There must be a MES/MOM Lifecycle Management scheme for controlling and accelerating the operations change process. Effectively managing change from an operations or supply chain director perspective involves a number of milestones.

An Manufacturing Execution Vision: Harmonize on Transformation Roadmap and Priorities:

• Form a cross-department process action team (PAT) to identify production pain profile of today’s plant environment and recommendations.
• The PAT next identify MES solution opportunities and AGREE on the recommendation priorities and order for a systems roadmap
• Each MES project in the roadmap must have compelling performance improvements to support the company’s business strategy. This link is critical.
• The production pain profile and systems roadmap is the basis for a 3-5 year Manufacturing Transformation Strategy and Manufacturing Maturity Model for scalable continuous improvement. For MES to be successful, plant management must do 3-5 year strategic planning every year using a PAT.
• The PAT must develop concise business cases based on tangible operations benefits for each project/step in the roadmap that focuses on key business issues of manufacturing domain which directly tie the MES platform to increasing EBIT and profit.
• Each operations manager must formally sign off on the Manufacturing Transformation Strategy before it is presented and explained to the Executive level for approval and support.  The Executive level will already have awareness of the PAT harmonization and strategic planning efforts and be expecting a department-level agreement on path forward and benefits.

Success in applying a MES system requires this Established Commitment across manufacturing operations department to have a real chance doing it right the first time. This has been the lesson learned in the first 15 years of MES. Without creating a common understanding of the main factors, the departmental barriers or turf wars simply hold back your manufacturing performance and the needed support for real operational change and improvement.

This process builds and mobilizes shared vision and constructs the transparency necessary for the MES system to be a platform for continuous improvement. When the system requirements for MES are built from an agreed upon vision, then MES becomes a real business architecture. The system requirements and expected benefits are then transferable across staff and suppliers to enable end-to-end business scenario development.

When the Process Action Team (PAT) delivers a common MES/MOM Vision, their organization alignment:

Shapes final form of the projects to address the prioritized needs of the greater plant;

Accelerates the Change of the cultural and process changes; and

Delivers and Governs on the operations improvements as advertised to the Executive level.

NOTE: The next project’s business justification in the Transformation Roadmap must be a “Deliver” activity in the current project. The KEY point is that the reason many MES/MOM Transformations fail is that the Roadmap is project-based. This creates stops and starts in the path.  So each project must budget for the next project’s business case, benchmarking, and feasibility study.  Typically, when Project is done, the transformation stops dead in the water until funding from the next business case has been re-sold again and again which takes a 3-5 year transformation and literally makes it a 10-15 year transformation.  Typically, management changes over every 5 years, the internal MES education and sell starts over again including the “ERP can do MES” battle and organization alignment on the path. This point must be made since it is the reason many MES/MOM program fails.

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It takes 5 years and 2-4 large projects for an MES architect to learn how to model manufacturing processes into a flexible database application. It is an empirical knowledge that requires trial-and-error, mentoring, or both. Successful projects require the combination of required skills to be assembled into a cross functional project team led by a project manager who specializes in MES projects.

The MES project tends to have significant scope variations due to progressive insights throughout the requirements discovery because MES supports 3 critical business processes: product lifecycle, order fulfillment, and supply chain management. Many projects start with a focus on order fulfillment and then get progressive insights from the other business areas.

Enterprise IT solutions and service buses are grounded in low-fidelity business systems enabling well-defined business processes, data models, and transactions. MES/MOM is not in the current comfort zones of Enterprise SOA, BPM, and architectural thinking. Corporate IT remains challenged by MES/MOM projects. Corporate IT deployments typically trivialize manufacturing real-time complexity and change requirements by favoring a financial planning approach to Manufacturing IT solutions.

Their convergence of IT and Operations is challenged by a myriad of unfamiliar of manufacturing technologies and processes. The orchestration of manufacturing applications to support real-time operations processes challenges their current perspective of IT systems. Blending of IT and operations skills is their work in progress.

The MES skills convergence is further complicated by manufacturing companies who out sourcing IT functions including MES to IT firms who do not have the experience or leadership to deliver the required MES project described above.  The MES capabilities of outsourcing firms need to be clearly understood to enable successful execution of MES projects.

