APA Improves Motorola Plant's Productivity.

Motorola Computer Group's complex board and system assembly facility in Tempe, AZ, features seven surface-mount lines manufacturing a high mix of products. Nearly 60 percent of the boards produced at the Tempe plant are custom orders. Hundreds of variables can come into play and impact profitability on a daily basis.

To maximize output and profits, the plant managers needed to understand exactly where to focus their attention to deliver increases in performance. They chose to implement an advanced profit analysis (APA) software program to identify the profit opportunities hidden in their plant.

"If you are an experienced manufacturing guy, you think you can walk around a plant floor and simply see what needs to be done to improve results," said Lee Craft, vice president and director of manufacturing, Motorola Computer Group. "However, when you get the actual data from the APA software, you find out that you were often mistaken. The APA software shows us exactly what we need to work on to improve our performance, then checks whether our solution actually delivered the gains we needed."

Motorola implemented the APA software in June 2000 and currently uses it to analyze all seven of its surface-mount lines at the Tempe plant. What are the results so far? After the management team began using the APA software, the Tempe plant was able to rapidly increase the output of its existing surface-mount lines by 65 percent to meet market demand. Cash flow generated by these manufacturing assets shot up by over $60 million.

The APA software works by combining information from the production lines with financial information from a company's enterprise resource planning (ERP) or legacy systems. By analyzing the plant's production flow and assessing a charge to products and machines that cause interruptions, managers are able to "dollarize" each problem they encounter on their most critical assets.

For example, at the Tempe plant, the APA reports identified work-in-process (WIP) build-up in front of test stations as a major source of "hidden profit" and an opportunity for improvement. The surface-mount lines would frequently shut down to allow the test operation to clear the backlog of work. Recognizing that this area needed quick improvement, the plant teams went to smaller batch sizes and alternated product types to keep all test machines evenly fed, thereby reducing WIP levels and increasing productive time on the surface-mount lines.

Interestingly, the production team had considered taking the opposite action and increasing batch sizes to reduce set-up times before the APA reports "dollarized" the value of the WIP-related downtime. The APA software showed that the profit increase available from smaller batch sizes and the resulting better utilization of the surface-mount lines far outweighed the benefit of larger batch sizes and reduced set-ups.

"We've taken an already smooth-running operation and turbocharged it," said Craft. "The APA software shows us exactly where we need to focus our improvement efforts to achieve superior financial results."

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