cosyn_wp_909

8/7/2019 cosyn_wp_909

1/16

Manufacturing Enterprise 3.0The New Information Management Paradigm Built on Processes

8/7/2019 cosyn_wp_909

2/16

2

Manufacturing Enterprise 3.0:The New Information Management ParadigmBuilt On Processes

Executive Overview It is time to reevaluate how we look at our information manage-ment toolset andexamine ourbusiness from a process perspective. Information silos cannot beaccepted and information canno longerbe departmentally owned.We need to orchestrate infor-mation into strategicandsustainable competitive advantageprocesses that support theextendedenterprise and include a wide range of stakeholders across the value chain.

This paper will describe howBusiness Process Management (BPM) canbenefit companies,particu-larly manufacturing companies, by focusingon their processes. Information management from aprocess perspective makes betteruse of available data sources,bridges application silos and linksdepartments more directly to business results.Trying to accomplish application interoperabilitythrough systems integration is difficult, expensive,too time consumingand is not agile.

In Manufacturing 3.0each information application across the extended enterprise is considered apotential sourceand/or a user of information.Historically, the ERPsystemhasbeen the focalpointof the information system infrastructure but that is no longer the most effective approach. It iscompany processes that build a sustainable competitive advantageand the Business OperationsPlatformis the premier method to orchestrate information into the most effective businessprocesses.This paper will provide a broad setof ideas to help your company begin a new and moreeffective journey in manufacturing enterprise information management.

8/7/2019 cosyn_wp_909

3/16

3

Copyright CollaborationSynergiesInc 2009

Biographical Information For Michael McClellan

Michael McClellan has over 30 years of experience serving and managingmanufacturing enterprises. He has held a number of positions in general management, mar-keting, and engineering, including President and CEO for companies supplying capitalequipment and material management systems. In addition to numerous articles and

whitepapers on manufacturing systems, he has written two books, Applying Manufacturing Execution Systems , which defines and explains manufacturing executionsystems and Collaborative Manufacturing: Using Real-time Information to Support the Supply Chain , the first definitive examination of collaborative manufacturing concepts. Heis also a major contributor to a new book on business process management titled, In Searchof BPM Excellence . Mr. McClellan has served over six years on the Manufacturing EnterpriseSolutions Association (MESA) Board of Directors.

He currently lives in Vancouver, Washington and is President of CollaborationSynergies Incorporated , an advisory company providing consulting services in the areaof business process management, real-time manufacturing information systems, manufac-turing execution systems, and collaborative manufacturing system development and imple-mentation. He can be reached at [email protected] or www.cosyninc.com .

8/7/2019 cosyn_wp_909

4/16

4


Rethinking Manufacturing InformationTechnology Management

Manufacturing 3.0 describes the true holistic convergence of information systems and ubiq-uitous information usage across the extended enterprise, obliterating the line between theadministrative view and the operations view. It is time to rethink our perspective of informa-

tion application silos. Instead,we must consider the inclusive view of our company process-es (how things get done) and view information and its use in a business process sense.Enterprise level systems including Enterprise Resource Planning (ERP) and manufacturingplant systems should be seen as elements of the same unit, not two different worlds.

The information technology management within manufacturing companies is unique frommost other businesses.Foremost is the large number of disparate applications in use. Asingle plant can easily reach 100 stand-alone applications, in addition to ERP and otheradministrative systems. Major companies can number their applications well over 3000,each one justified at the time of acquisition and continuously requiring managementattention and maintenance. Added to this base are the wide-ranging applications withinour value chain, our customers and suppliers.The good part is there is a wide quantity of data available as we evolve to a more strategic use of information across the enterprise, inthe form of initiatives like Lean Manufacturing, Collaborative Value Chain management,or regulatory compliance.

Manufacturing enterprises are also unique in their ever-ongoing effort to improve and com-pete, and it is unlikely this will change anytime soon. Certain aspects of business and ourinformation systems will continue:

Collaborative Sharing information is the norm ranging from current demand toproduct design to quality assurance and production schedules and much more.The informa-tion must be real-time, specific, and shared to give all stakeholders the same facts.

