As companies respond to cost and competitive pressures,
supply chains continue to grow leaner every day.
Inevitably, though, the leaner your inventory, the
more exposed your supply chain is to production
issues or unexpected changes in customer demand.
To alleviate these risks, the burden of replenishing
customer orders without a drop in service levels
continues to shift to the factory, and real-time
visibility into the shop floor is becoming critical.
Consider these trends:
manufacturing is becoming a key competitive
differentiator. This issue really
pushes the problem to the factory. The battle
is now on the shop floor — and the
victor is the organization that can best
build postponement strategies into its manufacturing
processes and then rapidly build products
as confirmed orders come in. When building
to a specific order and identifying and managing
an order status, the problem is frequently
centered in the factory itself.
is re-emerging. As inventory continues
to become an expensive liability, maintaining
high levels of customer service requires
the factory to become the de facto response
buffer. This need is further precipitated
by customers that expect products to be delivered
in continually shrinking time frames. Manufacturers
must be able to rapidly digest customer input
and dynamically adapt their manufacturing
operations to pull-based systems.
manufacturing is growing. Detailed,
real-time shop floor information grows in
value as more and more companies see outsourcing
as a mandatory need. Maintaining control
of distributed manufacturing operations is
pushing the need for visibility to greater
levels. The more complex the network, the
greater the challenge in managing the visibility
Despite these trends, the reality is that
the typical factory is not sufficiently integrated
into the supply chain to deliver an effective,
timely response to change. Factories continue
to operate as "black boxes" within
very localized environments. They typically
do not have adequate, timely status information
on the external events that affect their own
operations and costs, nor are they able to
easily transmit information into the supply
chain. This promotes uncertainty that frequently
results in manufacturing and supply chain inefficiencies,
especially as the luxury of inventory in supply
chain pipelines continues to diminish.
So while recent gains in stripping out inventory
have been phenomenal, the process has also
led to fragile supply chains that must be backed
by a more responsive approach to manufacturing.
The ability of a factory to profitably replenish
the supply chain while dynamically responding
to unpredictable change is termed "adaptive
Role in the Adaptive Enterprise
To be adaptive, companies need manufacturing
capabilities that deliver:
ERP solution for managing
manufacturing with associated workflows
that enable closed loop operations
integration platform to connect
manufacturing processes with enterprise
and supply chain processes
dashboards that enable decision
support for production personnel to deliver
on their performance goals
manufacturing — the ability
of a factory to profitably replenish
the supply chain while dynamically
responding to unpredictable change
The Challenge: Turning Real-Time Shop Floor
Data into Enterprise-Ready Information
To enable efficient operations, you need
visibility into factory operations that deal
with information such as:
- Real asset utilization and overall equipment
efficiencies — How effectively are
the capital assets performing?
- WIP (work in progress) status across plants — Where
is the WIP, and what is the value of the
WIP currently on the shop floor?
- Manufacturing efficiencies and yields — What
is the value of increased material and labor
- Causes and sources of downtime — What
is the increase in expenses due to downtimes
and related expedites and overtimes?
- Quality measures — What incremental
value does adhering to quality on the shop
- Maintenance issues — What are overall
machine availabilities and equipment effectiveness?
Much has already been accomplished in building
point solutions to collect the data needed
to improve quality, increase efficiencies,
and reduce operating costs on plant floors.
The challenge is to combine these disparate
buckets of information into a meaningful framework
that enables informed decision-making. A combination
of gut feel and labor-intensive, paper-based
production reports is not adequate. Data must
be gathered in a consistent, meaningful, and
contextual way across the plant and throughout
the enterprise. Only then can accurate, relevant
data be disseminated to, and analyzed by, the
appropriate users, from the COO to the production
But there are two primary hurdles to effective
- The multiple tiers in the information
flow, without the existence of any
established standards, that currently exist
within manufacturing (see sidebar)
- The complete lack of any technology platform
that can integrate all these layers in a
single cohesive framework to enhance manufacturing
This is where SAP's enterprise solutions and SAP NetWeaver technology platform can help companies make the most of their data collection and manufacturing operations monitoring, with systematic workflows to manage the
manufacturing events that occur on the shop floor, and technological ability to economically move information from the shop floor into the ERP system.
Three Layers of Information in Your
Today, three distinct tiers of information
flow exist within manufacturing enterprises.
Each level includes its own applications
and networking requirements, and integrating
these different levels has been an expensive
Layer is responsible for accumulating
real-time data. This tier includes high-level
devices — namely PLCs (programmable
logic controls) and DCSs (distributed
control systems) — that run the
HMI or SCADA software. Together, they
provide a real-time view of the manufacturing
process, plus a user interface through
which to control the process. A control
network such as ControlNet or Ethernet
interconnects the machines, linking PLCs
and DCSs to each other as well as to
HMI and SCADA applications. These applications
collect real-time data and in some cases
pass it to the enterprise tier (ERP layer).
