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What Plant-level Systems Can Do for the Enterprise Market

Written By: Predrag Jakovljevic
Published On: November 23 2005

Market Analysis

Real time enterprise performance management (EPM) objectives; regulatory compliance requirements and mandates; traceability; and mass customization capabilities are some of the main reasons why plant-level systems are particularly important. However, in order for plant-level models and deep manufacturing to expand into markets such as enterprise resource planning (ERP), industry best practices, non-disruptive business processes, and real time event management and workflows that allow swift decision-making, are crucial. Plant-level models also need to support demand-driven planning and manufacturing that satisfies actual demand in an on-line environment, and provides plant-level data to confirm supply chain compliance and complete the management information loop. Also prudent are near real time interaction and information sharing among trading partners who can use the entire production system to gather information.

Part three of The Importance of Plant-level Systems series.

Less adversarial and more inclusive managerial approaches, such as collaborative planning, forecasting, and replenishment (CPFR), contract-based manufacturing management, and collaborative product lifecycle management (PLM) have expanded the audience of plant-level information. For instance, PLM can include "cradle to the grave" data, ranging from product design through to end of life cycle (ELC) processes on the floor. Many of these components are supported by data originating from the same manufacturing process and is stored in production applications. Product genealogy information such as test results, quality assurance (QA) data, and component source information are a few pertinent examples (for more information, see The Many Faces of PLM). Genealogy and product traceability are similar functions designed to provide a complete history of a serialized item or a group of items. In addition to locally generated production data, most systems can include similar information on components going into the finished product.

As a result of these changes, a major paradigm shift is occurring. Plant-level information customarily used to manage an isolated plant floor department or function, is being given a much broader, tactical role. This information is being used to provide near real time information that can be used to manage corporate-wide business processes and support collaborative initiatives across the value chain. Industrial segments, such as global brand management in consumer packaged goods (CPG) and warranty cost containment in the automotive segment, are key drivers that use plant-level information. In the life science industries, plant-level applications can confirm US Food & Drug Administration (FDA) regulatory compliance. In discrete manufacturing industries, the primary source for product genealogy information, including component sourcing, QA confirmation, and product run-in test data, also resides in these applications.

This is Part Three of a three-part note. Part One discussed the plant-level situation. Part Two discussed the obstacles to overcome and current developments.

Disseminating Information for a Stronger Enterprise

Many meaningful key performance indicators (KPI) and EPM initiatives that require key data can be found in hands-on production system. These systems are integral to an intelligent enterprise operation because they manage and record the events in plant processes and logistics "on the spot" and as they take place, providing an information source that is most current and accurate in near real time. However, while this information is valuable, it languishes from disuse because it is not widely accessable.

Manufacturing companies are moving to collaborate more closely and the real time information paradigm is revising the value proposition of plant-level systems. In past, these applications were typically narrow in scope, thus justifying their return on investment (ROI) was difficult. However, adaptive manufacturing enterprises need to use plant intelligence more directly to support their enterprise and value chain objectives: better inventory management, improved customer service, shorter process cycle times, stronger competitive advantages, improved profitability, and so on.

Enterprises where operations personnel ask questions about information access and speed will benefit from a plant-level application. Plant-level applications can answer questions such as, "How can I access all of my systems on a single dashboard?"; "How can I do this without having to go through multiple separate vendor solutions that run on the shop floor?"; "How can I get information from different systems running in one, or more importantly, in a number of factories?"; "How do I rapidly respond to labor capacity and quality problems?"; "How do I monitor and measure performance in a timely way?"; "How can I synchronize this plant process with my enterprise application?" can be answered with a plant-level application.

Seamless plant floor integration can give customers added value as well. Cost reduction or margin improvement, improved production visibility, food safety and regulatory compliance, improvements in managing product complexity and quality will create a better product or service. Ultimately, many improvements may be attributed to the availability of real time information when and where it is needed; and the ability to handle exceptions in an informed, closed-loop manner across the organization.

Real time information that can be captured include cycle times, machine efficiency, and scrap percentage. The machine operator can enter timely production, backflush raw materials, print labels, change tools as necessary and "on the fly", assign labor, record rejects with user-defined codes, enter downtime with user-defined codes, and view internal and external documents (e.g., part production, setup control, material staging, quality control, overall plant performance, etc.).

