Outflanking the Competition in Defense Manufacturing

Military and defense manufacturers face unique challenges. Like most manufacturers, they must make a quality part and deliver it on time, every time. But the difference is they must do it while contending with strict compliance regulations, political and economic upheavals and specific costing requirements while maintaining a reliable supply chain.

To meet these challenges, defense industry manufacturers need the ability to simplify the compliance process, track costs with precision, handle customer changes to jobs in progress, and solve production problems in real time. To acquire these capabilities, they are increasingly turning to enterprise resource planning (ERP) software.

Compliance Simplified

The ability to organize and track compliance documentation is essential for defense contractors. In addition to the required industry certifications and process standards, these companies must also maintain strict data security measures. They need software that provides robust documentation and quality control features that simplify the process of generating ISO and other certification documentation, including certified payroll and cost documentation.

Bendon Gear & Machine Inc. (Rockland, Massachusetts) manufactures precision gears, gear assemblies and other motion control components for aerospace, naval and high-tech customers. According to the company’s ERP administrator, Marilyn Werkheiser, ERP software helps ensure the right certifications go out with each job.

“With all the certifications and other paperwork to include with each shipment, there’s always the risk that important documentation can get left out,” Ms. Werkheiser says. “Our ERP software automatically links all documents directly to the job, so our shippers can ensure each shipment contains the correct paperwork.”

The right software can simplify compliance with Defense Federal Acquisition Regulation Supplement (DFARS) cybersecurity by providing high levels of data safety through secure database structures that allow for tight security controls over who has access to what data and when. Software should be implemented that simplifies the defense reporting process.

Precision Job Costing

Defense industry manufacturers need precise control over two of the most important elements in any manufacturing enterprise—job costs and capacity. Dumur Industries (White City, Saskatchewan), which machines, fabricates and welds precision parts for military ground vehicles, sets a good example for getting precise job costing with complicated production runs. The company’s production mix ranges from small washers and brackets to complete assemblies. Lot sizes range from one to several thousand. Parts can cost anywhere from 50 cents to more than $200,000. Dumur typically has as many as 10,000 open work orders on the shop floor at any given time, and the run time for different jobs can range from a few hours to several months.

This is not exactly the ideal environment for tracking costs or capacity with a high degree of accuracy. Since implementing ERP software, though, Dumur management knows the status of every single job and its costs—in real time.

Keeping close track of each job and its cost in real time helps Dumur Industries determine material usage and labor requirements.

“We can see our costs on every component we make—not after the job is done, but while it is in progress,” says President Bob Dumur. “The software captures the exact costs of every job at every step of the production process. This allows us to determine if we’re running over or under on materials and where we stand with estimated labor hours versus actual. The ability to identify and resolve problems as they occur gives us a real competitive edge.”

In addition to the costing compliance, raw materials and components must be traced back to their source. This process can either be simple with ERP or inefficient, manual and complex. Instead of automatic calculations, the defense contractor will be responsible for hiring and paying extra accounting and costing resources or delay the reporting to a point where the data is only meant to be compliant with a deadline instead of being used to make business decisions. This lack of costing and traceability compliance often means stiff penalties and eventual loss of business with that government entity.

Advanced Scheduling

For high-volume machine shops with diverse product lines, scheduling often presents the biggest challenge. Add in short lead times and government customer changes to jobs in progress, and it can become a nightmare for those using a manual scheduling process.

For years, Bendon Gear manually scheduled the entire shop floor—a time-consuming task. Now, schedulers input all job data into the company’s ERP software, and the system does the scheduling for them. When customers request a change to a due date or a job in progress, planners can drop the data into the scheduling module to see how it will affect other jobs. Knowing the outcomes enables them to make informed decisions about which jobs they can push back, reschedule, or renegotiate the due date with the customer.

“The visibility of data in the scheduling module is superb,” notes President Peter Belezos. “We can see exactly when every job will start and end. We can easily determine which jobs are on schedule and which are running behind. At any given time, we know who has each order and where it stands in the production process. This information has resulted in a leaner, more organized production process that allows us to be more responsive to customer needs and still get finished orders out the door on time.”

Staying Ahead of the Curve in Real Time

For defense contractors, the ability to solve problems as they occur rather than after the fact is paramount. PKC (Santa Ana, California), which manufactures custom wiring, cable and harness assemblies for military aircraft, relies on ERP software to provide this essential capability.

In the past, PKC tracked jobs by their due date, typically reviewing them a day or two before their scheduled completion. With this approach, managers couldn’t identify any design, material or labor issues until the day before the job was due, leaving little time to take corrective action. The company now uses its ERP software’s dispatch list to review work orders by start date rather than completion date, allowing proactive problem solving on the shop floor.

“In our Global Shop Solutions ERP software, the first step on all our routers has a start date,” says Justin Langdon, materials manager for PKC. “The software looks at all the routers and identifies which jobs are due to start today on the dispatch list. Any job that doesn’t get started on time remains on the dispatch list, which tells us where to focus our attention.”

For example, if he reviews the dispatch list and sees two jobs that were supposed to start yesterday but didn’t, he knows he can ignore everything else because these two are the only problems. Each department has its own dispatch list, so he can quickly review all the jobs on the shop floor and see if there’s a problem with the department they are in.

“Staying ahead of the curve is all about having the visibility of data to act in the moment, and you just can’t get that with manual processes,” Mr. Langdon says. “ERP software provides the data we need to ask the right questions, make the right decisions and keep us ahead of the curve.”