The turf wars being conducted between manufacturing operations and enterprise software providers are also blurring boundaries.  All of these influencers led to large project risk in the MES solution space.

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Manufacturing Execution Systems (MES) evolved dramatically over the last 20 years to be further defined and replaced by the functional activity models and the term Manufacturing Operations Management (MOM) in ISA-95 Part 3, MOM Activity Models.

These and other MOM standards have evolved the current generation of MOM systems into a Work Process Management (WPM) architecture. WPM now performs near real-time root cause analysis while directing and tracking order routes, batch processes, material transformations and movement, and the status of plant resources. Even as important in competing globally, MOM solutions based on WPM are growing in demand as manufacturers seek to streamline plant operations while aligning those operations with ever-changing supply chain processes.

These manufacturers are discovering that using modern computing technology combined with continuous improvement methods dramatically accelerate time-to-benefit. Optimizing manufacturing operations within a global supply chain requires a WPM application on a platform to define, model, and coordinate each plant’s work processes and resources across shop floor, MOM and supply chain applications. An operations work process engine in a WPM system is the key unifying application for aligning business and plant processes for rapid response to normal and abnormal tasks and for optimizing all real-time conditions.

Real-time work process applications drive proper notification and acknowledgement of alerts, alarms and events to trigger alternative and corrective work processes and tasks through integrated real-time transactions.

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For the ROI calculation for a MES/MOM solution, all of these cost reductions are summed up across a plant’s value stream and through improved variances in each material transformation process.  YES, these cost savings go directly to increasing profit.  So profit is increased two ways: One by cost reductions in labor, inventory, assets, and effectiveness/efficiency of operations processes; Second by increasing revenue.

MES/MOM solutions are traditionally not justified on their ability to increase revenues through increased quality, accelerated NPI, accelerated time-to-volume/market, increased Perfect Order, and being a scalable continuous improvement platform. All of these ROI benefits for increasing revenues can be calculated but are viewed as less tangible and more strategic in the CAPEx project approval process.  They simply make the business case better.

Also worth mentioning is how the Supply Chain Council’s SCOR model has developed their metrics framework through Vollmann Diagrams by mapping the supply chain planning metrics to the plant operations metrics.  The Level 1 Supply Chain performance metrics are: Perfect Order Fulfillment, Order Fulfillment Cycle Time, Upside SC Flexibility, Upside SC Adaptability, Downside SC Adaptability, SC Mgt. Cost, COGS, Cash-to-Cash Cycle Time, Return on SC Fixed Assets, and Return on Working Capital.  All are heavily influenced by the MAKE metrics.  The Perfect Order metric is a great example where MES/MOM solutions directs reduced cost directly to profit.  The metric is defined by 4 process metrics:

1) Delivered 100% complete

2) Delivery Performance to Customer Commit Date

3) Documentation Accuracy

4) Perfect Quality and Condition

If any of these metrics are not 100% correct, expensive secondary business processes are performed to complete the customer order.

MES/MOM is the only solution to reduce these costs of an im-Perfect Order.

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Productivity may be based on the production of an area, line, or work cell but some company’s measure productivity based on units or based on order moved into the warehouse as finished goods inventory that is ready for picking and shipping.

Unit based Productivity is measured as a throughput number such as unit per hour, shift, day, week, or month by line, shift, or plant.  A unit can be an individual piece, crate, or pallet of pieces.  An order-based productivity is simply based on production orders completed and/or shipped.

Another popular version is Labor Productivity which is based on units per manufacturing labor or labor hours per unit.  Here is a list of a number of productivity metrics:

• Cents per Unit (CPU): The total Cost of Production/Total quantity of useable Units produced
• Direct Labor Productivity (DLP): Units per hours – Labor hours that are able to be directly linked to a specific manufacturing Line/process
• Units per Person Hour (UPH): Good Units Produced/Actual Manufacturing Labor Hours, Actual Manufacturing Labor Hours is: Total Permanent Labor Hours + Total Temporary Labor Hours (Full Time + Part Time) + (Agency + Casuals)
• KG/Per Man Hour (Labor Productivity in KG/Mn Hr): The actual number of useable units produced per physical hour of labor
• Performance Percentage (%): The specific quantity being produced during the running time, versus the potential quantity, given the designed or ideal speed of the equipment.

