adaptation the key to business performance with manufacturing it vde leeuw

European Manufacturing Automation Forum

Adaptation: The Key to Business Performance with

Manufacturing IT

Dr. Valentijn de Leeuw

Director of Consulting

Advisory Group


Automation and maintenance is viewed as a cost and not as a value generator

Cost reduction programs resulted in work force reductions, increasing the workload

Solid market growth even in commodity products, but.. (West-) European operating companies struggle to replace, add and maintain systems

• Patchwork of systems of all types and ages

• So-called commodities have functionality and performance potential

Standards are not fully adopted, slow to emerge

Observations: Automation


OM Solutions have become more mature in particular as enterprisesolutions

• Platforms, modular, SOA-based

• Corporate roll-outs of Best Practice templates

The wave of business system implementations is over

• There is a larger role for IT in OM than before.

The cultural gap between IT and Automation/Engineering/Maintenance remains

Standards exist and deliver value

• Potential for further improvement: merging ISA and OAGI

Despite proven benefit potential, resistance to investment

Manufacturing IT = Operations Management + Automation

Observations: Operations Management


Siemens’ UGS acquisition focuses attention on

• Downstream integration

• Time-to-market

• Brand value

• Data ownership

The market is not ready to ‘close the loop’

• Still ‘working’ on downstream business process integration

• Potential for systems integration to support product and production improvement is high

The cultural gap between R&D, Manufacturing and Business functions inhibits distributed Master Data Management

• Every function thinks they own the data in their system

Innovation supports market responsiveness:

• shorter product life cycles: importance of TTM increases

• Brand value: increasing functionality and manufacturability

Observations: Innovation


Transforming attitudes, skills and goals while motivating people

Investing in value-adding project without overloading people

Creating transparency and ownership by creating non threatening environment and preserving self-confidence

Dealing with uncertainty and risk by balancing risk and reward while staying in budget and cash limits

Creating relationships of trust, cross-boundary team work

Making cultural and habit changes, developing capability, and creating sustainable value

Creating value from a portfolio of technology projects at enterprise level while serving local needs

Continuous improvement and responsiveness

Step change improvement

Growth, profit, market leadership

Challenges


Striving for market leadership

• (un)conscious belief: better chances for survival

• Based on Darwin’s “survival of the fittest”

• Interpreted as ‘competition’ and ‘responsiveness’

Strategy must be ‘executed’, implemented in operations

• Feedback triggers adaptation

Observations: Strategy

Strategy

Operations

Strategy / Directives

Results /

Feedback

AdaptationAdaptation


The ‘fittest’ species adapt well to their environment

• And some are capable of adapting the environment to them

Options for adaptation

• Fight

• Flight

• Peaceful cooperation

What did Darwin actually say?


The short-living company’s life span is far below it’s potential

• Similar to the medieval man living 40 years

• Creates a lot of waste: know-how, energy, social well-being, etc.

Long-living companies live in the range of 100-700 years

• Long living companies are good at Adaptation

So Darwin’s theory applies to companies!

The next question: which strategies for adaptation, solve at the same time our challenges?

Reference: Arie de Geus: ‘The Living Company’ (Harvard Business Review, March-April 1997, p. 51)

The life span of companies


Two-way adaptation,

• Responsiveness to the market

• Creating new markets (Blue Ocean strategies)

• Don’t’ only follow but express original strengths

• Etc.

Fight

• Compete, improve, innovate

Flight

• Quit non profitable business

Peaceful cooperation

• Take care of people, support them to be excellent

• Respect the environment and society

• Create partnerships

Adaptation as key company strategies


Framework for strategy implementation

• Performance management guarantees business results

• Management system supports organizational and individual change

• Supports best practice sharing and centers of excellence

• Synergy through coordination of ‘components’

• Coordinated goal setting and execution

• Multifunctional team work

• IT and manufacturing

• R&D and manufacturing

• CRM and R&D, etc.

Learning: Operational Excellence (that works)

CustomerNeeds

OptimumPotential

Six SigmaDMAIC

CONTROL

CustomerNeeds

CustomerNeeds

OptimumPotentialOptimumPotential

Six SigmaDMAICSix SigmaDMAIC

CONTROLProven track-record

• Manufacturing IT and Automation (and any other initiative) should be implemented as Operational Excellence component to deliver business results


Framework Component

Elements

Strategy and goals Operational and improvement strategy and adaptation

Overall goals and values

Business process management, strategy alignment

Management system

Governance and project portfolio management

Organizational behavior and development

Performance management

Change management

Functional domains e.g. manufacturing, supply chain, R&D, IT

with for each the different key elements that implement and/or support the strategy, e.g. IT performance and efficiency, innovation management, quality management

Operational domains

e.g business units, sites, research centers, distribution centers

with for each the key elements implementing the strategy (e.g. schedule adherence, time-to-market, raw material and utility efficiency, capital efficiency/ROA


