Formation Systems Pioneers Product Design Collaboration For The Process Industries

Introduction

What the process manufacturing industry lacks in glamour it makes up for in complexity. Software companies have for decades used technology to automate business processes found in discrete manufacturing, becoming giants by selling their products to the Dells, GMs, and Toshibas of the world. In discrete manufacturing, much of the complexity lies in coordinating the great number of parts that are assembled into PCs, minivans, and televisions. Capacity needed to assemble the multitude of intermediate parts and sub-components into finished goods is a simple function of the number of assemblers brought to the task, which can be increased or decreased according to demand.

It is not as easy to make changes in process manufacturing. For example, the amounts of chemicals that a plant can produce are fixed by the design characteristics of the tanks and reaction vessels it uses to make them. Adding capacity is a costly endeavor involving months of design work, followed by multi-million dollar construction projects. Disposal of off-spec material is another costly operation even in cases where the material can be sold to another plant. Rework of unused material is preferable, but requires careful planning so that production of premium-grade products is not adversely affected. Additionally, unlike discrete manufacturing, switching from one product to another in a process plant involves significant downtime during which maintenance is performed and vessels and piping must be cleansed to prevent product contamination.

Perhaps it is the complex nature of process operations that has kept software vendors from progressing beyond the more esoteric realms of process design and simulation into the commercialization of new products. Formation Systems Inc., based in Southborough, Massachusetts is an exception. For the past six years, Formation has specialized in providing product lifecycle solutions for process manufacturing that enable companies to satisfy complex customer needs, reduce manufacturing costs and simplify their supply chains.

Analysis

Formation Systems' Optiva suite spans a broad range of applications aimed at strategic areas of product design, marketing, sourcing, and management. Table 1 gives the modules that make up Optiva. The modules can be selectively purchased and configured to best fit product development information and process needs:

Table 1: Product Information: Optiva 3.5

The centerpiece of the suite is Optiva Workbench, which accelerates the product development process by supporting design collaboration with suppliers on formulas and specifications as well as providing the visibility needed to utilize fully existing information so that "wheel reinvention" is avoided. Other modules in the Optiva Product Suite like Optimization for constraint-based formulating, Requirements Management, and Specifications Management are designed to capitalize on the data management features of Workbench. In its entirety, the Optiva suite speeds the product development life cycle by easing collaboration, facilitating access to supply information, and managing product testing and other tasks that precede a commercial release.

Optiva is delivered in an n-tier architecture supported by a global data repository. The repository is responsible for storing and distributing application data, providing users with one-time only data entry. A central data clearinghouse is critical to Optiva's scalability that enables it to keep pace with the demands of a growing organization or one that chooses to implement Optiva components incrementally.

In addition to the novel collection of applications in Optiva, Formation has other strengths that should serve it well in the process manufacturing software marketplace. President and CEO Peter Shields leads a senior management team composed predominantly of scientists and engineers who have attained real-world business skills along the way. This gives Formation an important distinction in an industry too often peopled by talkers and sellers rather than thinkers and doers.

Another advantage for Formation is its blue-chip customer base, composed largely of household names like Coca-Cola, GE Plastics, The Gillette Company, Proctor & Gamble, and chemical giant Akzo-Nobel. In addition to enhancing its corporate resume, large multinationals provide Formation vast global networks of product development and manufacturing sites in which to expand.

Through strategic alliances, Formation leverages the strengths of established consulting firms, technology providers, and content providers. The Consumer Goods and Services practice of Accenture (formerly Andersen Consulting) is Formation's preferred service partner for Optiva implementations. It also offers related services such as helping develop an effective product development strategy, streamlining product development processes to reduce time to market, and using consumer insight to generate innovative new products.

Outlook

With the growing adoption of software technology among process manufacturers, we expect Formation Systems to grow substantially (100-150%) over the next 2 to 4 years. Senior management needs to continue emphasizing Optiva's capabilities for reducing costs and enhancing revenue to avoid the inevitable comparisons to off-line simulation packages and design toolkits. Formation should also embark on an aggressive marketing campaign to improve its visibility in the process industry and even consider an alliance with Aspen Technology provided it employs its own brand.

User Recommendations

Process manufacturing companies or those that develop and market products for manufacture through outsourcing partners should give Formation Systems strong consideration if speed and cost-savings in their product development cycles are a priority. Through its partners, Formation provides integration services and can connect Optiva to ERP, MES, document management, and other systems such as LIMS either through a standard interface (SAP, J.D. Edwards) or custom implementation.