To reach desired “IT end-state,” Volvo CE focuses on multi-plant performance

With exports of complex products from developed to developing economies on the rise, the construction equipment market is a robust one. Volvo Construction Equipment (CE) has experienced “tremendous growth,” says Scott Park, CIO and senior VP of processes and systems for the Brussels-based division of Volvo Group.

By Kevin Parker, editorial directorand Frank Smith, senior contributing editor October 1, 2007

With exports of complex products from developed to developing economies on the rise, the construction equipment market is a robust one. Volvo Construction Equipment (CE) has experienced “tremendous growth,” says Scott Park, CIO and senior VP of processes and systems for the Brussels-based division of Volvo Group .

“The last five years it’s been organic growth, and prior to that through acquisitions,” says Park. “We’re moving now to a ‘one-company’ vision. Consistent performance across what have been disparate entities will help us meet our aggressive growth targets.”

In the wake of considerable and ongoing change, then, Park has been tasked with conceptualizing and executing a “desired IT end-state,” as he describes it.

“The program actually encompasses three areas: process innovation, total quality management, and information technology,” says Park. In moving from a multinational corporation to a globally integrated enterprise, “Volvo CE needed an integrated supply chain, and that’s where we’re headed,” he explains.

At the heart of that supply chain are 16 production plants found in numerous global regions, with diverse heritages and cultures, all of which—to maximize output and quality—should be part of a single global production system.

“We need to be able to make any product at any location. We need to be able to measure the effectiveness of methods used at different locations,” says Park. “Best practices can then be shared.”

The plant operations system that supports these efforts at Volvo CE is Apriso FlexNet, which has been variously described as a manufacturing execution system (MES) or as a “core system” for plant floors, in the sense that ERP is a core system for the business. One differentiating characteristic of Apriso’s approach is said to be its focus on plant operations as part of a greater supply chain.

For Park, what strikes him first is FlexNet’s flexibility, “and its center-of-excellence concept to identify best practices,” he says. “It can be very difficult to change manufacturing culture and practice. Apriso adapts to our processes, but can change over time. You need a system to prove your point to plant managers.”

A bigger picture

Evidence indicates that a growing number of manufacturers are availing themselves of the opportunity—based on the sophistication and scale of today’s ERP systems and a new generation of service-oriented architecture (SOA)-based plant operations software systems—to implement multi-plant performance initiatives. Gains are seen in that iterative implementations become increasingly easy, needed IT resources can be quantified, and performance can be measured and thus improved—although getting to true “apples-to-apples” comparisons can be a challenge.

According to Colin Masson, a senior analyst with Boston-based AMR Research , “Legacy architectures of most MES systems are based on a static plant equipment model. You configure it once and it’s hard-coded, making it difficult to deploy at another site that has a different equipment configuration.”

Apriso has more of a “top-down” supply network model, Masson adds, “where manufacturing is part of an overall fulfillment process. Each site is modeled and then further down the road, potentially, best practices can be aggregated. Apriso solves the problem from a business-operations management perspective. It dramatically accelerate multisite deployments.”

“We’re putting in place the processes each plant believes it needs, and then, with real comparable numbers in place, can enact needed change, Park says. “Shoving change down people’s throat doesn’t work at any company.”

Performance issues aside, “The ease of integrating FlexNet with the SAP ERP system was critical,” says Park. “It’s less easy to change SAP ERP, so there we have defined processes with a small amount of localization.”

Getting started

Volvo Construction Equipment makes, sells, and services loaders, excavators, and haulers from sites all over the world.

Volvo CE instanced its global operations solution standard first in 2006 at its Changwon, Korea-based excavator-equipment production plant. “At the time, it was the biggest and most complex facility we had, and they have very strong concepts [regarding best practices],” Parks says.

The Changwon plant already had a homegrown system in place that suited its methods well, but that was “inflexible.”

A team comprising stakeholders from the plant, members of Park’s staff, and representatives of Apriso professional services managed the implementation.

“We struggled at first,” Park says, “but we found our way and put together an extremely ambitious plan that our senior executives believe will deliver real value to the organization.”

The first step was a production process template.

“We replicated features and functions of the existing MES, but built it in a way that they could take the model anywhere in the world,” says Daniel Winters, Apriso program manager for professional services. “In seven months we created an entire execution system with material feeds, scheduling, and manufacturing production—with an interface to SAP.”

If the process model is the map, then FlexNet’s SOA is the means to configure processes based on discrete “services” that constitute the needed “building blocks.”

The plan is to have FlexNet implementations complete at all Volvo CE plants that will use the system by early 2009.

At Volvo CE, Apriso FlexNet manages production at component, fabrication, and assembly plants, including production order execution, logistics related to material feed, quality, production monitoring, and machine integration.

“We hit all machine points, all displays, and all real-time monitoring tools,” says Winters. “With the process model and the basic building blocks, you can make process steps discrete and reusable, which provides a lot of value to the client.”

Assembly, fabrication, and component orders are sent to FlexNet through an IBM WebSphere integration broker, with subassembly orders generated and sequenced based on the parent assemblies, and orders optimized by a “line of balance” process performed for the next seven days and transmitted with a suggested daily sequence.

At Volvo Construction Equipment, Apriso FlexNet is being rolled out as a corporate standard for production management for component, fabrication, and assembly processes.

Planners can modify the suggested sequence or assigned date. Sequence numbers are assigned to both the parent order for assembly and child orders for fabrication. Options for sequence manipulation and irregular fabrication order sequencing are available.

Each day’s work orders are delivered to the assembly line at the start of the day, and contain the sequence number and symbols related to each operation within an assembly sequence.

Milestone operations are reported to FlexNet and uploaded to the SAP FactoryMaster via touch screens and bar-code scanners, with results displayed to users in the daily sequence.

Three quality processes—ultrasonic test, product audit, and weld audit—are embedded in the production flow, with preconfigured result logic and alerting capability.

Finally, monitoring capabilities include work-in-process (WIP); WIP in assembly; cumulative daily build; line stops; material feeding; fabrication display; and component production performance results.

Common values

Each facility does some things the way it wants, Park says. “With the first site, we’re close to 90-percent fit. My hope is that once we’re about one-third the way through with the overall implementation, we’ll be able to accelerate the other deployments and be close to a 95-percent fit.”

Park deems the approach a “penetrate-and-radiate” strategy.

“We don’t consider ourselves a technology-leading company from an IT perspective, but a strong follower of proven solutions. But hopefully it will prove the envy of a lot of manufacturing companies out there.

“I’m looking forward to the day when the vision is achieved and IT will be strategically placed in the organization from a business perspective, not just an IT perspective,” Park continues. “If we stay the course, it should provide a strong competitive edge in our industry.”