SAP applications do not replace any segment
of the automation layer. Instead, they
leverage the real-time information and
alerts that are sent up from the automation
layer to the enterprise layer.
Layer posts data to the ERP
application. The MES (manufacturing execution
system) is a plant floor system that
acts as a middle layer between the enterprise
and automation tiers. It monitors adherence
to manufacturing procedures on the shop
floor, typically receiving data from
the automation tier and then posting
this data. The MES layer is responsible
for real-time alerts on quality, maintenance,
rework, etc. It also tracks completions,
material/labor usage, and quality and
lab data. Many manufacturing companies
have some form of an MES, either homegrown
or from specialized vendors, that feeds
information to the ERP layer.
Manufacturing Layer tracks inventory
and materials, creates the manufacturing
plans, issues the necessary work orders,
and determines the costs associated with
the manufacturing processes. In addition,
this layer also manages the activities
around Manufacturing Planning, Manufacturing
Execution, Quality Management, Maintenance
Management, and Environmental Health
and Safety. As manufacturing needs continue
to get complex and factories demand a
tighter and less expensive integration
between the applications across and within
plants, the ERP layer increasingly is
providing many of the capabilities that
the MES layer delivered.
The fact of the matter is that the quicker your SAP system gains access to the information that emerges from the shop floor, the faster actionable steps can be taken. Only when the SAP system has access to shop floor data can this data be transformed into information that will drive significant, meaningful improvements within the enterprise. With mySAP ERP, the SAP NetWeaver platform, and SAP's services-oriented applications,1 enterprises can effectively and economically manage workflow and support the flow of information between the shop floor and the rest of the business.
SAP Integrates the Factory with Comprehensive Workflows
With real-time shop floor data informing business decisions, the SAP system can make information available via a role-based user interface — typically a portal (see Figure 1).2 From here, a user can, for example, make sure stock is available in inventory, determine which customer orders still need to be met, or check on the pace of production, capacity utilization, and availability. Rather than bouncing from application to application or system to system to be able to initiate the necessary workflows, the user has a central point of access to initiate workflows, no matter what application or system is providing the information on the backend.
|Leveraging Technology and Applications to Enable Manufacturing
Consider what happens when a piece of equipment goes down during a production cycle: the automation layer detects the stoppage and sends an alert to the MES system, which in turn alerts the production supervisor and requests immediate problem resolution. The problem is that most workflows stop there; this equipment failure is treated as an isolated event when, in the age of real-time business, it has repercussions up and down the entire supply chain.
This problem can only be fully addressed when the event is absorbed into the SAP system, so that subsequent steps can be initiated. For example, an SAP system could automatically initiate these steps in the case of equipment failure, for a comprehensive workflow:
- Create and dispatch the maintenance work order. For work to begin, the work order can be sent automatically to the mobile device of the maintenance supervisor. Simultaneously, the system can check on availability of spares in inventory or determine if parts need to be ordered or expedited.
- Identify the potential for lost production. Equipment downtime is associated with lost production. Based on "mean time to repair" information received from the maintenance supervisor, the system can immediately analyze the potentially lost production and the impact on inventory levels — and, if necessary, overtime can be scheduled.
- Identify the potential for lost or delayed orders. Along with the updates in the inventory stock, the system can analyze customer orders for any that could be missed or would be delayed, so the appropriate information can be conveyed.
- Locate alternate sources to meet the customer order. If necessary, the system can locate alternate suppliers or search for substitute products to meet customer commitments.
- Inform suppliers. By determining the impact on raw material inventory, you can avoid excess stock and raw material buildup by informing suppliers to hold back shipments.
SAP Provides the Technology Platform to Enable Real-Time Manufacturing Operations
Such a comprehensive approach requires a platform that allows companies to provide role-based views (such as SAP's new Plant Manager desktop, as shown in Figure 2), integrate various applications and systems, run manufacturing analytics, and enable collaboration inside and outside the organization. At the same time, companies must also
minimize use of "expensive" custom adapters. They need a technology platform that takes a standards-based approach to communication and interfaces, thereby lowering the total cost of ownership.
|The Startup Page of the Role-Based Plant Manager Desktop
The Enterprise Services Architecture (ESA) technology framework is designed to support these requirements by basing communication, development, and design on established and emerging Web services standards. SAP NetWeaver provides a technical foundation for implementing ESA so that underlying applications rely on reusable services rather than on various backend connectors (see "How Web Services and ESA Support Manufacturing Workflows"). In addition to the openness and reusability of a service-oriented approach, enterprise-ready Web services allow for more dynamic exchange among backend applications without affecting the functionality across multiple applications. For example, when a piece of equipment goes down in a factory, the signal is first captured by a PLC that could push the alert to SAP through an OPC (OLE for Process and Control) connection. The ERP system would then distribute the alert based on defined service-based rules to various other SAP and non-SAP systems.
The sidebar below provides some specific examples of how the SAP NetWeaver platform supports manufacturing enterprises in each of SAP NetWeaver's key capabilities.