Here are some additions productivity metrics:

• Returns/Productivity
• Return on assets/net assets (ROA/RONA)
• Productivity in revenue per square foot
• Productivity/Sales per employee
• Return on invested capital (ROIC)
• Labor hours per unit of output for salaried employees
• Labor ours per unit of output for hourly employees

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Eyes must be wide open to the current state of politics, capability, and customer expectations. A realistic evaluation of your personnel under your change and on your management team is required to construct a skill matrix.

Next, a gap analysis is needed to understand your customers and their expectations compared to your deliverables and ability to deliver to an operations margin. The detailed assessment of your operations costs (labor, assets, inventory, and operations expenses, and cost per unit) for which you are directly responsible is required in terms of capability/capacity of what products at what throughput rate at what cost.

A major part of these assessments is to understand if the current metrics and reports used for operations and financial adequately measure the state and performance of operations. Are the operations and financial metrics misaligned to the point that effective processes are compromised?

After 30 days in your first 120 days, consider a manufacturing transformation assessment as explained in MESA Paper #38, Building a Manufacturing Transformation Strategy with ISA-95 Methods. A thorough manufacturing operations assessment looks at 4 business domains to build the manufacturing maturity and capability models and transformation strategy:

1) As-Is/To-Be user requirement of the operations processes for fulfilling the current demand state and product set

2) As-Is/To-Be (required) alignment of organization structure to effectively execute operations processes

3) As-Is/To-Be Personnel skills assessment of required process role, responsibility, and authority level to effectively execute operations processes, and lastly

4) The As-Is/To-Be manufacturing systems assessment of the functionality set to the user requirement specifications for the required operations processes.

The resulting manufacturing transformation assessment provides the current as-is and to-be manufacturing maturity and capability maturity models with comprehensive 3-10 year strategy in a manufacturing system roadmap.

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Many manufacturers come to this challenge from only top-down business intelligence methods with financial metrics based on monthly mass balance numbers and/or basic macro supply chain metrics like capable-to-promise.  This approach is like driving by looking in the rear view mirror.  It does not factor in the current as-is plant capability, capacity, and cost metrics into a high value decision making process.  Global supply chain management requires near-real-time plant metrics to be able to understand many dependent business and operations processes.  Based on the current state of operations resources and demand, management MUST know how best to balance the flow and purchase of materials from suppliers to customers to ensure the highest profit margins on every sales order.

One of the best practices for doing this alignment is to build the top-down and bottom-up metrics frameworks in parallel. Let’s start with the top-down best practice first.  The Supply Chain Council’s Supply Chain Operations Reference (SCOR) Model has spent over 10 years developing their Metrics methods and mapping. SCOR PLAN Level 1 Metrics map to supply chain operations Level 2 metrics which then for the plant maps to MAKE manufacturing Level 3 metrics.  The PLAN Level 1 metrics are chosen based on the focus type that your company’s supply chain must operate. PLAN Level 1 metrics categories are reliability, responsiveness, flexibility, cost and assets. So if your supply chain focus is on reliability, you would construct the Perfect Order Level 1 metric which maps to four Level 2 supply chain process metrics and which in turn are partially supported by five MAKE Level 3 plant metrics.  A note here….the Levels in SCOR and not the same as the ISA-95 Levels but SCOR Level 3 is the same as MOM Level 3 in ISA-95.

So now that we have the SCOR Level 3 plant metrics, we do the bottom-up performance metrics for the plants manufacturing operations to determine what metrics are to be used to construct the SCOR metrics.  Big note here…..the SCOR Level 3 calculation is not the same across all plants or lines because each manufacturing form or type uses different performance metrics to control the operations.  An example of this is the throughput for a discrete packaging line is calculated in units per hour where throughput for a batch mixing operation is calculated in pounds or gallons per mix per hour.

