Plant Automation and Supply Chain Execution Converge
Manufacturers' increasing integration of automation and enterprise technologies are being used for a variety of purposes, from production margin optimization to strategic energy efficiency decisions.
Indiana Veneers has seen good times come and go in its 117 years in business, but the current global recession has given it new challenges to face and adapt to. The Indianapolis-based company specializes in hardwood veneers exported to 42 countries for use in furniture and paneling. Due to the dramatic fall-off in business, it has been forced to operate leaner, with production geared more tightly to customer demand. It has turned to real time data coming from its PLCs for use in determining profitability and satisfying customer delivery expectations.
“When we buy trees to fill an order, it’s almost speculation for what we’ll find once we slice them open,” says Skip Smith, technology director. It’s only after the wood moves through grading, sorting, and bundling that the company can determine margins and expected profitability. The company has come to rely heavily on the tight connectivity between its Mitsubishi Electric IQ Series PLCs and the Mitsubishi MESInterface IT module that is resident within the PLC.
The unique configuration has enabled the company to streamline and accelerate real-time visibility by eliminating an OPC connection that wasn’t fast enough to accurately poll and capture the complete data set associated with a bundle due to the high rate of speed at which bundles are processed on the conveyor line. The resident MESInterface IT module now takes data directly from the PLC and sends complete data packets to the Microsoft SQL database, making accurate information immediately available to decision makers.
“Before, we might have gotten incomplete or inaccurate information due to the relative slowness of OPC polling. Now we can quickly and accurately know whether we have enough to fill an order, and how much we have to charge to make money,” Smith says.
A coming trend
Too early to be certified a clear trend at this point, the convergence of automation and supply chain execution is being explored by pioneering companies around the world. The relevance of automation data “is no longer restricted to remaining within the four walls of the plant, but extends to an enterprise’s portfolio of plants and to its extended supply chain,” says Greg Gorbach, vice president of ARC Advisory Group. “Companies are beginning to deal more holistically with the information so they can better respond to dynamic market needs.”
Bill Polk, research director of AMR Research, refers to the shift as moving away from an 'inside out’ to an 'outside in’ business orientation. “The days of manufacturers being told what to make are over. Successful plants will be successful nodes of an extended supply chain. Those that are disconnected will fail no matter how efficient they operate,” he says.
Though reducing costs is not new to manufacturers, the hammering inflicted by the global recession has made it singularly imperative to survival. But with inventories depleted and signs of an emerging recovery, there’s anticipation it will be followed by expanded focus on margins and profitability.
“Though demand will be variable, with smaller orders and shorter cycles, everybody will want to take orders when the economy recovers,” says Don Hart, Rockwell Software vice president of marketing. “But there’s certain to be an all-out price war.”
Says Marc Leroux, ABB marketing manager for collaborative production management: “Manufacturers will want to know not only if they are capable-to-promise, but whether its profitable-to-promise.”
Automation vendors adapt
There are numerous drivers behind automation-supply chain execution convergence. “First and foremost is the desire on the front end to reduce the latency in sensing the demand signal. This is not necessarily the role of the plant, but the owner of the supply chain,” says Polk. Regardless, “leveraging automation and control technology to be more adaptive and agile in responding to the demand signal is critical.” This is something automation vendors have gleaned and are working to engineer in their portfolio offerings. It’s creating what Polk describes as a “seismic shift in the DNA of many automation vendors. Invensys, GE, Rockwell, ABB, Emerson, and Siemens are moving down this path, trying to create more integrated organizations and product portfolios,” he says.
As evidence of this, consider the June 2009 Invensys reorganization of three separate division—Invensys Process Systems, Wonderware, and Eurotherm—into Invensys Operations Management. This move was said to have been done to bring tighter focus and product synergy to its portfolio across the production chain. Likewise, Rockwell is engineering similar synergies in leveraging composite applications that combine capabilities of various acquired technologies, including Incuity’s manufacturing intelligence, Pavilion’s process optimization, and Datasweep MES functionalities.
One of the industry drivers behind these recent synergistic moves by automation providers is referenced in the findings of an August 2009 AMR study, which states that manufacturers still turn more readily to ERP suppliers than to automation vendors for broad enterprise software guidance. “Only a small portion of U.S.-based companies surveyed see automation and controls vendors influencing their manufacturing operations spending decisions similar to their enterprise vendors,” the report states. The authors stress that automation vendors need to do more to integrate platforms they have.
“The technology is there, but vendors need to look at the data flows and provide tighter integration—creating more of an ERP-like platform with true operations management capabilities,” Polk says.
Early signs of convergence
This is not to say that progress isn’t being made. “Surprisingly, in food and beverage and in automotive, we’re talking with supply chain vice presidents. They’re becoming big advocates in bringing us in and having us meet with all interested parties,” says Hart of Rockwell Software.
One area of opportunity widely viewed as ripe for impacting demand-driven supply chain- and enterprise-margin performance is energy cost management. “We’re working with meters and instrumentation in several areas on the plant floor to help feed energy costs into ERP for it to be included as a component of bills-of-material,” Hart says. It gets netted as energy cost per pound of material produced. “It can help answer such questions as 'can I wait to fill the order until evening, when costs of energy are less?’”
For one large German polymer manufacturer, Rockwell leveraged three technologies it acquired to power a dashboard for selecting which process reactor provides the best margin at the moment for meeting customer demand. This includes visualization technology from Incuity, optimization algorithms from Pavilion, and MES from Datasweep. The customer also uses the composite application to optimize the credit/penalty agreement it has with a critical feedstock supplier.
Likewise, Wonderware is involved in a pioneering multi-plant deal with a Midwestern food manufacturer that was driven by an enterprise supply chain initiative. “They drove it right down into manufacturing, hooking manufacturing and the supply chain together,” says Tom Troy, Wonderware director of MES solutions. It was justified on the premise that “their supply chain was only as strong as its weakest link—and if they didn’t drive it down to manufacturing, manufacturing would be a missing link.
In this implementation, the company is using Wonderware System Platform 3 to link various Rockwell automation technologies in the process/batch and packaging areas. Data aggregated from the automation systems by Platform 3 is then fed into the Wonderware Operations MES module that updates the company’s SAP enterprise and Red Prairie supply chain systems. The manufacturer uses this diverse system linkage to provide critical visibility to enterprise supply chain and warehouse applications.
“Theirs is a very low margin business. They needed to reduce inventory, improve perfect order performance, and increase margins,” he says. The company is involved in a pilot project now, but will eventually roll it out to 40 plants over three or four years.
Despite several examples of system integration as described above, it would be an overstatement to say that automation-supply chain convergence is a prevalent trend. “Of the more than 50 Fortune 500 companies I’ve met with over the last two years, this is the only company that has embraced this kind of vision,” Troy says. But they are 100% committed to it being successful, he asserts. And if their manufacturing capability truly becomes “a successful node” of its extended supply chain, it will likely pressure competitors to rethink just how deep supply chains need to reach into their plants—and the critical role that automation can play in supporting successful, demand-driven extended supply chains.
Frank O Smith is a contributing writer for Control Engineering.