record was attributed to that process. We had FAIs and PPAP processes come out of these. And that's pretty important because you can waste a lot of money in an FAI and a PPAP process.

Just through tracking, just through part management, just through process management, PLM saved us thousands of dollars in that space. And I can't stress that enough because, sure, we see $450,000 saved, right? But that was in real, actual material that did not get scrapped. The upstream and downstream effects are going to be addressed in my handout, of course.

But we can't address them here. But you've got to see $450,000 in recovered activities because every time you scrap $1, there's more dollars behind it to recover, to manage, to discard, to recover. So that $450,000 is an integral piece in what took us to that 33% yield over the last year in revenue. We developed a quality management system out of it. As I mentioned, they're rolling it out throughout the entire company.

We got predictive modeling. And I think that's the most critical piece of what we're doing here in this case study. With predictive modeling, I can do a myriad of things. I can tell now, as I mentioned, I can tell when an employee is struggling. I can tell when a tool is struggling. I can tell when a process is struggling. I can tell when my factory is not at peak performance.

I have daily reporting that shows me the performance of this factory and the standard deviation from day to day. I can look at historical performance over time. I can look at part performance, life cycles. Everything you can think of that can be put into PLM, we got out. Every piece of data we fed into it, we fed into it with the expectation that there was ROI on the back end for us.

We knew that what was going to come out for us was going to allow us to develop qualification frameworks that we could later use to be impactful in our own industry and within our own organization. And that was extremely critical-- all from this tiny piece of paper that was once so formidable, digitized and turned into an agent for positive and proactive change using PLM.

Well, today, as I mentioned, EPMP is Cadrex Manufacturing Solutions Seguin. And we are now an integral part of the largest mechanical solution supplier in North America. Our efforts, just like yours, will be more successful because people who always desire and want clear access to data that will allow them to make informed, qualified decisions-- they're always around.

No one wants to march off by themselves and make an unqualified decision or an unqualified action. No one wants that. So you're going to get more buy in as time goes. Who wants to leave room for guessing in a world that doesn't allow us to really wantonly waste time?

We live in a world where artificial intelligence is beginning to perform countless microtransactions for mankind in an effort to save us time, to eliminate the waste in our lives, to give us back those precious, precious moments we desire with our family, our friends, the experiences we can have in this world, those treasured moments in time.

And while PLM is not AI, it is an extremely powerful tool, an extremely powerful tool that can help us understand and strategize creative methods to salvage more of what we all want, time to ourselves and time with each other.

Thank you for sharing time with me today. I sincerely thank each of you for being here. And I hope you can use PLM to find creative solutions to drive profitability and continuous improvement while reducing losses from waste. Thank you guys.