Now, to do the bottom-up metrics framework for a given plant, the best practice is to start with a value stream mapping (VSM) of the end-to-end process and determine the waste streams to be controlled, their losses per use cases, their performance metrics, and the cost per waste stream.  Second, around each work center’s or unit’s actual physical process, Six Sigma analysis must determine the process variances, their losses per use cases, their performance metrics, and the cost per event type.  The combination of VSM and Six Sigma to determine the bottom-up metrics framework provides the requirements definition for the MES that must do the data collections, calculations, reporting, and interfaces to construct the SCOR Level 3 metrics.

Hope this helps.

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CI initiatives include, but are not limited to:

• Lean manufacturing
• Six Sigma
• Design for manufacturing (DFM)
• Total productive maintenance (TPM)
• Condition based operations (CBO)
• Total quality management (TQM)
• Theory of constraints (ToC)

MES/MOM system transformations include, but are not limited to:

• manufacturing execution systems (MES)
• product lifecycle management (PLM)
• quality management (QMS)
• enterprise asset management (EAM)
• finite capacity scheduling (FCS)
• enterprise manufacturing intelligence/analytics (EMI)
• data collection historian systems

Historically, CI and Manufacturing Execution Systems ROI calculations have been hard to develop to adequately justify capital funding. The primary reasons have been a general lack of understanding of:

1)     the actual types of improvement benefits that optimize operations

2)     inadequately benchmarking the use and cost of the CI method applied to characterize the MES solution requirements

When the initiatives are combined, justification for CI and Manufacturing Execution Systemsis more easily described and the project ROI can be quantified in a defendable form.  Projects must combine Manufacturing Execution Systems functionality to enable specific CI initiatives and outcomes. The same reasoning applies to CI projects: Phase 1 Manufacturing Execution Systems must validate CI benchmarks and then sustain and track the CI progress of improvements. CI-enabled Manufacturing Execution Systems and their ROI justifications are required by any manufacturer attempting the three to five year Lean Transformation Process or MES System Roadmap for operations excellence. ROI benefit calculations are required by management to determine which capital projects get funding approval and which get allocated, non-billable resources for projects. Defendable Manufacturing Execution Systems justifications are based on an assessment of financial risk versus reward presented in a business case for corporate financial management.

The challenge is to conduct a granular ROI assessment for a defendable justification, and then aggregate the findings into a high-level enterprise value proposition-based business case for management’s understanding and approval.

According to a Control Magazine Survey from December 2008, 85% of cross industry manufacturing plants still utilize paper-based processes and data exchange transactions to manage and execute their plant operations (less in high tech verticals such as telecom, electronics and semiconductor). This is important because:

• In general and contrary to popular opinion, current manufacturing management has limited knowledge or confidence in the success of Lean transformations, Six Sigma initiatives, or Manufacturing Execution Systems for real-time work process execution
• In 2012, CI and Manufacturing Execution Systems projects are still viewed as high risk due to the perceived high cost/value ratio, required cultural change and organization re-skilling
• CI methods enabled by Manufacturing Execution Systems are not currently well known or viewed as complimentary to benchmark, enable, accelerate, and sustain operations improvements
• Upper management, especially finance, has a hard time committing the adequate full time resources to properly execute manufacturing changes, even if required to be competitive in the short, mid, or long-term.  This is killing many companies …. risk is required to grow
• CI and Manufacturing Execution Systems projects are historically underfunded, under resourced, and under skilled, which leads to the high-risk view and current project failures in CI initiatives and MES/MOM systems

This is the current “manufacturing management paradox” in global manufacturing:

• The “Do Nothing” option means to:  1) make a short-term profit or margin goal with loss of market share over one to three years or  2) assume medium risk and cost for required change that will potentially take two to five years to succeed
• Apply the political reality of short-term cost cutting for short-term gains. This type of management decision is often driven by personal and political reasoning to promote the executive’s or manager’s short-term bonus metrics or plan for personal advancement
• In contrast, CI and Manufacturing Execution Systems projects are typically a mid-term decision based entirely on real business needs for market competiveness and adaptive manufacturing for today’s global supply chain effectiveness. A properly conceived project has an ROI on a CI/MES Transformation Roadmap of 6-24 months

Even though CI methods enabled by Manufacturing Execution Systems are a best practice for operations excellence, they are not yet widely applied (15 to 20% of plants at best). Over the last 20 years, the tools and methods greatly matured through the efforts of innovative manufacturers, consultants and vendors. In the last 10 years, both optimization approaches came down in cost and risk due to the steady growth of the global knowledge base of skilled delivery resources.