Global The fact that business is a global set of processes is not new. The ideasbehind the flat world of manufacturing will continue.As our world shrinks, there are manyconditions that will affect where value is added.This will be met with interconnected globalbest practices regarding every aspect of the product lifecycle, from inception to end-of-lifeconsiderations.

Unrelenting As this is written, the world is dealing with a major economic down-turn, and we are watching the agonizing throes of General Motors, as this once mighty com-pany deals with the realities of the times. Life will not be easier in the future. All businesses,but especially manufacturing entities,will be more agile and responsive to intensified condi-tional events.

8/7/2019 cosyn_wp_909

5/16

5


User role-based information Looking at reports is so yesterday, and so isinterpreting information to make an informed decision. Information must support decisions,be specific to the user, and be built on trust. Again, this is not about data or behind-the-scenes,monolithic computer systems, but a focus on content, workflow and the process thatsuits the user at any position within the extended value chain.

Coherence How many sources of the facts do you have to deal with in yourmanufacturing enterprise? ERP, PLM, MES,Data Library, CRM, various databases,Maintenance, Logistics,Warehouse Management, APS,SPC, Quality Assurance, and so on.This world of data chaos ends when companies focus on their processes, instead of theirapplications. Managing the cross-departmental, horizontal nature of processes, and support-ing those processes with exact information at the right place and time, will replace the dinof data with usable and actionable information.

Predictable The use of best practices and their support through evaluated, devel-oped, and supported business processes will take personalities and their vagaries out of thebusiness environment.

Agile Agility is the capacity to react to changes in your business and businessenvironment. Some changes require immediate responses, and others require strategic reac-tions. Information systems must, and will be, the leading response mechanism, but they willoperate within well-defined and supported processes.

Competitive advantage Building competitive advantage through better infor-mation use is quicker and likely less expensive than nearly any other initiative.

In Manufacturing 3.0, companies will apply holistic, proactive management across theextended enterprise/value chain using precisely defined and supported business processes.Easily coupled and decoupled information resources will provide real-time informationbetween any and all sources and the focus is on the processes, with people addressingexceptions and improvements.

This new vision is forward-looking, yet makes best use of the assets in which we haveinvested over the years and is robust enough to take us where we want to go, over the next20 plus years. Historically, we have implemented applications with a heavy tilt toward ven-dor standard products, whereas the new vision is easiest to implement when based on abusiness process platform and self-reliance, using in-house knowledge resources to makethe changes you need.

8/7/2019 cosyn_wp_909

6/16

6


What is a process?

It may takea minute towrapyourarmsand mindaround this, but it is time to think in terms of Process not systemapplications. Process management, long advocated by business leaders suchas Michael Hammer,PeterFingar, and others,has been around for some time, and is thebasis formost activities within businesses today. A process is a series of steps or tasksaimed at accomplish-ing a defined,business objective.To issue a payroll check, there is a process.Issuing a purchase orderis a process.Scheduling workat a work station isa process.Entering data at a timeclock isaprocess.Product development is a process. In major companies,thenumberof business processescan run into the thousands.Some are well developed and documented. Some are performed on anad hocbasis, as necessary. Andsome are lockedup in software applications, irrevocably fixed andstationary.The current situation in everycompany is that most processes can be lumped into twostacks: theprocesses within the hundreds of software applications (often hiddenand difficult tochange);and those people-driven processes that are required to fill thegaps between the existingapplications.

Ideally,processes withina company are related,and all aimed,directly or indirectly, at servingcus-tomersmost effectively. In many industries,it is not theproduct that differentiates onecompanyfrom another,but the processes within those companies that areused to meet customer require-ments. It is this process-centric view that many successful companies are using to meet moderncompetitive achievement objectives.

Illustration1,Typicalplantdisparate applicationarray

A first step is to consider the enterprise in a holistic sense.Our objective is to build themost effec-tive organization,not tribalwarfare,and that view is likely to cross departmental boundaries.

Horizontal and chronological process steps versus array of applicationsA single plant can have over 50 silo applications.

Think process steps and data use to support the process.

