Standardizing Processes and Reporting Through Global MOM/ERP Integration at a Connectivity Solutions Manufacturer With international headquarters in Switzerland and U.S. operations based out of Pennsylvania, this case study focuses on a designer and manufacturer of electronic sensors, power management systems, antennas, connectors, cables, and others products to a diverse customer base that spans more than 150 countries across the world. The company serves a range of industries such as automotive, data communication systems, consumer electronics, telecommunications, aerospace & defense, medical, energy, and others. With over 90,000 employees, more than 100 factories, 21 global design centers, a $675 million R&D investment, and approximately $15 billion in revenue, this company is a leading global supplier of connectivity solutions. Despite this market position, the company was experiencing disconnect in the way manufacturing processes were executed and metrics reported across its large, global manufacturing base, resulting in sub-optimal performance and issues defining key performance metrics. The Challenges of Suboptimal Asset Capacity With a product line of over 500,000 SKUs consisting of mostly small, low complexity products that do not require serialization, the company s success is tied to executing efficient high-speed, high-volume manufacturing, necessitating fully optimized shop-floor assets and effective measurement and reporting across product lines, plants, and business units. High levels of standardization are paramount. For this reason, the company has put keen focus on improving Overall Equipment Effectiveness (OEE), and has lacked both a standard definition of this metric as well as a way to measure it across the enterprise.. The company was experiencing disconnect in the way manufacturing processes were executed and metrics reported across its large, global manufacturing base. 1 Page 1
With a legacy of disparate Manufacturing Operations Management (MOM) applications in place across global manufacturing facilities, the company recognized the need to focus on integrating systems and reporting methods to gain an enterprise view and control of production execution, improve efficiency, and become more agile to market demands. The company made the decision to proceed with a global Manufacturing Execution System (MES) rollout starting back in 2005, an important goal of which was to connect to the enterprise-wide ERP system. With a large number of targeted implementations and a need to be up and running in a limited timeframe, the company needed a solution with out-of-the-box functionality that would fit its needs and quickly standardize production without becoming cost-prohibitive. An Overview of the LNS Research MOM Framework The LNS Research MOM framework includes a layer of software applications that connect the shop floor automation systems to the larger overall business and reporting software like ERP. As an important application in facilitating manufacturing steps and procedures while tracking and tracing product materials and/or components, MES fits within this MOM framework of software applications. When coordinated effectively, the link provided by this collective set of applications can help address many of today s manufacturing challenges by enabling a more holistic business and manufacturing process approach, including: Increasing manufacturing profitability Obtaining a higher return on assets Lowering business risk Improving customer response and service The graphic on the following page is a visual representation of the software applications in the MOM framework, and how they tie into the overall organizational IT structure. When coordinated effectively, the link provided by MOM applications can help address many of today s manufacturing challenges by enabling a more holistic approach. 2 Page 2
The company chose to implement MPDV Hydra MES system, surpassing 30 plant roll-outs across the project's inception in 2005, each integrated with a single global instance of SAP ERP. Rolling Out a Global Multi-Site MOM Implementation As the company had previously completed a highly centralized SAP ERP implementation of a single instance globally across its 100 factories and 30,000 users, it needed a solution that would integrate well in this type of landscape and be easy to implement with very little customization, so it searched for a solution that would fit its architecture with very little customization. The company chose to implement MPDV Hydra MES system. To date, it has surpassed 30 plant roll-outs since the project s inception in 2005, each fully integrated into SAP ERP and helping to address the company s need to standardize reporting and metric measurements as well as better handle the large amount of data that must be processed and contextualized in its global operations. 3 Page 3
Along with a standardized integration to ERP, the company also sought a solution that would integrate with the shop floor level equipment as well. It took a unique approach by standardizing Programmable Logic Controller (PLC) for data from all machines to move into Hydra. While this added costs in additional hardware, it also limited the time and efforts of customizing machine integrations at each asset. The implementations of Hyrda have taken place in a variety of locations across the enterprise including Europe, the U.S., Brazil, Mexico, and Asia, with current projects in Spain and Thailand. Gaining buy-in from plant managers and shop-floor workers in these different locations was a significant milestone in this initiative, and, along with bridging some of the cultural divide across these locations, has allowed the company to standardize many operational policies, procedures, and key metric definitions like OEE across the included sites to