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• global competition
• increasing pressures for cost reductions and new products
• quality-driven compliance
• improvements in on time and infill orders

The Perfect Order is required. A company’s core business functions is affected including product design, manufacturing, supply chain operations, sales and customer service. Within this context, many manufacturers are initiating corporate-wide Lean cultures and programs in order to compete in the 21st century.

Though Lean concepts have been around for many years, it is only recently, with the advent of modern information technologies, that an enterprise can realize the true vision of Lean. With state-of-the-art Manufacturing Execution Systems (MES) or manufacturing operations management (MOM) systems—which combine technologies such as the Internet, Web services, XML, radio-frequency identification (RFID) and other real-time shop floor technologies—manufacturers can now gain visibility into their entire supply chain, from source through consumption. Manufacturers who leverage these technologies and move towards a fully Lean system will see additional incremental business benefits.

Unfortunately, the results have sometimes been so successful that many beneficiaries have called into question the need for using information technology in Lean deployments. The truth is that manual Lean techniques will deliver some early benefits, but a Lean deployment absent of technology is unlikely to sustain and will not scale to achieve a Lean enterprise.

Industrial information technologies and applications—MES/MOM solutions in particular—are vital to the success of any enterprise-wide Lean initiative. Typically, a program of Lean initiatives begins in the plant, moves upstream into the supplier community, and finally moves to distributors and customers.

The plant is the most logical starting place for a Lean initiative. The approach for implementing Lean in the plant has been proven across many industries and manufacturing styles. Books, industry groups and Lean consultants provide an abundance of information related to deploying manual Lean techniques within the plant.

Many Lean practitioners promote the use of 100% manual Lean techniques. Plants suffering from poor quality, excess work in process and long cycle times often see dramatic improvements based on these manual techniques. However, over time, these plants find that manual methods are labor intensive and do not scale across the factory.

In order to reduce the number of manual steps, factory schedulers typically develop spreadsheet tools specific to their production lines or product families. Rarely is there any standardization among these scheduler-specific tools. The drawbacks to these tools include limited re-use of best practices, inability to scale across the factory, and heavy reliance on “tribal knowledge” within the plant. Additionally, these spreadsheet tools often cannot deal with complexities such as modeling flexible work cells and smoothing complex demand patterns.

Paper-based kanban systems are also pervasive in Lean plant environments. These systems require the passing back and forth of paper cards from operators to material handlers several times per day. In many cases, these cards represent the only source of inventory information on the plant floor. Paper-based systems result in labor-intensive processes for transporting and managing cards when demand patterns change, requiring, for example, recalculation of kanban quantities, collection of old cards and creation of new cards.

Although improved quality, lower work-in-process (WIP) inventory and reduced cycle times may be achieved using manual methods, deploying information technologies elevates Lean initiatives to a new level for many manufacturers.

At the plant level and in the supplier network, manufacturing systems can add the following value to a Lean program:

1. Eliminate Non Value-Added Steps
2. Provide Real-time Performance Visibility
3. Enhance Visual Controls
4. Standardize Work Processes
5. Track One-piece Flow Efficiently
6. Facilitate Just-in-Time (JIT) Pull Processes
7. Identify and Resolve Constraints
8. Enable Quick Product Line Changes
9. Improve Product Quality by Reducing Variability
10. Track Process Improvements

Many Lean programs focus solely on improving the manufacturing process, but Lean techniques can also be applied to other areas of the enterprise. For example, the output of the manufacturing process (finished goods) could naturally be defined as the input (inventory receipt) of the distribution process.

Only the appropriate use of technology can build the cross-functional bridges required to bring multiple processes together.

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