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Aiming for Operational Excellence in Your Organization

by Dr.-Ing. Achim Krüger | SAPinsider

July 1, 2013

Working in siloes used to be the norm for asset-intensive industries, but today, it has become clear that achieving corporate objectives can only succeed when organizational boundaries are permeable. Stakeholders across the business should be able to access the risk, cost, and performance information needed to make informed decisions. In this article, see how obtaining operational excellence can help you combine real-time technical data with business information to improve your operations, manage risks, and reduce costs.
 

For those in the manufacturing or other asset-intensive industries, it was once the norm to work within silos. Reliability engineers, environmental health and safety experts, maintenance supervisors, quality specialists, and operations managers each focused on their own responsibilities and goals. And for a while, that was enough. But today, it has become clear that achieving corporate objectives can only succeed when organizational boundaries are permeable.

While tasks like maintenance were once considered to be simple cost-driving factors, and risk management focused solely on compliance with rules and regulations, the reality is that these types of activities can have a great impact across the company. For example, product quality issues, such as contamination and packaging defects, extend beyond the scope of the risk management office. These defects not only endanger the safety of customers, but have a dramatic impact on the brand and product revenue. Making sure that such important information isn’t being accessed by only a single silo is critical. Stakeholders across the business should be able to access the risk, cost, and performance information needed to make informed decisions.

In their efforts to drive profitable revenue by creating customer value, companies have to ensure integrity and sustainability of operations to stay in business. Managers must make sure the organization delivers continuous improvement against cost, quality, and compliance expectations. This requires them to be able to holistically, cost-effectively, and proactively control operational risks that can adversely affect safety, quality, reliability, and asset productivity.

Furthermore, we are in the midst of a new industrial revolution caused by an interconnected world in which machines talk to each other, information flow is becoming seamless, and value chains are growing more integrated. One effect of this is that consumers today are exercising more influence on a product, often to the point of customizing products to fit their exact wants and needs.

These trends have made it clear how crucial it is to integrate and connect environmental health and safety, energy management, quality, and maintenance operations. The ideal that asset-intensive industries should aspire to is a new field of activity that we call “operational excellence.”

Defining Operational Excellence, A Critical Part of Idea to Performance

Operational excellence is part of the idea-to-performance product life cycle, which also includes sustainable innovation, responsive manufacturing, and aftermarket service. It describes an organizational culture that supports collaboration and information sharing. The processes and tools that enable operational excellence allow for horizontal (alongside the value chain and across organizational boundaries) and vertical (from shop floor to top floor) integration. And any data that these tools and processes collect is disseminated to relevant stakeholders in a format that makes it easy to access, view, assess, and learn from.

Operational excellence, therefore, is a key ingredient in the idea-to-performance approach, underpinning the design, plan, make, and service processes in particular, and supporting environmental health and safety, quality, and asset utilization and reliability matters.

Information technology and business applications can help organizations move closer to this  operational excellence paradigm and help your company run smarter, faster, and simpler. Let’s explore some examples.

The Role of Big Data and Analytics

Years ago, companies struggled to collect data; today, the challenge comes in having to navigate through a sea of unconsolidated data. As products and assets get smarter, and sensors become cheaper and more prevalent, the amount of information a company collects is growing. But this information alone does not promote the business.

For example, an asset may be able to provide you with information on when it might fail, but for that information to be really useful, you must be able to put it into the context of the rest of your operations. For instance, in many cases, it may actually be more reasonable to run an asset to failure if the associated risks are low, reactive maintenance is not very costly, and the effect on production is negligible. On the other hand, making the wrong decision because you didn’t analyze the system holistically could have serious consequences, like a major production loss or even a catastrophic safety incident.

To turn data into contextual, useful information, it’s imperative to put data that needs to be analyzed into one common platform with the ability for real-time analytics — such as a database powered by SAP HANA (see Figure 1). When companies combine technical and business data while putting events into context, they can support decision making using statistical models and predictive forecasting. Thus, organizations can avoid defects and incidents in advance, take preventive actions, and ensure continuous process improvement.

Analyzing big data with SAP HANA
Figure 1 Analyzing big data with SAP HANA

SAP HANA allows for instant insight and decisive knowledge directly from unaggregated data from both technical and business domains. This simultaneously allows for optimizing cost, risk, and performance by putting technical information into context, analyzing patterns, and finding correlations. In short, SAP HANA helps companies run smarter with real-time data delivery and insightful analytics. SAP HANA also helps companies run faster, giving them the information they need to make the right decisions more quickly.