form much more cohesive and standardized reporting methods and greater enterprise visibility. As one of the main goals of the project was to increase OEE and maximize shop floor assets, this reporting standardization and connection to ERP has allowed much improved production planning and asset efficiency as well as agility in response to market demands and material availability. The company has also been pleased with the results of standardizing PLC across machines, viewing the tradeoff of additional hardware costs as well worthwhile in the long run. Lessons Learned Navigating Cultural Differences One of the challenges that the company navigated in this global roll-out was the differences in culture seen across plants located in different countries. For example, while the company s German plants operate in a centralized manner, those in the U.S. are far more autonomous. While it was common to see Hydra and SAP as part of the onboarding process for workers in Europe, many times this was not the case in the U.S. It was crucial to identify the correct processes and metrics to standardize across the enterprise, as well as to convince the workers of the various locations to learn and trust the system so they would use it. Obtaining Executive Support Another important lesson learned in this global rollout was the importance of gaining up-front executive sponsorship at the business unit leader level. With such a high number of plants (and more to go), the ability to enforce high-level standards on technology and a detailed company definition of metrics like OEE across the enterprise was essential to timely implementations, gaining the support of the shop-floor workers and plant managers interacting with the system daily, and ultimately, success. The ability to enforce high-level standards on technology and a detailed company definition of metrics like OEE across the enterprise was essential to timely implementations. 4 Page 4
Additionally, the MOM OEE application being tightly integrated with ERP was supported by the corporate IT group and built into a training program used by operators. Next Steps Based on the success the company has experienced in standardizing its reporting and measurement of OEE and other performance metrics, it is considering a number of initiatives that are an extension of its MOM rollout. In addition to adding more locations with ERP integration, the company is looking toward a nextgeneration architecture that draws upon the Internet of Things/Industrie 4.0, and Big Data capabilities in the new in-memory HANA database, supporting goals such as: Extending MOM functionalities to Statistical Process Control (SPC), leveraging Big Data to become predictive with quality initiatives Extending a standardized operational approach to become more engineering-driven To view and measure profit as a metric as an extension of OEE, at the asset level, the company has a goal of measuring and understanding the profitability of each shop floor asset by integrating standardized financial systems to operational systems The company also plans to expand the relationship between the industrial automation group and corporate IT Recommended Actions For manufacturers such as the one referenced in this case study that are competing in high-speed, high-volume manufacturing, maximizing shop floor asset utilization is an important source of competitive advantage. With today s advanced MOM software applications, the ability to standardize processes and reporting across global plants is key in developing this capability. From a technological perspective, it is recommended to take a long-term view of the future by considering emerging trends such as the Internet of Things/Industrie 4.0/Big Data and how these capabilities will affect the relationships between inter-plant relationships and the enterprise at large, facilitating increasingly predictive operational capabilities as time progresses. Also important in forming a single enterprise version of the truth is fostering the collaboration of IT, Business, and Automation groups in establishing these standards and shared goals to work toward. Taking a broad view of MOM capabilities is important to long-term success, as continuous improvement initiatives like improved quality management or product traceability are other core functions that have the potential to be managed at the enterprise level through today s software solutions. 5 Page 5
Selecting MOM solutions that integrate into the automation systems and ERP out of the box is crucial to getting on this path, as the need for customization across plants is likely to make the process cost-prohibitive and much too time consuming to gain the support of these key stakeholders. From a personnel perspective, it is important to have a strong understanding of the cultural differences across an organization to standardize processes appropriately. Also, taking a broad view of MOM capabilities is important to long-term success, as continuous improvement initiatives like improved quality management or product traceability are other core functions that have the potential to be managed at the enterprise level through today s software solutions. Developing a keen understanding of long-term possibilities and maintaining a forward-looking attitude to future operational initiatives will pay future dividends. LNS Research provides advisory and benchmarking services to help Line-of-Business, IT, and Industrial Automation executives make critical business and operational decisions. LNS research focuses on providing insights into the key business processes, metrics, and technologies adopted in industrial operations. Authors: Matthew Littlefield, President and Principal Analyst, matthew.littlefield@lnsresearch.com Greg Goodwin, Research Associate, greg.goodwin@lnsresearch.com 6 Page 6