E-Manufacturing for Process Industries
This is the third in a series of articles on electronic- and collaborative-manufacturing. "E-manufacturing" appeared in the February issue, and "Control, MES Partner for C-manufacturing Solutions" appeared in the May issue.Harvard Business School's famous academician, professor Michael Porter crystallized the notion of competitive advantage when he said, "No company can earn above-average...
This is the third in a series of articles on electronic- and collaborative-manufacturing. 'E-manufacturing' appeared in the February issue, and 'Control, MES Partner for C-manufacturing Solutions' appeared in the May issue.
Harvard Business School's famous academician, professor Michael Porter crystallized the notion of competitive advantage when he said, 'No company can earn above-average profits in the absence of a unique competitive advantage-something that creates value for customers, or lowers the cost of providing that value, and is difficult for competitors to imitate.'
There is no doubt that transformation to e-business will yield unprecedented efficiency gains. Yet it's not easy to convert productivity into profits. And in the absence of a genuine competitive advantage, it's impossible.
Consider the other 'e'...electricity. A study of the historical economics of electricity conducted by Goldman Sachs a year or so ago revealed the makers of electrical equipment (i.e., GE and Westinghouse) enjoyed the biggest and most sustained profit boost, in part because of their lock-on key patents, a particularly robust form of competitive advantage. The study revealed that electricity producers did well in the beginning then suffered dwindling margins as competitors multiplied. The study also verified that industrial companies (manufacturers) dramatically improved efficiency, but in the absence of a unique competitive advantage for which users were willing to pay (value-add), these manufacturers were forced to pass savings to consumers to the point where profit growth was less than domestic product growth.
The Internet definitely offers opportunities to reduce the cost of transactions of all types, inside and outside a company's boundaries, and that's great. But every company's costs are reducing, and like electricity's influence on manufacturing, the savings go mostly to the customers in the form of lower prices.
When Henry Ford was mass-producing automobiles, he owned the power plants, glass factory, steel mill, rubber plantations, mahogany forests, and the barges that crossed the Great Lakes. He owned all this not because he wanted to, but because the transaction cost of partnering was greater than doing it all himself.
Today, e-business lowers the transactional cost of partnering but at the same time also lowers the barriers of entry and levels the playing field among competitors.
In the process industries, B2B (business to business) exchanges such as Sequencia's (Phoenix. Ariz.) ProcessPoint, The World Chemical Exchange, Energy Exchange, PetroVantage, GECustomElastomers, and the Oil and Gas Exchange have appeared, all with the goal of making it easier for all participating businesses to collaborate, save time, and reduce costs. That's not a bad thing so long as a company's management isn't caught in a mindset that believes lower cost automatically equates to more profit. Without a company's ability to create products, services, and business models that are truly unique and utterly compelling, e-business and e-manufacturing transformations may drive corporate strategies to be more alike than dissimilar.
During the past 10 years, we have witnessed how semiconductor manufacturers have divided their design and manufacturing activities to the point where companies focused on design confidently and efficiently outsource semiconductor manufacturing activities. The result has been a decline in margins made up in volume.
In the process industry, consumer products, food, beverage, and commodity chemicals are being produced in similar fashion. However, companies with engineered products, such as plastics, steel, fine chemicals, and pharmaceuticals, have been less inclined to adopt the semiconductor-manufacturing model, mostly because:
Executive-level managements haven't transformed their enterprises to an e-business architecture;
Business infrastructures aren't yet robust enough to conduct online collaboration;
Trust with one's partners is not as deep as it needs to be; and
Product translation languages are less defined than is needed.
So, when does a business become an e-business? It used to be when you could buy something from a company's web site. Today its when a company takes and fills orders, provides services, procures millions of dollars in goods and services, interlocks with suppliers, and supports customers and employees in different locations and different world areas to learn, collaborate, innovate, and work - all in real-time and on the Internet.
If that defines an e-business, then e-manufacturing must form the foundation on which the e-business is built; so what transforms manufacturing into e-manufacturing?
AMR Research (Boston, Mass.) defines e-manufacturing as a technology roadmap that takes e-business processes, such as build-to-order or reliability-centered maintenance, and generates guidelines for implementing plant systems that support transparent information flows among customers, suppliers, and employees.
So e-manufacturing doesn't mean rip-it-out and start over, it requires taking what you have and making it share information with other business systems. That sounds simple enough, so why aren't process industries doing more?
Well for one thing, the operational philosophy within many process industry operations is more along the lines of answering only what's asked-no less and no more. To the people in these operations, allowing data and information to flow among business domains is viewed as 'asking for micro-management from people who don't understand how things are in operations.'
Well, maybe that's true, but management has a way of managing with or without the necessary data and information, so just maybe it makes sense to ensure they are managing with as much information as they need to profitably grow the company.
OPC and XML provide the "glue" to hold different manufacturing applications together to
accomplish the e-manufacturing goal.