“It is vital that we build risk management strategies based on valid data. With SAP software, we have access to strong analytics and reports, which is key to ensuring broad use across all business levels.”

Health and Safety Systems Manager at a global resources company

Taking Knowledge Mobile

Once you’ve got a way to analyze and prepare your information, another important part of operational excellence is making that information available, in real time, to the people responsible for operations. This often means providing the information on a mobile device so they can always have the information at their fingertips. Not only does this make sure that users have information at the moment it is needed, it also gives the millennial workforce the kind of anywhere and anytime access to information that they expect.

Access to social media and collaboration tools also ensures that stakeholders across the business can work from the same information and put their heads together to come up with solutions to issues before they grow into real problems. For example, SAP EHS Safety Issue — the mobile app that accesses SAP Environment, Health, and Safety Management — makes it easy to report safety issues. Also, the SAP Work Manager app gives maintenance technicians access to all the information they need to execute repairs. These apps play an important role in helping companies run faster, since they put knowledge into the hands of the workers at the point of decision. They also help companies run simpler, with user-friendly, intuitive interfaces. In fact, SAP Performance Benchmarking results show that companies see 40% higher employee productivity when mobile access is provided to employees across all levels.

In addition, with these simpler mobile interfaces, user adoption of the solutions is likely to rise, which means that you can be assured employees are using the information available to them within the context of their roles. And, as we’ll see in the next section, this kind of intuitive interface can be especially helpful for those in manufacturing.

Presenting Information Visually

The adage “a picture is worth a thousand words” also holds true for business information. Decision makers often find it easier to derive actions from facts if information is displayed as a picture, especially an interactive or animated picture. That’s why 3D visual solutions are a key part of meeting evolving customer requirements in a much simpler way. Using a solution like SAP 3D Visual Enterprise (see Figure 2) to present business information also helps in other ways:

  • When workers analyze specific events and present status or KPI information, they must apply them to a real-world situation. This can be more easily done when the information is directly embedded into a 3D animated model of the respective plant, machinery, or component. Consider an event like a broken component; being able to visualize the repair instructions for that asset is immensely helpful for bringing it back into operation.
  • Requesting specific equipment information, whether it’s a purchase requisition, measurement value, or an operational risk, can more easily be done if the respective technical object can be directly selected on an interactive model, since it makes it easier for the user to choose the correct component, rather than depending on parts numbers.
  • Work instructions are easier to understand when shown as an interactive movie that integrates additional 2D information. This not only applies to work execution, but also to training.
  • Visualization allows users to test tasks before executing them to see if they work as planned and determine what risk might be involved.

“Where SAP 3D visualization is used, our delivery times have been reduced by 15% to 20% due to less rework and more efficient operations.” 

Director of Lifecycle Logistics and Support at a leading global security company
iPad image of SAP 3D Visual Enterprise
Figure 2 iPad image of SAP 3D Visual Enterprise

The Importance of Collaboration

The ability to effectively collaborate with partners and suppliers has always been important for those in the manufacturing world. But the introduction of cloud computing is making it simpler and more streamlined than ever.

Now, there is no need for operators to directly log in to their suppliers’ systems or portals — up-to-date information can be made available via the cloud and integrated as a link into their business systems. For example, SAP Product Stewardship Network helps companies easily certify and make product declarations related to hazardous chemicals (as outlined in the REACH Regulation and the Restriction of Hazardous Substances Directive, for instance) and share this information across the supply chain. Of course, standardization and information security are still paramount, and can be fulfilled with a proper master data concept and sufficient authorization. If these concerns are addressed adequately, companies taking advantage of these cloud capabilities can see a great increase in productivity and operational efficiency. Proactive and collaborative operational risk management measures like this one can enable smarter operations overall.

Conclusion

The operational excellence scenario is a key part of the idea-to-performance approach. And while it may seem like a lofty goal, with help from SAP solutions — which enable companies to run smarter, faster, and simpler — it’s one that’s certainly within reach. By allowing you to proactively analyze the performance of operations and identify improvements, SAP solutions can help circumvent upcoming bottlenecks and risks. In addition, these solutions can help you combine real-time technical data with financial, operations, people, product, and asset data to improve your operations, reduce risks, optimize performance, and save costs.

To learn more, visit www.sap.com/idea-performance, www.sap.com/sustainability, or www.sap.com/eam

Achim K

Dr.-Ing. Achim Krüger (achim.krüger@sap.com) started his career as a technical officer with the German Air Force, moving on to working as a logistics general staff officer. After joining SAP in 2002, Achim was assigned positions in consulting, development, and solution management. He is now responsible for SAP’s solutions for operational excellence.

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