These types of information increase data integrity and reduce transaction costs, as long as there is complete access to ERP and back-office functionality; the production schedule is automatically updated; and production reports are generated. Without such a module, gathering actual production information is typically a time consuming, tedious, and a highly subjective task, the reconciliation of the actual data on the floor, and with the planned data in ERP is often delayed for days, if not weeks.

The potential benefits of integrating an ERP system with the plant floor to achieve near real time information are multiple. For one, such a system could transfer data entry functions traditionally performed in the office, to the manufacturing floor. In doing so, material personnel could transfer material to and from machines on-line instead of submitting the paperwork to office, where it would be entered the next day. Further, material could be classified as "used" or "unused" and be returned to the system immediately, giving production planning a real time inventory.

Production counts could also be automatically updated through the near real time production monitoring system and verified by machine operators, giving supervisors constant feedback on how their shift is performing. Production reports for completed jobs would then be generated and analyzed the day after the run is complete, instead of a few weeks. All of this should bring the production floor and financial and planning departments closer together because they would be working "shoulder to shoulder" instead of passing outdated paper back and forth.

This, in turn, could also encourage discussions regarding improvements on how to do things internally. It could break individual silos where teams live in their separate worlds. By working in unison, the "office staff" would know when machinery was down or if production is far off target for some shift. Plant-level information could be the first great steps toward "the manufacturer's nirvana" where every batch is a great and repeatable batch. If manufacturers could eliminate terrible runs and lift the ranking of every run, enterprise could see a significant financial gain (for more details, see Process Manufacturers--Great Batch, Every Batch).

While some larger complex enterprises, with a variety of unrelated businesses and divisions, may need a best-of-breed solution to extend their activities into e-collaboration and make them more flexible, we also believe that managing this large application portfolio, which involves partnering or extensive integration and customization, is cumbersome to say the least. While the best-of-breed approach can have its merits (see Best of Breed Versus Fully Integrated Software: The Pros and Cons, Single Source or Best of Breed - The Debate Continues, and Pure-Play CRM Vendors: Choose an Integrated or Best-of-Breed Solution?), we believe it consistently leads to additional integration costs and complicates service and support arrangements.

Also, interfaces between the diverse components of a core ERP system usually require significant tailoring. This can be a barrier to future changes as revising already-modified code is notoriously time consuming, costly, and risky creating a product that has a different "look-and-feel". In a nutshell, the bad news about interfaces is that they need continuous management and coordinated upgrades. They require an increase in IT support staff, multiple software company maintenance contracts, and may have complications with report writing. Moreover, one should beware of financial (in)stability of multiple software providers, as all involved providers may have different, even diverging business strategies.

Conversely, a fully integrated extended-ERP product like IQMS's EnterpiseIQ or SAP's composite application SAP xApp Manufacturing Integration and Intelligence (SAP xMII, coming for the Ligthammer acquisition) might almost completely eliminate these issues for a small and medium repetitive manufacturing enterprise. Namely, when the data is stored in the same database, there is no need to create and manage ungainly interfaces, because there is only one master application. Data visibility becomes inherent, since with the proper links, data can be gathered and disseminated in multiple ways, without delay. Yet, in most cases, multiple databases on the shop floor (e.g., quality management data, production and warehousing real time transactions, plant maintenance data, ERP master data, etc.), are rarely in sync, which make timely decision-making difficult and often inaccurate. This holds true any time information is kept in more than one location, since without a highly advanced method of synchronization, the chances of having accurate data stored in more than one location are small indeed.

If data is only synchronized daily and on a batch mode basis, or even by shift, managers have a difficult time making timely, accurate decisions about production planning, shipping, inventory control, and purchasing. It also handicaps customer service representatives as they attempt give customers updates on their order. In the worst cases, some data is never synchronized to the master ERP system, which creates a serious communication voids and promotes "islands of automation".

This is Part Three of a three-part note. Part One discussed the plant-level situation. Part Two discussed the obstacles to overcome and current developments.

 
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