If there's a technological "silver bullet" out there, nobody's found it yet.
For years, manufacturers anticipated instant benefits when they installed new software packages. ERP, CRM, SCM -- all seemed to promise a world in which production bottlenecks and late shipments would be eliminated by the powers of technology, and the lofty goal of pull-based manufacturing would be made easy, if not painless.
Wake up and smell the machine oil.
While new technologies can be helpful and sometimes empowering for production workers, they generally are anything but easy or pain-free. Many companies found that installing these complex systems, getting them to talk to other systems already in place, and then getting people to understand and use them, was a challenging and costly undertaking.
By contrast, process changes, both across-the-board as well as those made in continuing increments, often yield real gains in productivity, operational efficiency and expanded capacity.
Although some ERP buyers expected a magic transformation of the business, most found that the real payback came from longer-term process improvements. Because ERP systems were designed for the business top-down, they had scant real-world connection with the plant floor. By contrast, the plant was the setting for lean manufacturing initiatives and other process improvement efforts that were yielding their own significant gains, usually sans technology.
A continuing pain point for many manufacturers lies in the disconnect between the plant floor and the enterprise. ERP software vendors have begun taking measures to close this gap, but at many companies there remains a chasm of uncertainty between what the people in the plant know and do, and what the managers in the office think is happening.
Connecting With Lean
For instance, one area where process and technology are starting to come together is lean and ERP. A number of ERP software packages now include modules that support lean principles. In addition, software from some lean-specific vendors such as Austin, Texas-based Factory Logic supports lean activities and offers a smooth handoff of information to enterprise systems.
Associated Rubber: ERP Improves Inventory Management, Financial Closings
"Companies are now recognizing the need to go beyond the spreadsheets they are currently using within their lean pilots to reach the next stage of improvement," Factory Logic's Web site states. The company's survey also found that while two-thirds of respondents use spreadsheets for lean efforts, more than half said they are currently making IT investments in operations to augment this capability.
Interestingly enough, three-fourths of manufacturers in the survey reported troubles with data integrity arising from manual data entry. And, not surprisingly, 71% reported too much time spent on data collection and manual calculations. Historically, data collection has been a sticking point for those committed to lean initiatives, because data recording tends to be viewed as an activity that doesn't add value to the product.
Of course, as operations grow in complexity, technology becomes a necessity, as manufacturers must balance multiple orders and far greater product variety. As Factory Logic reports, "Many companies have begun by using spreadsheets but have quickly found that they need something more substantial in order to handle the real-life complexities of producing leveled production schedules and supplier demand projections while responding effectively to sometimes volatile customer demand."
In an effort to help bridge the gap between the plant-floor and SAP, Factory Logic offers level scheduling and kanban management modules that can be used in concert with SAP. Factory Logic refers to this as "the supply-chain synchronization layer" between SAP's ERP and an MES system on the plant floor.
Few manufacturers are ready to toss out their proven plant-floor control systems in favor of new systems. Older automation systems, in fact, tend to be kept around and used for a decade or more, with the newer stuff just getting bolted on as needed.
Now, with today's emphasis on real-time data from the plant floor, there's a new urgency to find ways to, if not upgrade, at least tap the data provided by these older automation and control systems.
"One problem we hear from executives at manufacturing companies is that although they spent hundreds of millions of dollars on plant-floor automation and IT, they never have any idea how the business is doing, except at the end of the month," observes Peter Martin, vice president of performance management at Invensys, a manufacturing software firm headquartered in Foxboro, Mass.
One problem is that many older plant-floor control systems, although installed years or even a decade ago, may not be fully utilized even today. "A lot of IT systems already installed have tremendous capabilities," Martin says. Instead of going out and buying newer plant-floor systems, Martin believes the answer may lie in greater utilization of existing systems put in 10 or 15 years ago.
"You go into a plant today and it's common to see a Honeywell or FoxPro or other system that is only being utilized at the 10% to 15% level," Martin adds. He recommends that manufacturers seek ways to knit these older systems together to more fully utilize their capabilities. "Most companies end up stitching together their legacy applications for manufacturing," adds Colin Masson, research director for manufacturing operations at AMR Research.
To enable manufacturers to more fully utilize their older plant-floor controls, Invensys released a new system in April called Infusion that is designed to tap the data in these older systems and connect them with enterprise systems. "This provides an infrastructure that lets the whole plant work as a single IT computing world," he adds. The goal is to provide managers with greater visibility into production. "Executives can see whether they are losing or making money, and whether they are satisfying customers or not, and why."
Some companies that are trying this system are Dynegy and BASF. "We call it asset performance management," Martin says. "Manufacturers need a very good model for measuring, analyzing and improving the business."
AMR's Masson concurs that there is a pressing need among manufacturers today for this integrated view of production. "We call this layer that sits on top of legacy solutions 'operations process management,' " Masson says. "We are seeing a lot of interest in this breed of manufacturing intelligence solution."
Masson says the key drivers for companies seeking new or more responsive systems to provide plant-floor information are compliance, including track and trace functionality; greater product variety, necessitating more frequent changeovers; and the ability to rapidly introduce new products. "There is more spending going on for manufacturing operations as a result of these needs," Masson says.
"Increasing regulatory compliance is a business driver," he adds. "If you don't have this capability, then you must rewrite your system or go out and buy a new one."
In many cases, companies have ended up putting together their own systems to get the functionality they need to run and manage their operations. "There isn't an ERP for manufacturing," Masson points out. "Most manufacturers have to assemble a solution from multiple vendors to meet their manufacturing needs."
Of course, having a layer of operations process management information to aggregate plant-floor data in one place in a meaningful format is no silver bullet for manufacturing. Nonetheless, says Masson, "It can be used to break down the various silos of information for something such as quality management."
Such a quality view would combine information from R&D, the warehouse, core production and the operations lab. "You may have quality data in three or four systems," Masson says. "But it's not integrated into a single view of quality. Operations process management can be used to do this, and it's a much lower cost option than replacing the entire array of systems."
"A lot of spending is going into putting a manufacturing intelligence layer atop legacy applications to enable companies to look at performance information," he says.
SAP, among others, has already caught the operations process management wave. "They are encouraging companies to do what I call 'leave and leverage' their existing platforms but to add an intelligence layer and to create manufacturing-to-enterprise workflows," he explains.
ERP software vendors are a natural to embrace the "leave and leverage" approach to plant-floor systems because it enables them to provide a means to connect the enterprise with production-something most have lacked until very recently. Concludes analyst Masson, "Integrating manufacturing sites with enterprise processes is where I see the most activity today."