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A manufacturing intelligence software solution enables enterprises to uncover valuable shop floor information and so boost plant and supply chain effi ciencies. Edward Toung explains more.
Manufacturing continues to be the engine that drives economies around the world. With competition mounting from global suppliers, and an ever increasing push towards mass customization and shortened product lifecycles, there is an increased need for manufacturers to be more responsive and flexible. Manufacturers must make rapid decisions using real-time information and make continuous adjustments based on changing environments.
Operational decisions at all levels – corporate and plant – must be made with the most recent information, presented in the right context. Currently, what happens down in the factory floor and its implications at the corporate level are often not aligned. Corporate operational decisions are often made with outdated and incomplete information, usually because there is no adequate conduit between the corporate IT systems and the data residing in the plants. Similarly, plant decisions are made without consideration of their potential impact on other facilities in the supply chain.
Manufacturers need a comprehensive view of their operations at all times. They must be equipped with the most relevant information in the proper context so holistic decisions can be made appropriately. Enter Enterprise Manufacturing Intelligence (EMI).
EMI – A synthesis of elements
Enterprise manufacturing intelligence is the synthesis of three key elements required for global manufacturers to compete in the current businessenvironment:
• Manufacturing Performance – monitoring of production events and understanding production constraints are the best tools for evaluating the competence of a manufacturing organization
• Business Intelligence – insight into business operations is critical for decision making. Root cause analysis and drill down capabilities are required to uncover hidden improvement opportunities.
• Real Time Information – it is imperative that manufacturers use real-time information to make operational decisions. Weekly schedules and ERP runs are becoming a thing of the past.
Enterprise manufacturing intelligence (EMI) is the next generation of decision support capabilities for global manufacturers. It is about making real-time manufacturing information, with “drill anywhere” capabilities, available to manufacturing executives and plant staff so they can make the right decisionsand improve their supply chain performance.
And when implemented correctly, EMI solutions stand to provide significant benefits to globalmanufacturers and their ecosystem:
• Strategic decision support platform allows manufacturing and supply chain executives to make optimal supply chain level improvement decisions
• Real-time synthesis of production events with actionable information for the plant enables staff to continuously improve manufacturing effi ciency
• Supply chain objectives such as inventory reduction, cost reduction, and capital avoidance can be achieved by actively managing shop fl oor production levers
• Modern IT architecture based on Web services “future-proofs” factories from forthcoming projects
Enabling operational strategies with EMI
Three strategies and their financial implications are discussed below:
1. Managing inventory & increasing responsiveness
Inventory and replenishment management policies are typically determined by planning models based on customer service levels and demand patterns constrained by supply chain and geographical limitations. While most companies are able to marginally adjust manufacturing capacity and replenishment schedules based on changing business conditions, increasing competition, product line proliferation, and a myriad of other factors provide pressure to be more nimble and agile.
Building in more fl exibility and agility in the supply chain is paramount in today’s manufacturing environment. Companies must focus on a high-performing supply chain and continuously strive to reduce inventory cost, reduce lead times, and improve service levels.
Business levers that are available at the plant level can be leveraged to boost supply chain performance. By understanding and managing critical shop fl oor levers, companies have the fl exibility to adjust their production and replenishment strategy to better react to customer demand while minimizing overall cost.
EMI solutions, such as from Informance, empower supply chain teams to zero in on cycle time reduction opportunities and ways to minimize production variance across the entire plant network. Real time notifi cations alert line managers of impending production issues and customer service representatives of fulfi llment issues that may disrupt customer supply.
2. Lowering production cost
Today every manufacturer must relentlessly pursue cost reduction to remain competitive. Streamlining production and taking cost out of processes are concrete actions that manufacturers should master. Companies are accustomed to tackling improvements on a plant by plant basis. Areas such as manufacturing performance, cost of labor, production effi ciency, etc. are all potential targets for improvement. Plant level improvements are tangible, often with quick and visible payback, but they tend to be tactical.
Although important, the impact of plant level improvements remains small compared to corporate wide initiatives. Companies stand to gain signifi cantly from improvement opportunities that span the entire plant network. The objective is to identify crossplant improvement opportunities that lead to signifi cant cost savings across the supply chain.
Manufacturers often allow plants to manage production issues, and the associated improvement programs, within factory confines. While there are clear advantages to plants being autonomous, higher performing manufacturers are complementing factory decisions with corporate initiatives to yield better results. Effi ciencies can be attained by addressing common issues that may cut across multiple plants. For example, an issue that may be minor for a single plant could become a major one when considered holistically. Note also that when investing in a manufacturing intelligence solution, the ability to leverage a single investment into multiple plants can represent signifi cant cost savings. Finally, visibility into details that exist across plants allows for the transfer of “best practices” across the plant network.
3. Growing by avoiding capital expenditures
Most corporate supply chain initiatives target the cost component of the operation. While cost cutting initiatives are important, companies are often rewarded much more through revenue growth and margin improvements. Companies running close to capacity often resort to large capital investments to boost production. Some companies have chosen to outsource additional production to contract manufacturers. Both approaches erode company profi tability. The objective is to capture additional revenues while curbing or eliminating the need for capital investments. It is a seemingly elusive goal, but many companies have found ways to achieve this goal.
