ETO Manufacturing, Engineer-To-Order

ETO
Taking On More While Improving Delivery Performance

Engineer-to-Order (ETO) manufacturers today, especially the ones in growth sectors such as energy and infrastructure are facing a formidable challenge. They are enjoying an increasing demand on the one hand, and are constrained by an inability to quickly increase engineering and production resources on the other. (It is also not prudent to make significant investments in new capacity because the boom might not last long enough for the investments to pay off).

Understandably reluctant to refuse orders, what ETO’s are forced to compromise is delivery – lead times stretch and due-date performance plummets – which not only hurts the bottom line with excessive expediting costs and lateness penalties, but also jeopardizes customer relationships and market standing in the long run.

Such ETO’s would like a silver bullet that quickly increases throughput by 20 to 40% without increasing capacity, and while making deliveries faster and more reliable.

Execution is Where the Opportunity Lies

While it appears that projects are already squeezed for time, and that engineering and production resources are working at full capacity, a closer look reveals that about 50% of time and capacity are actually wasted in ETO due to poor coordination and control.

Poor synchronization between departments is one of the major time traps in project execution. This can occur within and across projects, leading to peaks and valleys in workload, resources not available when needed, missing inputs and information, and delays in routine decisions.

Multitasking happens when resources are spread thin across multiple projects. Instead of moving projects towards completion, spreading resources thin causes all projects to slow down; people are forced to constantly switch from one hot task to another; and half-finished tasks and projects pile up everywhere.

Parkinson’s Law is also sometimes a problem. There is a tendency to put tasks off until they become visibly urgent, or to continue “polishing” already completed work.

Realization: A Complete Solution for ETO Manufacturers

This is where Realization comes in. We provide a management system for project-based operations to improve coordination and control. Based on the critical chain rules of managing execution, this system has been proven in a many engineering and projects-based manufacturing environments.
Not only do we provide a system, but we also help your organization adopt and absorb the required changes so that real improvements in project speed, throughput and due-date performance are realized. Our implementation team is known for doing what it takes to get the job done, swiftly and surely.

Here is a sample of our ETO customers and their reported results:

	B E F O R E	A F T E R
Electrical Power Transmission, Engineer-to-Order ABB AG, Power Technologies Division	Throughput was 300 bays per year.	Throughput increased to 430 bays per year.
Power Transformers, Engineer-to-Order ABB Córdoba	Engineering cycle time was 8 months. On-time delivery was 85%.	Engineering cycle time reduced to 3 months. On-time delivery improved to 95%. 16% increase in manufacturing throughput (revenues).
Transformer Repair and Overhaul ABB, Halle	42 projects completed in 2007. On-time delivery was 68%.	54 projects completed in 2008. On-time delivery improved to 83% .
Theme Park Design, Install and Comissioning Action Park	121 projects completed in 2004.	142 projects completed in 2005. 153 projects completed in 2006.
Material Handling Solutions, Engineer-to-Order Alcan Alesa Technologies	Completed an average of 6.9 projects per year.	Completed 10 projects in first 8 months of 2009. 31% increase in throughput-dollars.
Iron Ore Asset Development Projects BHP Billiton	25,800 man-hours of engineering design work had to be completed in 8 months. Historical delays of 2 weeks and man-hour overruns of 20%.	Project finished 3 weeks early. Productivity increased by 25% with only 19,500 man-hours needed.
Satellite Design and Assembly Boeing Space and Intelligence Systms	Reflectors were the constraint in Antenna and Satellite delivery. Electronic units were late, delaying Satellite subsystems. Classified Government program was behind schedule and losing money. Operation was losing $200M a quarter.	Doubled Reflectors throughput and reduced cycle time by 28%, alleviating delivery constraint. Increased productivity in Antenna Assembly and Test by 64% and subsequently another 26%. Reduced cycle time for Electronic units, allowing subsystems to finish 30% faster. Stabilized schedule and returned money to Government 4 quarters in a row. Operation turned profitable.
Nuclear Power Engineering C.N. Cofrentes (Iberdrola)	Due-date performance was 60%.	Due-date performance increased to 95%. Throughput increased by 30%.
Nuclear Power Engineering Central Nuclear Almaraz Trillo	19 design evaluation and modification projects were being completed per month.	Throughput increased by 25% to 24-30 projects per month.
Oil & Gas Platform Design & Manufacturing LeTourneau Technologies, Inc.	Design Engineering took 15 months. Production Engineering took 9 months. Fabrication and Assembly took 8 months.	Design Engineering takes 9 months. Production Engineering takes 5 months. Fabrication and Assembly takes 5 months with 22% improvement in labor productivity.
Defense Products Design and Manufacturing TECNOBIT	Difficult to synchronize Design and Manufacturing. Long project cycle times with frequent delays.	Project cycle times reduced by 20%.
Automotive Assembly Systems, Engineer-to-Order ThyssenKrupp (Johann A. Krause, Inc.)	70% of projects were late. High overtime and outsourcing.	Lateness reduced by 50%. 63% gains in productivity. 15% more projects completed.
Custom Furniture Design and Manufacturing Valley Cabinet Works	Struggled to complete 200 projects per year. Revenues were flat, business was just breaking even.	Completed 334 projects in the first 9 months. Revenues increased by 88% and profits by 300%.
Equipment for Manufacturing Solar Panels, Engineer-to-Order Von Ardenne	Revenues of €130 M. Profits of €13 M. Cycle time was 17 weeks. On-time delivery was 80%.	Revenues of €170 M. Profits of €22 M. Cycle time reduced to 14 weeks. On-time delivery improved to 90%.
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