8/7/2019 cosyn_wp_909

7/16

8/7/2019 cosyn_wp_909

8/16

8


Key ThoughtThe business process is where the IT department and operations meet.

What if you had theability to connect to any application,retrieveany item of data, and reuse thatdata in anotherway? Combine data from applications,performsoftware logic operations anddis-play the answers.Sound complicated? It is not. If you can identify where the data is, then a BPMSorBusiness Operations platformcan retrieve it, use it in a process calculation,and provide an answerthat might be a dashboard metrics display, sent to the ERP or another application,or sent to a cus-tomer or vendor. From your existing installed base, it is likely that well over 90 percent of the datayou need in any process already exists and is easily available for reuse.

The Business Operations Platform

Illustration3, Business Operations Platform

The Business Operations Platform(BOP) will usually include a number of tools.The primary tool is aBusiness Process Management Suite (BPMS)consisting of the following:

Business process designer The new business process is modeled and developedthrough theuse of graphical tools that define steps andevents in the process.By using drag-and-drop modeling icons,available from an easy-to-use palette, the process canbe collaboratively out-lined and reviewed.

8/7/2019 cosyn_wp_909

9/16

9


Process connectors BPMS packages come with a library of software components thatform the links with the new processes and the various connection points of the processes,suchasERPsystems or MESsystems.This could include existing processes, and procedures from existingprocess sources.Theconnectors arefrequently based on webaccess to various systems,but con-nectors can be provided to legacy systems that do not haveweb access.

Process manager One of the more significant impactsof a BPMSsystem is theabilityto manage processes and makechanges easily and quickly. It is possible to simulate a processusingreal data,prior to actual use,to identify potential problems and make changes.Measurement of the performance of a process to see frequency, cycle time, and processhistories is common.Process Lifecycle Management provides the ability to trace the full development and history of theprocess,much like reviewing the revision levels on a product design. It is possible to useinstancesof the process with variations, to suit specific business needs.One example is a shipping processthat is tailored to fit individual customers.

Process system server This is the coresystem component that provides the transac-tual execution of the processes.

Composite Application and Mashups Toolset A compositeapplication consists

of functionality drawn from several different sources.The components maybe individual,selectedfunctions from within other applications,or entiresystems whose outputs have been packaged asbusiness functions,modules, or webservices.Mashups aresimilar to composite applicationsandusually rely on online resources.

Service Oriented Architecture Service Oriented Architecture (SOA) is included inmany BPM suites. SOA describes an ability to build basic,small,reusable software modules calledservices.These reusable services are maintained in a library and can be used to build larger applica-tions. SOA is not necessary for successful BPM applications but can be a very capable supportingtool in a company-wideview of process management.

8/7/2019 cosyn_wp_909

10/16

1


Using the Business Operations Platform

There is a major shift occurring in the useof plant information,from the historical use ofmanaginga plant floor department or function,to a much broader role of providing real-time informationnecessary to support enterprise processes andcollaborative initiatives across the valuechain.In lifesciences industries,process applicationsprovide confirmationof FDA regulatory compliance. In dis-crete itemindustries, the primary source for product genealogy information includingcomponentsourcing,quality assurance confirmation,andproduct test data resides in process applications.Meaningful key performance indicators and business performance management initiatives arelikely to require thedata items that are foundin the production system and which are available innear real-time.

Key ThoughtDefining Collaboration The simultaneous use of real-time informa-tion across the value chain.

Business management is increasinglyusing a process focus, as companies drive towardgreater par-ticipation in information sharing andcollaboration.Broader real-timebusiness issues arebeingaddressed through initiatives,such as analytics, business activity monitoring,business processintelligence,business performancemanagement,digital dashboards, supplychain event manage-ment, collaborative valuechains,product lifecyclemanagement, the real-timeenterprise,andso on.Nearlyall of these initiatives centeron the idea of real-time information sharing and use,preferablyfrom its originating source or masterdata repository. In the typical valuechain,that originating

sourceis usually the manufacturing and/or supplychain information systems within the businessunit and/or the valuechain partners.

