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Manufacturing Enterprise 3.0The New Information Management Paradigm Built on Processes

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Manufacturing Enterprise 3.0:The New Information Management ParadigmBuilt On Processes

Executive Overview It is time to reevaluate howwe look at our informationmanage-ment toolset and examine our business froma process perspective. Information silos cannot beaccepted and information can no longer be departmentally owned.We need to orchestrate infor-mation into strategic and sustainable competitive advantage processes that support the extendedenterprise and include awide range of stakeholders across the value chain.

This paperwill describe howBusiness ProcessManagement (BPM) can benefit companies,particu-larlymanufacturing companies,by focusing on their processes. Informationmanagement fromaprocess perspectivemakes better use of available data sources,bridges application silos and linksdepartmentsmore directly to business results.Trying to accomplish application interoperabilitythrough systems integration is difficult, expensive, too time consuming and is not agile.

InManufacturing 3.0 each information application across the extended enterprise is considered apotential source and/or a user of information.Historically, the ERP systemhas been the focal pointof the information system infrastructure but that is no longer themost effective approach. It iscompany processes that build a sustainable competitive advantage and the Business OperationsPlatform is the premiermethod to orchestrate information into themost effective businessprocesses.This paperwill provide a broad set of ideas to help your company begin a new andmoreeffective journey inmanufacturing enterprise informationmanagement.

3©Copyright Collaboration Synergies Inc 2009

Biographical Information For Michael McClellan

Michael McClellan has over 30 years of experience serving and managingmanufacturing enterprises. He has held a number of positions in general management, mar-keting, and engineering, including President and CEO for companies supplying capitalequipment and material management systems. In addition to numerous articles andwhitepapers on manufacturing systems, he has written two books, ApplyingManufacturing Execution Systems, which defines and explains manufacturing executionsystems and Collaborative Manufacturing: Using Real-time Information to Support theSupply Chain, the first definitive examination of collaborative manufacturing concepts. Heis also a major contributor to a new book on business process management titled, In Searchof BPM Excellence. Mr. McClellan has served over six years on the Manufacturing EnterpriseSolutions Association (MESA) Board of Directors.

He currently lives in Vancouver,Washington and is President ofCollaborationSynergies Incorporated, an advisory company providing consulting services in the areaof business process management, real-time manufacturing information systems, manufac-turing execution systems, and collaborative manufacturing system development and imple-mentation. He can be reached at [email protected] or www.cosyninc.com.


Rethinking Manufacturing InformationTechnology Management

Manufacturing 3.0 describes the true holistic convergence of information systems and ubiq-uitous information usage across the extended enterprise, obliterating the line between theadministrative view and the operations view. It is time to rethink our perspective of informa-tion application silos. Instead, we must consider the inclusive view of our company process-es (how things get done) and view information and its use in a business process sense.Enterprise level systems including Enterprise Resource Planning (ERP) and manufacturingplant systems should be seen as elements of the same unit, not two different worlds.

The information technology management within manufacturing companies is unique frommost other businesses. Foremost is the large number of disparate applications in use. Asingle plant can easily reach 100 stand-alone applications, in addition to ERP and otheradministrative systems. Major companies can number their applications well over 3000,each one justified at the time of acquisition and continuously requiring managementattention and maintenance. Added to this base are the wide-ranging applications withinour value chain, our customers and suppliers. The good part is there is a wide quantity ofdata available as we evolve to a more strategic use of information across the enterprise, inthe form of initiatives like Lean Manufacturing, Collaborative Value Chain management,or regulatory compliance.

Manufacturing enterprises are also unique in their ever-ongoing effort to improve and com-pete, and it is unlikely this will change anytime soon. Certain aspects of business and ourinformation systems will continue:

Collaborative – Sharing information is the norm – ranging from current demand toproduct design to quality assurance and production schedules and much more. The informa-tion must be real-time, specific, and shared to give all stakeholders the same facts.

Global – The fact that business is a global set of processes is not new. The ideasbehind the flat world of manufacturing will continue. As our world shrinks, there are manyconditions that will affect where value is added. This will be met with interconnected globalbest practices regarding every aspect of the product lifecycle, from inception to end-of-lifeconsiderations.