How SAP NetWeaver's 7 Key Capabilities Directly Support Manufacturing
Some of the key abilities provided by SAP NetWeaver to enable manufacturing are:
- Enterprise Portal Infrastructure — This capability can deliver unified, personalized, and role-based user access. While many roles for employees and managers are available now, the first role designed specifically for manufacturing, Plant Manager, will be shipped with mySAP ERP 2004.
- Collaboration — Collaboration promotes dynamic communication in permanent and ad hoc teams or communities within and across manufacturing facilities. Using SAP NetWeaver's collaboration features, you can share schedules for subassemblies between manufacturing locations to enable synchronous production.
- Multichannel Access — With multichannel access, manufacturing personnel can connect to enterprise systems through voice, mobile, or radio-frequency technology. For example, a maintenance request order can be dispatched to the maintenance supervisor's mobile device. This capability is provided through SAP Mobile Infrastructure.
- Knowledge Management — Knowledge management, available through mySAP Enterprise Portal, provides content management capabilities with integrated search, taxonomy, classification, publishing, and related workflow processes. Looking through the shift logs written up by production supervisors over the last three months, for example, you can share best practices across plants and capture the knowledge built over years of experience by the plant personnel.
- Business Intelligence — This capability enables users to integrate, analyze, and disseminate relevant and timely information — for example, to analyze the capacity utilization trends over the last three months to identify patterns of best practices. This is provided through SAP Business Information Warehouse, a component of SAP Business Intelligence.
- Master Data Management — This capability promotes information integrity across a business network in a heterogeneous IT environment. It is provided through SAP Master Data Management (SAP MDM). For example, SAP MDM ensures that parts and subassemblies being manufactured internally and sourced from outside are all similarly recognized.
- Integration Broker — This capability enables XML/SOAP-based communication between application components from various sources and vendors. With SAP Exchange Infrastructure (SAP XI), you can connect SAP ERP to other manufacturing applications on the shop floor to access real-time information, and then dispatch alerts and events to portal views.
The degree of adaptivity that manufacturing organizations achieve is directly dependent on their ability to leverage various backend applications designed to run on an integrated technology platform. Such platforms will enable
role-based views that will be easy to maintain and modify due to a modular structure that separates frontend capabilities from backend applications. This platform will also provide sophisticated frontend capabilities, like event management, analytics, collaboration, and knowledge management, as well as create a web of XML connectivity within and across manufacturing locations. Such capabilities to drive adaptive manufacturing are no longer an option — they are a necessity.
How Web Services and ESA Support Manufacturing Workflows
A systematic workflow would require a number of steps across multiple applications and systems. But the role-based views shown back in Figure 1 rely instead on a collection of standards-based Web services rather than on a collection of different backend applications requiring custom adapters.
Service-oriented applications, such as portal-based Self-Services in mySAP ERP, are designed based on the principles of Enterprise Services Architecture (ESA). The services-based approach set out in the ESA blueprint allows for more dynamic exchange of backend applications without greatly affecting composite application functionality. This enables ease of use, as normal boundaries between underlying applications can be ignored. It also supports greater accessibility for various roles over a variety of channels and drives ease of use by shielding the end-user from the complexity of various backend applications.
SAP today has one of the most complete footprints of manufacturing solutions, encompassing manufacturing planning, execution, and asset management, including maintenance, visibility, and quality management. These are all available within the ERP system and are tightly integrated with other business applications like SAP SCM, SAP PLM, and SAP CRM.
In addition to the application's breadth, the SAP NetWeaver technology platform is a significant differentiator that ties SAP and existing customer applications together to lower TCO and provide capabilities like advanced knowledge management, preconfigured and customizable analytics by leveraging SAP Business Information Warehouse, sophisticated master data management, and connectivity within and across manufacturing locations by leveraging the SAP Exchange Infrastructure. This is all in the process of being backed up by configurable role-based views for manufacturing personnel that will enable intelligent decision support to further drive production efficiencies and ease of use across multiple applications.
more information on the Enterprise Services
Architecture, see "When Does a Web Service Become an Enterprise Service? An Introduction to the Principles of Enterprise Services Architecture (ESA)" by
Franz-Josef Fritz in the April-June 2004
issue of SAP Insider (www.SAPinsider.com).
2 The requirements for this type of SAP system are the 2004 release of mySAP ERP, which includes SAP NetWeaver 2004 and its components, as well as the Plant Manager role and the Self-Services features mentioned in this article.
Bhattacharya joined SAP in 2002
and is currently Vice President of Manufacturing
(Application Solution Management). Sudipta
came to SAP after a year at i2 technologies,
where he managed the post-implementation
value engineering practice. He has spent
eight years with several companies of the
Tata Group in India, managing manufacturing
operations and the international business
operations of Tata-Rallis Limited. Sudipta
holds a bachelors degree in Chemical Engineering.
He also holds masters degrees in Manufacturing,
Chemical Engineering, and Operations Research
and an M.B.A. in Finance and Operations