Thevalue of the information changes when used to support higher-level business processes.Thedata hasone valuewhengenerated for a department supervisor for management purposes,andquite anothervalue when used to meet Sarbanes/Oxleycompliance needs.Another example ishow the valueof quality assurance information increases substantially when used to supportenterprise-wide,warranty exposure issues. Inventory information takes on a different look whenviewed acrossa value chain,with synchronizedschedulesbased on real demand.

The hard part about incorporating production data into wider use is the problem of retrieving thespecific,requireddata and arranging that data in a context that supports the business process.Historically, this has been very difficult.Most information technologydepartments arenot closelyconnected to plant operations or to various manufacturing system components; they have very lit-tle awareness of what data is available or how to retrieve it.Anothernegativeaspect is that amedium-sizedplant could have dozens of disparate information sources within their manufactur-ing infrastructure.Many of these applicationswere likely built to specifications long forgotten,using technology that is no longer current. Documentation is frequently poor or nonexistent.Further,when the desired information has been determined and located, the cost and time to inte-grate the data sources on the plant floor havebeen prohibitive. BPM methods and tools are veryeffective at addressing these problems,by making information accessand process developmentsignificantly easier.

8/7/2019 cosyn_wp_909

11/16

1


Strategic Initiatives

The demand for a broader useof data, formerly a department issue,requires a new setof tools and

a newway of thinking to support strategic initiatives,including andsimilar to Lean Manufacturing,Product LifecycleManagement,Real-timeEnterprise,Demand Driven Manufacturing orCollaborative SupplyChain Management. Strategic initiatives are typicallynew uses of data thatrise above the capability of traditional IT infrastructure or application silos.

This model of themanufacturing company infrastructure describeshow strategic initiatives requirethe broadest use of information in a nonhierarchical sense.Lean Manufacturing is not an applica-tion, but an assortment of business processesaimed at newer business objectives,that include awide range of information from inside and outside theusualcorporate base.

Illustration 4, Used with permissionfrom MESA International.

Themodel wasdeveloped to show how information from applicationswithin theoperationalandadministrative information systems is used to address strategic initiatives,transcending the exist-ingsoftware application infrastructure.The fundamental idea behind the model is that informa-tion real-time and historical should travel into and out of applications whenever necessary, tosupportprocesses andevents.

8/7/2019 cosyn_wp_909

12/16

1


A broader list of the potential uses of process ideas will include: Collaborative SupplyChain Management Lean Manufacturing Demand Driven Manufacturing Regulatory Compliance:FDA,SOX,and so on. Real-timeEnterprise. Product LifecycleManagement. Enterprise Collaboration simple info sharing within the company. Metrics/Analytics KPIs,Dashboards,and so on. Business Activity Management (BAM). Business Intelligence (BI). Operational Intelligence. Enterprise Manufacturing Intelligence. CompositeApplications. Application Rationalization. Manufacturing OperationsMgmt Systems (MOMS).

A few moresuggestions for using BPM in a manufacturing enterprise include:I Addingfunctionality to existing business systems,such as CRM, ERP,manufacturing

execution systems (WMS),and so on. It is probably less expensive and quicker to extend an older application using BPM

than to install new software or reprogram the existing software. Design and add new processes as requirements change.

I Link business systems to aggregatedata andprocesses. Build new processes between acquired company systems to provide a full view

of inventory data. Connect themanufacturing systems within a value chain to supportwhere to build

strategieswith real-time information. Connect disparate sources of business intelligencewithin the company or across the

value chain to support Sarbanes/Oxleycompliance.I Link a number of systems to provide and support new processes.

Build a process to provide demand-driven schedule data across a value chain. Connect the manufacturing execution systems to the planning andscheduling

system. Develop a process that allowscertain CRM users to view and exchange data with the

warehouse management and themanufacturing scheduling systems.I

Design,build,simulate,and finalize new stand-alone business processes,using data fromanysource.

8/7/2019 cosyn_wp_909

13/16

1


Key Thought

Competitive Advantage A firm posseses a sustainable competitiveadvantage when its value-creating processes are superior tocompetitors and they have not been able to be duplicated or imitated.

Building a Competitive Advantage

Your information systems should be a collection of best practices but it is a different set of informa-tion andpeopleconnections that are required to build a competitive advantage.

