Integrated manufacturing: The new way of doing business

By Alana de Wet, Centre of Excellence Manager at AST

In the ever-changing global environment, manufacturers are facing challenges with regards to competition, globalisation, ever-increasing input costs, quality, unsynchronised supply chains and shareholders demanding improved returns. In order to counter this, manufactures are striving to maximise responsiveness and flexibility to customer needs, while maximising the profitably of the organisation within the context of the overall value chain of the organisation; optimising the process for overall organisation-wide effectiveness rather than individual plant efficiency.

Over the past 15 years efficiency improvement programmes implemented by manufacturers have steadily improved productivity, throughput, inventory management and quality. In the former vertically integrated organisational structure, new technology brought dramatic business results: increased revenue growth, greater flexibility and diminished cost. Today manufacturers battle with the challenge of adapting new technology into their organisations.

Manufacturers are starting to embark on a new way of organising and managing manufacturing organisations by focusing on enhanced and innovative methods of doing business as well as leveraging the appropriate technology to enable competitiveness.

By employing a combination of business process integration and technology, these manufacturers are achieving the following advantages:

* An improved ability to make informed, profitable decisions with improved response times;

* Improved execution of decisions;

* Increased visibility across the entire supply chain and horizontally into the business operations;

* A platform for collaboration and supply chain execution; and

* Reduced data entry time, reduced paperwork, rapid process upgrades, enforced regulatory conformance, improved product quality as well as productive, empowered employees.

Throughout the manufacturing value chain, integrated manufacturing focuses on managing and controlling key business and manufacturing processes. These processes are being enhanced in such a way that it leads to bringing together the entire organisation through the implementation of efficient business processes and technology, connecting both the physical process and the business process seamlessly as well as synchronised.

A critical success factor of this approach is common business process and real-time strategic business management information enabled by critical applications, production systems and enterprise information. The strategy is to focus firstly on facilitating and managing business processes. Secondly on the supporting systems incorporating real-time business intelligence, analysis and decision support tools for top management.

Integrated manufacturing is evolving and technology is making it more affordable and practical for all to consider this as a viable business solution. Technology suppliers are beginning to understand the business focused approach that manufacturers are adopting and are incorporating the implications of this in the packaging, implementation and support of their applications. Applications are not only sharing information anymore, but are starting to operate in the context of the broader business process workflow. This approach is not necessarily a new concept for factory floor or plant systems, but is a radical departure for traditional passive, transaction-based business systems.

Integrated manufacturing focuses the organisation on rapid response to customer or production needs, a solid return on investment and plant floor efficiency. As a result of the economic pressures, manufacturers facing this integrated approach are especially beneficial to companies. The integrated manufacturing approach can improve an organisation`s approach to changing market conditions, streamlining product introductions, improving asset utilisation and reducing inventory and cycle times. These are all important contributors to profitability, competitive advantage and shareholder value.

Business system vendors promise `real-time financials` that can make the entire organisation more responsive. Though an accountant`s view of `real-time` is different from that of a plant engineer, delivering on this promise requires current data throughout the enterprise including manufacturing. Business systems intend to create visibility into business processes with the ultimate goal of increasing efficiency. The objectives are to decrease inventory, decrease cycle time and increase quality. While business systems alone enable organisations to achieve this goal internally, the goal has now expanded to taking costs out of the supply chain as a whole.

The most frequently cited benefit area of business systems is improved decision support within the plant. Most of the information used in plant decision-making, aside from the production schedule, comes from the plant itself and not from the business system. Most plant-level systems deal with more detailed data - temperatures, pressures, flow rates - instead of higher-level business information - pricing, shipment schedules, production orders - that is valuable in decision support. Integrating plant data into ERP first requires transformation of that data to be meaningful - production orders into set points, flow rates into production totals, etc.

Real-time information is the key component for successful global manufacturing; collecting accurate and timely data from manufacturing operations remains a challenge.

The automation of business processes are providing the foundation to change the fundamental paradigm from one of providing data or information visibility to decision-makers, to one of automated business process control. This leads to a competitive advantage being gained through significant improvements in the ability to capitalise on the agility and responsiveness of adaptive business process control.