Unrelenting – As this is written, the world is dealing with a major economic down-turn, and we are watching the agonizing throes of General Motors, as this once mighty com-pany deals with the realities of the times. Life will not be easier in the future. All businesses,but especially manufacturing entities, will be more agile and responsive to intensified condi-tional events.


User role-based information – Looking at reports is so yesterday, and so isinterpreting information to make an informed decision. Information must support decisions,be specific to the user, and be built on trust. Again, this is not about data or behind-the-scenes, monolithic computer systems, but a focus on content, workflow and the process thatsuits the user at any position within the extended value chain.

Coherence – How many sources of the facts do you have to deal with in yourmanufacturing enterprise? ERP, PLM,MES, Data Library, CRM, various databases,Maintenance, Logistics,Warehouse Management, APS, SPC, Quality Assurance, and so on.This world of data chaos ends when companies focus on their processes, instead of theirapplications. Managing the cross-departmental, horizontal nature of processes, and support-ing those processes with exact information at the right place and time, will replace the dinof data with usable and actionable information.

Predictable – The use of best practices and their support through evaluated, devel-oped, and supported business processes will take personalities and their vagaries out of thebusiness environment.

Agile – Agility is the capacity to react to changes in your business and businessenvironment. Some changes require immediate responses, and others require strategic reac-tions. Information systems must, and will be, the leading response mechanism, but they willoperate within well-defined and supported processes.

Competitive advantage – Building competitive advantage through better infor-mation use is quicker and likely less expensive than nearly any other initiative.

In Manufacturing 3.0, companies will apply holistic, proactive management across theextended enterprise/value chain using precisely defined and supported business processes.Easily coupled and decoupled information resources will provide real-time informationbetween any and all sources and the focus is on the processes, with people addressingexceptions and improvements.

This new vision is forward-looking, yet makes best use of the assets in which we haveinvested over the years and is robust enough to take us where we want to go, over the next20 plus years. Historically, we have implemented applications with a heavy tilt toward ven-dor standard products, whereas the new vision is easiest to implement when based on abusiness process platform and self-reliance, using in-house knowledge resources to makethe changes you need.


What is a process?

It may take aminute towrap your arms andmind around this,but it is time to think in terms ofProcess – not systemapplications. Processmanagement, long advocated by business leaders suchasMichael Hammer,Peter Fingar, and others,has been around for some time,and is the basis formost activitieswithin businesses today.A process is a series of steps or tasks aimed at accomplish-ing a defined,business objective.To issue a payroll check, there is a process. Issuing a purchase orderis a process. Schedulingwork at awork station is a process. Entering data at a time clock is aprocess. Product development is a process. Inmajor companies, the number of business processescan run into the thousands. Some arewell developed and documented. Some are performed on anad hoc basis, as necessary.And some are locked up in software applications, irrevocably fixed andstationary.The current situation in every company is thatmost processes can be lumped into twostacks: the processeswithin the hundreds of software applications (often hidden and difficult tochange); and those people-driven processes that are required to fill the gaps between the existingapplications.

Ideally,processeswithin a company are related,and all aimed,directly or indirectly, at serving cus-tomersmost effectively. Inmany industries, it is not the product that differentiates one companyfromanother,but the processeswithin those companies that are used tomeet customer require-ments. It is this process-centric view thatmany successful companies are using tomeetmoderncompetitive achievement objectives.

Illustration 1,Typical plant disparate application array

A first step is to consider the enterprise in a holistic sense.Our objective is to build themost effec-tive organization,not tribal warfare, and that view is likely to cross departmental boundaries.

Horizontal and chronological process steps versus array of applicationsA single plant can have over 50 silo applications.

Think process steps and data use to support the process.


Some fundamental process rule ideals:• Core business processes are usually customer- or supplier-facing processes that crossdepartmental boundaries.• Support processes are smaller, frequently departmental,and they support core processes.• All business processes are aligned to best serve the customer.• All business processes are best practices, consistently executed.• All business processes have been identified,mapped,and face regular review.