Competitive advantage A few years agoAmerican auto producers required approximately 60months to bring a new car to the market while Japanese companies could accomplish a full newproduct launch in 30 months.That advantage (now overtaken)was once quite significant in termsof market response and new product cost.

Competitive advantage Dell Computer is legendary in their supplychain management efforts,being able to build a personal computer to the buyers specification and shipping within a fewdays. Internet marketingandreceivingpayment when the order wasplacedwere other significantbenefits enjoyed by Dell long before other companies could do the same.

Competitive advantage Within 24 hours Wal-Mart can tell each vendor in their supply chainhow much of their product was sold in each store everyday.This goes a long way to support thevendors responsibility in determining the replacement strategy.

These arenot best practices.They arecompetitive advantages and not available in anyequipment

or software catalogue.They can only be developed through an accumulationof innovative bestprocesses built on strategic and tactical use of your assets, most important of which are likely to beyour information technology base infrastructure.

In most companies,implementation of these ideas using typical integration methods wouldrequire a significant investment in time andmoney,and, most likely, the finished project will notfully satisfy the [company] requirementsor objectives.A significant promise of BPM is to radicallyimprove the development and implementation of these ideas by, a) vastly shortening the develop-ment process;b) putting this development partially or fully in the hands of operations; and c) build-ing andimplementing processes in a way that they can be easily and quickly designed, developed,simulated,revised, and implemented and then revised again and again as necessary to meetchanging business needs.

BPM is a far advancement from hard-programmed,workflow systems,but youarestill NOT goingto turn processdevelopment over to the janitor.This is very serious work that requires not onlyunderstanding the current state of existing processes within the company,but also being able tovisualize the new processes.A key perspectivehere is to see BPM as an enabler of business unitprocesses,not as a technology.Whereas applications such as CRM, manufacturing execution sys-tems or warehousemanagement systems arean assortment of available technology functions,BPM is a tool that allowsusers to design,build,and implement functions and processes to suittheir needs.As Microsoft Word is a tool to create and manage documents,BPMis a tool to createand manage processes.

8/7/2019 cosyn_wp_909

14/16

1


The intention of this paper is to make an argument for theBusiness Operations Platform and tofocus on company processes.We are past the time when the ERP system was thecenter point of your information technologystrategies.This neweramust be more holistic,taking into considera-tion the extended enterprise andcompetitive advantage requirements, instead of information sys-tem applications.The Business Operations Platform is an assembly of tools that can provide a pre-ferred perspective that will takeyou to Manufacturing 3.0.Begin by assessing whereyou are andhow this technology might affect your company over the next few years.Examineyour ability tomakechanges to processes or to even understand how the existing processes work or were devel-oped. Think in terms of cross functional requirements that begin with thecustomer and concludeas a satisfying financial return. If the vision is adequately holistic andseen from the highest level,the lower level processesand their intersection with departments will be self-evident. After someinitial assessment it would be surprising if youcould not seemajor opportunities for improvementusing these business operations platform tools.Initial demonstrations and proof of concept can fre-quently be done within a few days.

The following aresuggested for further reference:

TheAgenda by MichaelHammer,Crown Business Publisher. 2001Business Process Management,The Third Wave by Peter Fingar and HowardSmith,Meghan-KifferPress. 2007

Extreme Competition, Peter Fingar, Meghan-KifferPress.2006CollaborativeManufacturing: Using Real-timeInformation to Support the

Supply Chain, MichaelMcClellan,St Lucie Press.2003

8/7/2019 cosyn_wp_909

15/16

1


Acronyms

BOP Business Operations Platform

BPM Business Process Management

BPMS Business Process Management SuiteCRM Customer Requirements Management

ERP Enterprise Resource Planning System

MES Manufacturing Execution System

MESA Manufacturing Enterprise Solutions Association

SOA Service Oriented Architecture

8/7/2019 cosyn_wp_909

16/16

Collaboration Synergies Inc.P.O.Box 871555

Vancouver, WA 98687

360.833.8400

www.cosyninc.com

cosyn_wp_909

Documents