To avoid costly capital expenditures, companies facing rising customer demand must increase overall manufacturing effi ciency. By recapturing manufacturing capacity currently lost due to waste, signifi cant opportunities exist for boosting production. Companies must learn how to identify improvement opportunities so they can unlock capacity for increased revenue.
By implementing an EMI solution manufacturers can boost production without capital investments or turning to outsourcing. Insight into reducing unplanned downtime and increasing production consistency for the entire plant network allows companies to implement achievable volume enhancing strategies.
Traditionally, companies have made investments to add lines or even new facilities to fulfi ll demand. Understanding that significant opportunities exist in improving manufacturing operations, costly infrastructural investments can be reduced or even avoided in many cases. When companies boost their performance (OEE %), additional run hours are freed. These in turn translate into extra production volume. High performing companies can make this a competitive weapon: achieving revenue expansion while curtailing cost.
The next step
An enterprise’s manufacturing plants are arguably the most important component of its supply chain. Valuable information and trends are often hidden in events on the shop fl oor. An enterprise must uncover this information and convert it into insight, making manufacturing intelligence a competitive weapon and leveraging it to achieve higher levels of supply chain performance.
Enterprise manufacturing intelligence is the logical next step for global manufacturers if they aspire to remain competitive. By bringing together manufacturing performance and business intelligence capabilities on top of a real-time platform, companies can make better operational decisions – strategic or tactical – up and down the supply chain. Critical supply chain strategies, including inventory management, cost reduction, and revenue growth, and curbing of capital expenditures, can all be successfully implemented via enterprise manufacturing intelligence solutions.
Bridging the Divide According to a recent study out from AberdeenGroup, Best in Class manufacturers are using manufacturing intelligence solutions to enhance the value gained from ERP and MES systems. Bridging the gap between enterprise level ERP and the shop floor remains a barrier to improving manufacturing performance. Traditionally, the approach has been to connect ERP (enterprise resource planning) directly with MES (manufacturing execution systems). But more recently, a new category of technology solutions has emerged – Enterprise Manufacturing Intelligence (EMI). To date, this has been loosely defi ned and generally lumped together with MES. Manufacturing intelligence in the broadest sense implies a synergy in joining enterprise level data with operational execution, and collecting and aggregating data from multiple sources. However, if a unifi ed view was the only objective of EMI then a simple portal or dashboard would suffi ce. To truly add value, EMI must deliver on the promise implied in its name: it must add a level of intelligence to elevate the solution category from a platform to an application. Instead of operating as simply another data collection system, effective EMI solutions also provide real-time visibility, event management and analytical tools that enhance proactive and predictive control and drive execution. Solution strategies Aberdeen found Best in Class companies (the top tier in the Aberdeen Competitive Framework) reaping significant benefits by inserting an EMI layer between ERP and MES, thereby aggregating data from disparate sources and enabling actionable intelligence. This layer may be actually be delivered in one of three ways: as part of an MES solution; as an extension to ERP; or as standalone EMI solution: • EMI via MES: MES is increasingly being viewed as a necessity of business, and 37 percent of companies say they are pursuing EMI via MES – using solutions such as Pavilion’s Pavilion8, Rockwell Automation’s FactoryTalk, Honeywell’s Experion PKS, or Wonderware’s Production and Pe r f o r m a n c e Management Solutions. These MES solutions are grounded in the technologies of industrial control, delivering particular functionality in realtime asset and operational optimization. • EMI via ERP: ERP solution providers have the market penetration advantage over both MES and EMI technology providers. And they are constantly working to further increase their market penetration and by increasing the functionality of modules outside of their core business. Examples of ERP vendors offering EMI applications are SAP with xMII, Infor with EPM and Glovia with Action Desk. Manufacturers comfortable with implementing technology from an enterprise level down perspective may be most successful with this type of implementation. • Standalone EMI: Examples include solutions from technology vendors such as ActivPlant, Iconics, and Informance. Their strengths are in connectivity, utilizing data analytics, and providing actionable intelligence to decision makers through Web-based portals. Manufacturers looking for a balanced give and take between MES and ERP, but still wanting to focus on operational improvements may be best served by a standalone solution.
Business drivers “Ghiradelli Chocolate is in the process of leveraging an Iconics solution to assist in the aggregation of data from multiple sources, feeding directly into ERP and eventually connecting to Wonderware’s DT (Downtime) analyst. Explained Jerry Greenwald, Plant Electrical Engineer: “The plan is to use MI as a funnel for maintaining consistent and standardized data, with metrics like yield and OEE being monitored to improve performance.” Best in Class manufacturers are leveraging manufacturing intelligence to make proactive and predictive decisions based on throughput, effi ciency, effectiveness, and process bottleneck constraint analysis. In addition, instead of basing manufacturing decisions purely on plant schedules, they can take into consideration plant cost and effi ciency measures. The study found that Best in Class performers were 10 percent more likely than laggard or average companies to have invested in manufacturing intelligence, with marked gains in yield and capacity utilization. The greater visibility and added level of intelligence enhances the value gained from both ERP and MES. AberdeenGroup (www.aberdeen.com) is a provider of fact-based research focused on the global technology-driven value chain. |
| Edward Toung (edward.toung@informance.com) is the Vice President of Products at Informance International- a provider of enterprise manufacturing intelligence (EMI)solutions. He previously held product and consultingpositions at E2open, Ariba and i2 Technologies. |