Results are obtained when performance management is applied

Done well, it is two-way in nature

• ‘Adapt’ directives

• Take feedback into account

Performance Management is:

• The definition of responsibilities and goals

• The planning of performance, learning and resources

• Performance monitoring and evaluation

• Reinforcing or redirecting corrective action

At every level and time horizon:

• Strategy: ‘long’ term strategy, mid-term adaptation

• Operations: managed implementation, provide strategy feedback, mid-term

• Automation and control: real-time adaptive control

Performance Management is a key ingredient

Performance Mgt

Activity


Results / Feedback

2-Way Adaptation2-Way Adaptation


Adaptive at all levels

Strategy

OperationsExcellence


Result vsStrategy & Plan

RegulatorsShareholders, .. Regulations /

Objectives

Results / P&L

Operations Mgt,Manufacturing IT

Priorities /

Directives

Results / Feedback /

Clients

Operations,Automation

QualityQuantity

Setpoints /

Instructions


Within this framework:Practical implementation

recommendations

Supported by IT for Manufacturing,

Automation and PLM


Best Practice templates and their adaptation

• Operational Excellence distills best practices � reuse knowledge, adapted, accepted

• OM: implementation templates

• Automation: standardization, modular designs

• Standard solutions create synergy � less costly

• But never fit all the local needs

• Requirements for templates

• Easily adaptable with local skills � forward adaptation

• Easily maintainable and upward compatible

• New best practices flow back into the template �backward adaptation

Adapting systems to the organization and vice versa


Preparing the organization for change, taking input and adapt

• Operational Excellence requires habits to change

• Performance reporting

• Sharing experience

• Learning

• OpEx support: change management � 2-way adaptation acceptance

• Inform people ahead of time

• Involve them in designing the change, and giving feedback

• Take feedback into account

• Take time for transition and training

• OpEx support: management skills, motivation � sustainable change

• Employee performance management � 2-way adaptation

• Giving feedback and coaching

Adapting systems to the organization and vice versa


Operations (performance) Management and Manufacturing Intelligence

Adapting production to markets and vice versa

Providing business information, linked to the process, instantaneously to someone who can make a difference (MI, RTPM)

Control paradigm for production mgt

-MI, KPI dashboards

-Production and product analysis

- Re-optimize schedules regularly

For managers, engineers and operators

A1.0

Production

Process

Asset

RawmaterialEnergyPeople

Products

A0.0

Production

Management

Performancemeasurement

Quantities Delays Costs Qualities

ControlManagement

A2.1

Analysis

A2.2

Decision

support,

Optimisation

DirectivesWork orders

What

Control

What you

ought to do

Why


Operations (performance) Management and MI results:

Implement Operations excellence goals, such as � adapt mfg

• Internal goals: minimize energy, scrap, rework, WIP, etc.

• External goals: takt time, quality, etc.

Implement quicker, react quicker on deviations,

• with MI, and RTPM, the electronic versions of visual management

Operators and workers are autonomous � motivation

• Also get external (client and supplier) feedback � motivation

• When needed: get expert support � adapt mfg

• When find a best practice: share � adapt OpEx

Provide information to market

• Traceability, quality, materials, process � adapt market

Adapting production to markets and vice versa


Integration of RD&E with Manufacturing

Products optimized for manufacturability � adapt prod

• Proactive quality management

• Integration of methods in engineering phases

Manufacturing optimized for products � adapt mfg

• Plant and cell lay-outs

• Adapted tooling and QA

• Trained personnel

Design and manufacturing continuous improvement �2-way adapt

Support by PLM integrated with MES and ERP �2-way adapt

• Product definitions automatically transferred

• Comparison of ‘as designed’ with ‘as-produced’

• Automated product definition updates to MES, PLM and ERP

• Workflow with publish, review, authorize, implement, change management

Adapting products to manufacturing and vice versa


Two-way adaptive strategy - long term �2-way adapt

• Adapt products to markets � adapt prod

• Innovation to adapt markets to products � adapt mkt

• Integration of methods in engineering phases

Two-way adaptive innovation – mid terms �2-way adapt

• Execute strategy and provide feedback, ideas

• Monitor market feedback on innovation

• Adapt for continuous improvement of client perception

Adapting products to markets and vice versa


The long living enterprise is adaptive at all levels.

• It redefines itself and their markets by having a close eye on their performance.

• It adapts strategies to business performance and enterprise capabilities, and vice versa.

• Its manufacturing adapts to the enterprise, the client requirements and market dynamics.

• Its product definitions are adapted to manufacturing and market demands.

• They also adapt the market by creating new demands.

• Business, manufacturing and other systems fulfill business goals and adapt to strategic and operational requirements. They are deployed within a framework for strategy implementation.

Summary


QuestionsDiscussion

For more information contact:

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