Friday, July 2, 2021

The Order to Cash Lifecycle and the New MESA International Smart Manufacturing Model

 Authored by John Clemons, MESA Marketing Committee Chair, based on an interview with Darren Riley, MESA Model Sub-Committee Member 

MESA International is developing a new Smart Manufacturing Model. It’s going to cover a lot of ground from ERP, MES, and Control Systems, to IIoT, AI, AR/VR, Big Data, Digital Twins, Digital Threads, and a whole lot more.

The fundamental purpose of the new Smart Manufacturing Model is not to merely be descriptive in explaining what Smart Manufacturing is about, but to be prescriptive by providing specific recommendations on how people can be smart in their manufacturing endeavors.

The new Smart Manufacturing Model is based on the idea of the lifecycles of the manufacturing processes. One of the key lifecycles that is featured is the order to cash lifecycle. There will be a lot of meat in the chapter on the order to cash lifecycle and it’s worthwhile to a look at just a few of topics covered in the chapter.

For the new Smart Manufacturing Model, the order to cash lifecycle starts with the output of the long-term and mid-term planning (i.e., Planned Orders) and begins with these as inputs to production planning and the eventual creation of production orders. (For the operations space this is the beginning of the cycle whereas ERP sees the Order to Cash cycle starting when the customer places the order.) 

There’s several key constraints that are part of the manufacturing side, when I need to produce the product being ordered, of the order to cash lifecycle. Do I have the materials I need for these orders? Do I have the personnel I need for these orders? Do I have the capacity I need for these orders? The new Smart Manufacturing Model will help us learn how to be smart in making sure we have the materials, the personnel, and the capacity we need for the orders we have.

But, the new Smart Manufacturing Model doesn’t stop there, because the order to cash lifecycle is more complicated than that. There’s more to it than just having materials, personnel, and capacity. It has to be the right materials, personnel, and capacity, and the right combination of materials, personnel, and capacity. Having this right combination is all about the synchronization of materials, personnel, and capacity, such that they’re exactly what’s needed in the right place and at the right time to make the required products. The new Smart Manufacturing Model will help us learn how to be smart in synchronizing our materials, personnel, and capacity.

One of the common issues that hinder this synchronization is that not all required information is available in the same system at the same time. There’s just too many systems in place that have part of the picture. That means synchronization of materials, personnel, and capacity is a lot harder and takes a lot longer than it should. The solution is to bring this information together in a much more organized and unified approach so that synchronization can happen very, very quickly.

Because in the end, the order to cash lifecycle is really all about agility. How agile is the order to cash lifecycle? How agile is the synchronization of materials, personnel, and capacity? How agile is the order to cash lifecycle when it comes to responding to weekly, daily, or hourly changes in demand?

It’s only with the agility to change quickly – to adjust materials, to adjust personnel, and adjust capacity – that it’s possible to get beyond synchronization and ultimately get to the optimization of the order to cash lifecycle. The new Smart Manufacturing Model will help us learn to be smart in achieving synchronization, in achieving agility, and in using that agility to get from synchronization to optimization. That’s a tall order, but that’s what the new Smart Manufacturing Model is all about – being prescriptive and helping us learn how to be smart as we improve the order to cash lifecycle.

This is what’s going to be in just one chapter of the new MESA International Smart Manufacturing Model. This chapter is on the order to cash lifecycle and there’s chapters on many other key aspects of manufacturing operations. The chapters aren’t academic and they’re not merely descriptive. They’re practical and prescriptive, dealing with how we can be smart in dealing with the real world.

Stay tuned for more looks into chapters of the new MESA International Smart Manufacturing Model.


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