Manufacturers need to provide executive management with tools to set targets, measure performance and formulate strategies. Leading manufacturers incorporate real-time business intelligence, analytics and decision support tools for top management. Activity-based costing and balanced scorecards are utilised to influence disparate divisions, plants and groups of the company to act together as a team.

These tools will incorporate advanced business modelling capabilities, allowing managers to leverage technical capabilities in a strategic way to create competitive advantage for the organisation.

Inherent in these tools will be the creation and enforcement of business terms, calculations and relationships in the organisation. The addition of process development and management tools made the automation and maintenance of business processes a very real possibility.

Key performance indicators (KPIs) should be used to measure the performance of the organisation in relation to the ultimate goal of the organisation. KPIs must reveal the true level of manufacturing performance, on an accurate and real-time basis, and be effective by providing information that can be used by both the plant floor and management. The ideal is to have a system of KPIs which is both comprehensive and simple providing a true reflection of the organisation at different time intervals (real-time, daily, weekly and monthly).

New age plant systems are designed to support best practice performance measurements which provide the tools to help deliver breakthrough benefits to the organisation. The measurements and evaluation of performance is central to the control of the organisation and raises four basic questions:

* What is happening and what has happened?
* Why has it happened?
* Is it going to continue?
* What needs to be done about it?

It is imperative to have the information available to people - or systems - who need it, when and where they need it. This necessitates a deep understanding of the business process behind the request. In other words, business process requirements determine information requirements.

These processes must in turn be synchronised across multiple dimensions, across the traditional organisational boundaries. Machines and process equipment are the hallmark of manufacturing; integrated manufacturing integrates all varieties of production and material handling equipment.

As the production equipment becomes smarter, and as connections to the rest of the plant and company are enabled, integration will become more effective.

Integration in an information-sharing environment must be open for convenient access by all authorised users and other applications across the organisation utilising open access methods for maintaining and accessing information.

* Plant floor control information is the foundation of an integrated manufacturing strategy and is a critical component for an effective integrated manufacturing infrastructure. The challenge is to make the right information available, at the right time, along with the appropriate management tools, through all levels of the organisation in such a way as to reinforce, enhance and optimise business effectiveness.

The trend is moving towards increasingly sophisticated plant floor control equipment and increased manufacturing flexibility and information visibility, driving the collection, dissemination and analysis of information about production operations. These are recognised to be strategically as important as the physical production of products.

* Manufacturers are starting to utilise supply chain management and procurement systems to improve their upstream supply chain performance. Integrated manufacturers can utilise this information in real-time to distribute work throughout the production network in response to actual demand, rather than forecasts, thereby gaining the competitive-edge. An important aspect is the ability for individual plants to synchronise their work in real-time, based on accepted orders and to coordinate the production and delivery of materials. This requires sharing of details on current production information throughout the enterprise.

* Manufacturers are gaining a competitive advantage by making and delivering on their production and delivery commitments. In order to allow for the possibility of production equipment failure or downtime, they can either overestimate production schedules to provide for a margin of error, or implement appropriate systems which are closely integrated with production management and plant asset management systems. By using the latter approach, equipment health can be integrated into the production commitment generation and improve customer satisfaction.

* The Internet/intranet is becoming the primary platform for communication. It is imperative for information to be made accessible through simple browser interfaces to support all levels of interaction that will occur in manufacturing. In future, this is expected to be integrated into mobile devices that will become commonplace in manufacturing systems.

Aspects that are important in creating an integrated manufacturing infrastructure is the connectivity within the enterprise, eg different sites, locations, equipment connectivity and the visibility of the necessary information to users through all layers of the organisation. This can be achieved through application servers, messaging, host integration, Web services, etc. Visibility can be effectively implemented using portals (portals are oriented toward connecting systems with people). The business process approach replaces point to point integration with a more robust, easier to support, point to framework approach. By utilising this approach, manufacturers can achieve a high level of flexibility in connecting multiple applications, and the connectivity becomes less of a hurdle when it comes time to replace or add systems.

* Loosely adapted from ARC Enterprise and Automation Strategies for Industry Executives for the South African Environment by AST IPS Consulting.