Corporate Process HierarchyEnterprise StrategiesManagement Initiatives (to support the strategies)Business Processes (to support the initiatives)Core Processes (to support the business process)Support Processes (may be an application)Process Application (MES, LIMS,WMS,etc.)Data Elements

Illustration 2,Process Hierarchy

What is an application but a collection of processes? All applications take in data andmanipulate itaccording to the programmer’s instructions – a process.A group of processesmake up the applica-tion, and a group of applicationsmake up the IT infrastructure.The problem is that the processeswithin one application have no idea that processes in another application exist. It is our job inManufacturing 3.0 to link them to build new functionality (processes).

Envision a platform fromwhich you can oversee andmanage other software applications.Thatwould be a good start, but what if you also had amagicway to redraw and reallocate existing con-ditions, getting rid of the negatives and enhancing the positives. InManufacturing 3.0,wewantour platform to give us visibility ofwhat is there,but also to provide the tools to rearrange orrealign according towhat would best suit our new vision of the process requirement.


Key ThoughtThe business process is where the IT department and operations meet.

What if you had the ability to connect to any application, retrieve any itemof data,and reuse thatdata in anotherway? Combine data fromapplications,perform software logic operations and dis-play the answers. Sound complicated? It is not. If you can identifywhere the data is, then a BPMS orBusiness Operations platform can retrieve it,use it in a process calculation,and provide an answerthatmight be a dashboardmetrics display, sent to the ERP or another application,or sent to a cus-tomer or vendor. From your existing installed base, it is likely that well over 90 percent of the datayou need in any process already exists and is easily available for reuse.

The Business Operations Platform

Illustration 3,Business Operations Platform

The Business Operations Platform (BOP)will usually include a number of tools.The primary tool is aBusiness ProcessManagement Suite (BPMS) consisting of the following:

Business process designer – The newbusiness process ismodeled and developedthrough the use of graphical tools that define steps and events in the process. By using drag-and-dropmodeling icons,available froman easy-to-use palette, the process can be collaboratively out-lined and reviewed.


Process connectors – BPMS packages comewith a library of software components thatform the linkswith the newprocesses and the various connection points of the processes, such asERP systems orMES systems.This could include existing processes, and procedures from existingprocess sources.The connectors are frequently based onweb access to various systems,but con-nectors can be provided to legacy systems that do not haveweb access.

Process manager – One of themore significant impacts of a BPMS system is the abilitytomanage processes andmake changes easily and quickly. It is possible to simulate a process usingreal data,prior to actual use, to identify potential problems andmake changes.Measurement ofthe performance of a process – to see frequency, cycle time,and process histories – is common.Process LifecycleManagement provides the ability to trace the full development and history of theprocess,much like reviewing the revision levels on a product design. It is possible to use instancesof the processwith variations, to suit specific business needs.One example is a shipping processthat is tailored to fit individual customers.

Process system server – This is the core system component that provides the transac-tual execution of the processes.

Composite Application and Mashups Toolset – A composite application consistsof functionality drawn from several different sources.The componentsmay be individual, selectedfunctions fromwithin other applications,or entire systemswhose outputs have been packaged asbusiness functions,modules,orweb services.Mashups are similar to composite applications andusually rely on online resources.

Service Oriented Architecture – Service Oriented Architecture (SOA) is included inmany BPM suites. SOA describes an ability to build basic, small, reusable softwaremodules calledservices.These reusable services aremaintained in a library and can be used to build larger applica-tions. SOA is not necessary for successful BPMapplications but can be a very capable supportingtool in a company-wide view of processmanagement.


Using the Business Operations Platform

There is amajor shift occurring in the use of plant information, from the historical use ofmanaginga plant floor department or function, to amuch broader role of providing real-time informationnecessary to support enterprise processes and collaborative initiatives across the value chain. In lifesciences industries,process applications provide confirmation of FDA regulatory compliance. In dis-crete item industries, the primary source for product genealogy information – including componentsourcing,quality assurance confirmation,and product test data – resides in process applications.Meaningful key performance indicators and business performancemanagement initiatives arelikely to require the data items that are found in the production systemandwhich are available innear real-time.

Key ThoughtDefining Collaboration – The simultaneous use of real-time informa-tion across the value chain.