Assuming a business and its manufacturing operations want to become 'e,' some transformation hurdles to be overcome are the following.
Trust is probably the single most important success ingredient the semiconductor industry nurtured and evolved before reaching the ability to separate design and manufacturing. Long before product brand owners are willing to work with contracted producers, all parties must get completely comfortable with the relationship. The importance of trust in business relationships was validated by a study conducted and reported in the March 2001 issue of InformationWeek (Manhasset, N.Y., CMP Media) InformationWeek gathered data and ranked the 500 most innovative corporate users of technology. The one issue that most distinctly separated the top 100 companies from the next 400 was the willingness and breadth of information sharing among partners, suppliers, and customers. According to the article, InformationWeek took 25 to 30 cuts at the data attempting to see how and why the top 100 were more innovative and every analysis revealed the greatest gap appeared in the areas of openness, trust, and externally focused objectives and customer-centricity.
Fit is also important when it means fitting manufacturing into an e-business architecture. (See CE , Jan.'01, p.26). The success of every e-business strategy relies on the foundation upon which it is built; in this case that foundation is the manufacturing process-the part of the business that produces product. E-business strategies map defined business drivers from top to bottom. Manufacturing can't be an appendage to the strategy, it must be a planned, integrated element that permits closing the loop on business planning and scheduling. Sure the loop needs periodic tuning to accommodate changing process (business) dynamics, but who knows more about tuning dynamic loops than process control engineers? The alternative is to allow manufacturing systems to operate as islands or cells in open-loop mode, and we all understand the risk and variability introduced with open-loop control.
Language is another important success ingredient the semiconductor industry has overcome and process industries are working on. Language, not in the form of English, Spanish, or German, but an unambiguous articulation of how to produce a product. For example, computerized numerical control (CNC) machines can be programmed to produce a part from CAD (computer aided design) drawings. Process industries aren't quite there yet, but the ANSI/ISA S88 and the IEC 61512-01 batch standard provide a uniform language for defining the what and how of producing a product, including the definition of a general recipe. (See Online Extra for additional reading on general recipes.) It is this standardized method of defining a product's general recipe that Sequencia's ProcessPoint leverages to allow owner/producer collaboration. Such collaboration can determine where to best make a product, how to evaluate if other production facilities are viable, and how complementary or interchangeable are manufacturing operations with those of other companies. Some arguing against the use of S88-like standards maintain implementation is too complex or overkill. True, S88 can be complex, though it doesn't have to be, say, compared to the complexity of seamlessly integrating 20 or so custom PLC batch solutions into a single ERP system. Standards can dramatically ease such complexity of implementation, support, and subsequent modifications or upgrades.
Definitions and dictionaries in the semiconductor industry have been developed to support electronic exchanges of information. For example, design, engineering changes, customer orders, parts produced, and manufacturing cycle status are examples of information that flows easily among designers, producers, and customers in the semiconductor industry. This information flow mainly results from established trust, standardized information exchange methods, and the groundwork for what eventually became manufacturing execution system (MES) solutions. Until recently, process industry information tended to be bottled-up in proprietary systems that reluctantly shared data only after users learned SQL (Structured Query Language) to extract and manipulate the data into useful information. OPC (OLE for process control) is a recent standardized client/server technology developed by a consortium of vendors to address the problem of sharing information among control and automation devices from different suppliers. Most control and automation system suppliers offer OPC-compliant products, essentially eliminating the need for custom drivers, allowing use of point-and-click tools to connect different supplier control and automation system devices. But OPC doesn't provide the whole answer. The need to electronically share information between disparate systems and across enterprise domains is not unique to process industries. For several years IT professionals have been claiming the answer would arrive once the World Wide Web Consortium completed development of XML (eXtensible Markup Language). The final version of XML was recently released, and guess what? Information isn't magically and seamlessly flowing across domains. XML defines the structure of the language (i.e., we read left to right, top to bottom), but the dictionary of words and universal acceptance of what a word means still must be developed. Enter schemas, an information-exchange dictionary developed for and accepted by a particular industry, business, or domain desiring to seamlessly exchange data. In the process industry, the ISA S95 committee, a spin-off effort of the ISA S88 committee efforts, has made significant strides in developing models and establishing terminology that aid the sharing of plant/shop floor data across domain boundaries. Upon first blush, S95 looks like a standardized MES (manufacturing execution system) application, but S95 part 3 defines the activities required in manufacturing to provide the capacity, capability, and execution visibility required by an e-manufacturing strategy. This expanded view includes elements not included in the original MES model, such as process and production analysis, product analysis (quality assurance), maintenance management, and process. Adding these extensions provides the mapping and time domain transformation needed to convert real-time device information into transactional business information.
