Globalization and outsourcing are proliferating within the manufacturing industry, and most successful companies are implementing demand-driven business models as they seek ways to capture, shape, and respond to the demands of the dynamic global marketplace. This is because as demand visibility improves, manufacturers are called upon to respond to that demand more quickly and with more predictable results. Thus, increasingly, organizational visibility into the capacity and performance of production assets, whether wholly owned or outsourced, is needed to support decisions about where and how to meet production demands in a profitable and predictable fashion. In sum, manufacturing operations today are characterized by a significant need for factory transformation management.
Evolution of Tiered Manufacturing Operations
A top-down approach to manufacturing coordination and visibility is clearly in order. Consequently, manufacturers are looking beyond the realm of local execution capabilities to architectures and systems that support interdependent supply networks (ISN), synchronizing the execution of compliant manufacturing and logistics processes across a dynamic supply network (see Supply Chain Management is Evolving toward Interdependent Supply Networks).
In addition, the lines between familiar production applications have blurred. Modern production execution management applications combining traditional manufacturing execution systems (MES), quality, asset, and performance management functionality are beginning to emerge. These will offer manufacturers a more cost effective and integrated approach to contemporary manufacturing challenges, while providing an integrated view of site-level performance.
Global ISN Requires Continued Investment
ISNs require the orchestration of manufacturing operations on a global scale. Progressive enterprises view manufacturing as a strategic node in their ISNs. Brand owners are embracing the growing role of contract manufacturing and logistics to supply product in increasingly volatile supply networks. This is fueling the rapid evolution of a market for applications that provide brand owners with visibility into the performance of distributed arrays of manufacturing assets. ISN involves leveraging current investments, as well as making long overdue investments in the dynamic closed-loop scheduling of distributed assets, such as plants and distribution centers.
Local Manufacturing Operations Require Manufacturing Performance Optimization
First and foremost, production operations must focus on local execution excellence. Manufacturing capabilities vary dramatically across industries, geographies, individual manufacturing sites, and even production lines within those sites. Mergers and acquisitions have compounded the problem of highly heterogeneous plant software, instrumentation, and control landscapes, resulting in poor replication of manufacturing best practices. Moreover, for the past five to ten years, upgrading plant systems has taken a back seat to preferential investments in enterprise transactional systems, including enterprise resource planning (ERP), supply chain management (SCM), customer relationship management (CRM), and supplier relationship management (SRM).
Global manufacturers are now finding that in-house and contract manufacturing requires local investments in plant automation and control to ensure agile, compliant, first-time responses, as well as the associated visibility into the status and performance of all manufacturing assets. Enterprises are changing how they source, manufacture, and distribute products. They are gaining a greater appreciation for speed, timeliness, reach, execution, and integration with manufacturing operations strategies, including demand management, supplier management, product, and transportation and logistics strategies.
Pelion Systems and Manufacturing Performance Optimization
Pelion Systems, located in Boulder, Colorado (US), is a solution provider with a legacy in enterprise application integration, SCM, and manufacturing. Its goal is to assist demand-driven manufacturing operations that are in the midst of a transition by applying the best practices in manufacturing improvement strategies embodied in its manufacturing process optimization (MPO) software, a factory-level value-add solution for ERP and supply chain applications.
Pelion MPO software strives to synchronize the supply chain via a "virtual factory" approach. To this end, Pelion Systems has recently built out the solution to achieve a broader footprint. Pelion MPO includes modules for the following processes.
- Process optimization
- Demand management
- Supply management
- Factory management
- Distribution management
- Performance management
Pelion's solution set is designed to help manufacturers to enable and systemize contemporary manufacturing improvement strategies, such as "lean" strategies and Six Sigma. Pelion MPO utilizes a process-based modeling methodology to develop a factory knowledgebase of data that simulates and measures the business impact of manufacturing transformation. Based on the belief that there is a common manufacturing transformation lifecycle over time and using factory "pull" logic, Pelion MPO assists the manufacturer in modeling and visualizing possible future states of factory operations. Pelion MPO uses an "as is" and "to be" modeling and scenario simulation capability for new products, demand variations, and other unique shop floor processes in a state of change in order to enable a planned transformation. This, in turn, enables product and industrial engineering design capabilities that support new product manufacturing process modeling and even facility layout and design.
The real nugget here is that, unlike the manufacturing process management (MPM) solutions of the past, which focused on realigning manufacturing processes within and between other departmental entities, or enterprise manufacturing intelligence (EMI), which tries to bridge the gap between real time manufacturing operations and business systems, such as ERP, enterprise application management (EAM), and business intelligence (BI) applications, MPO is focused on modeling, visualizing, and optimizing a "virtual factory" with minimal disruption to manufacturing operations. By visualizing current and optimized manufacturing operations, and enabling a simulation of the future state, management can commit to a phased transformation and to a gradual though progressive adoption of change.
This is a rather unique capability in the schema of manufacturing operations software solutions. Significant supply chain and manufacturing planning systems vendors like i2 and Manugistics have either failed to execute the vision at this level, or have exited the manufacturing space. ERP vendors, such as Oracle and SAP, can articulate a similar vision, but must compete functionally across multiple modules that are considered complex to implement and interoperate. Lean niche vendors like FactoryLogic and eBots have a more narrow focus and are not as adaptive to multiple manufacturing operations strategies.
Pelion Systems, on the other hand, has recently completed migration to the Microsoft .NET platform, and has achieved "SAP Certified for NetWeaver" status. This is significant because it means that it now has a strong Microsoft platform-based architecture coupled with a certified, well-conceived SAP integration scenario. Pelion has defined its SAP integration architecture at both the enterprise and operations execution level, identifying how each of the Pelion MPO components integrates with the associated SAP modules. This provides clarity to any prospective buyer that uses SAP for their ERP backbone, as well as giving an information technology (IT) solution buyer a better perspective on the scope and nature of the Pelion MPO product suite.
Residing within verticals such as high technology, durables, automotive, consumer packaged goods (CPG), medical, and aerospace and defense (A&D), Pelion's target market is characterized by manufacturers who utilize a large numbers of components in mixed model production, who use multiple steps and work centers in the manufacturing process, and who require communication and collaboration within a network of feeder plants, contract manufacturers, and suppliers. Case study clients include Visteon, Nortek, Husqvarna, and SpaceLabs, all of whom use the Process Optimizer module, along with varying sets of other modules, to solve different manufacturing transformation problems.
Repositioning its market message from a "lean" approach and establishing a new market category, MPO, is a tall order for a small software vendor. The adoption of a new market category is in large part dependent on the extent to which the industry analyst community embraces the market category, and how well the solution set with its perceived objectives and benefits resonates with the prospects within the market category. To drive revenue and profitability, MPO needs to be perceived as a high value-add applications solution with a high value price point. In this regard, Pelion has done a superior job of defining their target vertical segments. Moreover, it recognizes that the SAP installed base is the biggest pool from which to derive sales and marketing opportunities. The company's opportunities will also derive from the fact that enterprises are changing how they source, manufacture, and distribute products, thus driving a renewed appreciation for agile manufacturing operations. Finally, how well Pelion Systems can articulate its value proposition to enterprises with dynamic manufacturing operations will determine the success of MPO as a solution category, as well as the long term success of Pelion as a solution provider.