Knowledge is power is a statement often associated with e-business and e-manufacturing justifications. But knowledge is not power; the authority and ability to act on knowledge is power , and despite claims to the contrary, many companies are not culturally ready, willing, or able to empower employees to take action. In fact, there is evidence that companies grossly over-invest in technologies that deliver information to people at all levels of the organization and dramatically under-invest in delegating authority and empowerment. Why? Because as information rises in the organization, senior managers find it easier to see more and more of what's going on, and this can lead to a recentralization of decision-making, rather than decentralization. Once managers and employees understand and accept where decision-making occurs, they must do what is necessary to ensure the information being used by those persons is accurate, timely, and complete. That's where c- (collaborative) and e- (electronic) manufacturing merge.
Innovation is key to producing wealth, but for too long we have focused almost exclusively on improving operating efficiency, rather than creating competitive differentiation-and thus competitive advantage and better-than-average profits. As long as business leaders exclusively follow the efficiency improvement path, they will continue to fall victim to e-biz vendors who claim information technology (IT) is a source of competitive advantage, encourage clients to outsource, expound the virtues of buy rather than make, and encourage embracing best practices instead of creating better practices. Anyone with major capital spending authority needs to understand the difference between cheaper and different. Sharing and using best practices is worthwhile, but innovation and out-of-the-box thinking is what produces better practices and creates a competitive advantage that delivers above average-profit. Many companies have succeeded in making everyone responsible for quality; now it's time we do the same for innovation.
Begin with what exists
Too frequently, users believe that embracing an e-manufacturing strategy requires starting over; almost without exception, that's not the case.
For example, for years process industries have been using PIMS (Plant Information Management Systems) such as Aspen Technology's (Cambridge, Mass.) Info Plus 21 or OSI's (Houston, Tex.) PI.
Making PIMS information available across enterprise domains, in a user-ready format is what EMI (Enterprise Manufacturing Intelligence) provides.
A recent AMR Research report examined the EMI market space, explaining how companies such as IndX Software (Aliso Viejo, Calif.), Lighthammer Software (Exton, Pa.), Mountain Systems (Green Bay, Wis.), Real World Technologies (Mt. Prospect, Ill.), and Verticore (Salt Lake City, Ut.) have developed applications, services, and products that retrieve manufacturing information from PIMS applications and makes that information available anywhere, anytime using a browser and an Internet connection.
Look to traditional suppliers
In recent years, traditional control and automation suppliers have been spending a lot of time and money learning about and developing XML, OPC, S95, and S88 solutions so users can point, click, and connect different control system elements into a solution that shares information within and across domain boundaries.
The following is only a small representation of e-manufacturing related product solution offerings from traditional control and automation suppliers.
Emerson Process / Intellution's (Foxborough, Mass.) iBatch, iWorkInstruction, iHistorian, and iDowntime modules are designed to efficiently address the movement of data into informational content to support timely decision-making and cross-domain exchanges. iBatch and iWorkinstruction have been designed to help users implement electronic record keeping and signatures as defined in U.S. Food and Drug Administration regulation 21CFR Part 11.
Rockwell Automation's (Milwaukee, Wis.) family of RSBizWare modules are designed as near-ready-to-use modules that assist users integrating plant floor processes with upper-level business enterprise systems.
ABB Automation Group (Zurich, Switzerland), in a joint venture with SKYVA International (Medford, Mass.), provides industry specific (i.e., pulp and paper) extended collaborative supply chain management solutions. The core of SKYVA's technology is a JAVA-based distributed object framework to produce intelligent wrappers of information from dissimilar environments capable of populating complex collaboration communities.
Invensys Process Automation provides integrated e-manufacturing solutions using division products, such as Baan's iMake, iBuy, iSell, and iService ERP modules, Foxboro's I/A S88 conformant batch offering, and Wonderware's WonderACT SuiteVoyager data historian.
Addressing process industry supply chain collaboration needs is what company's like ABB, Aspen Technology, Honeywell Hi-Spec/POMs (Phoenix, Ariz.) and Invensys / Baan (Barneveld, The Netherlands) have been working to provide.
Just because your favorite supplier wasn't on the above list doesn't mean they have nothing to offer. Contact them about what tools and capabilities they have to make cross-domain information sharing easier.
Whether the word business and manufacturing are proceeded with an 'e' or a 'c' is much less important than understanding how these capabilities can help gain a unique competitive advantage. That advantage must create value for customers, or lower the cost of providing that value, and be difficult for competitors to imitate.
Even the least-handy person among us knows you can't build anything starting at the top and working down; not buildings, nor houses, not ERP (Enterprise Resource Planning) solutions, and not e-business solutions. If your company is about to become, or is already in the throws of transforming to an e-business strategy, and production is not at the foundation of the architecture, then speak out loud and strong. To remain silent could be disasterous.
To read a longer version of this article as well as additional related material, visit
'Accelerating Product Deployment with Inter-Enterprise Recipe Management' by Seqencia's Dennis Brandl.
'E-manufacturing, A Catchy Name for what You Should be Doing Anyway.'
'How manufacturing Benefits by Understanding ERP and IT.'
'OPC Integrates the Factory Floor.'
'Control, MES Partner for C-Manufacturing Solutions.'