Businessmanagement is increasingly using a process focus,as companies drive toward greater par-ticipation in information sharing and collaboration.Broader real-time business issues are beingaddressed through initiatives, such as analytics,business activitymonitoring,business processintelligence,business performancemanagement,digital dashboards, supply chain eventmanage-ment, collaborative value chains,product lifecyclemanagement, the real-time enterprise, and so on.Nearly all of these initiatives center on the idea of real-time information sharing and use,preferablyfrom its originating source ormaster data repository. In the typical value chain, that originatingsource is usually themanufacturing and/or supply chain information systemswithin the businessunit and/or the value chain partners.

The value of the information changeswhen used to support higher-level business processes.Thedata has one valuewhen generated for a department supervisor formanagement purposes, andquite another valuewhen used tomeet Sarbanes/Oxley compliance needs.Another example ishow the value of quality assurance information increases substantially when used to supportenterprise-wide,warranty exposure issues. Inventory information takes on a different lookwhenviewed across a value chain,with synchronized schedules based on real demand.

The hard part about incorporating production data intowider use is the problemof retrieving thespecific, required data and arranging that data in a context that supports the business process.Historically, this has been very difficult.Most information technology departments are not closelyconnected to plant operations or to variousmanufacturing system components; they have very lit-tle awareness ofwhat data is available or how to retrieve it. Another negative aspect is that amedium-sized plant could have dozens of disparate information sourceswithin theirmanufactur-ing infrastructure.Many of these applicationswere likely built to specifications long forgotten,using technology that is no longer current.Documentation is frequently poor or nonexistent.Further,when the desired information has been determined and located, the cost and time to inte-grate the data sources on the plant floor have been prohibitive. BPMmethods and tools are veryeffective at addressing these problems,bymaking information access and process developmentsignificantly easier.


Strategic Initiatives

The demand for a broader use of data, formerly a department issue, requires a new set of tools anda newway of thinking to support strategic initiatives, including and similar to LeanManufacturing,Product LifecycleManagement,Real-time Enterprise,DemandDrivenManufacturing orCollaborative Supply ChainManagement. Strategic initiatives are typically newuses of data thatrise above the capability of traditional IT infrastructure or application silos.

Thismodel of themanufacturing company infrastructure describes how strategic initiatives requirethe broadest use of information in a nonhierarchical sense. LeanManufacturing is not an applica-tion, but an assortment of business processes aimed at newer business objectives, that include awide range of information from inside and outside the usual corporate base.

Illustration 4,Usedwith permission fromMESA International.

Themodelwas developed to showhow information fromapplicationswithin the operational andadministrative information systems is used to address strategic initiatives, transcending the exist-ing software application infrastructure.The fundamental idea behind themodel is that informa-tion – real-time and historical – should travel into and out of applicationswhenever necessary, tosupport processes and events.


A broader list of the potential uses of process ideaswill include:• Collaborative Supply ChainManagement• LeanManufacturing• DemandDrivenManufacturing• Regulatory Compliance: FDA,SOX,and so on.• Real-time Enterprise.• Product LifecycleManagement.• Enterprise Collaboration – simple info sharingwithin the company.• Metrics/Analytics – KPIs,Dashboards, and so on.• Business ActivityManagement (BAM).• Business Intelligence (BI).• Operational Intelligence.• EnterpriseManufacturing Intelligence.• Composite Applications.• Application Rationalization.• ManufacturingOperationsMgmt Systems (MOMS).

A fewmore suggestions for using BPM in amanufacturing enterprise include:� Adding functionality to existing business systems, such as CRM,ERP,manufacturingexecution systems (WMS),and so on.• It is probably less expensive and quicker to extend an older application using BPMthan to install new software or reprogram the existing software.• Design and add newprocesses as requirements change.

� Link business systems to aggregate data and processes.• Build newprocesses between acquired company systems to provide a full viewof inventory data.• Connect themanufacturing systemswithin a value chain to support where to buildstrategieswith real-time information.• Connect disparate sources of business intelligencewithin the company or across thevalue chain to support Sarbanes/Oxley compliance.

� Link a number of systems to provide and support newprocesses.• Build a process to provide demand-driven schedule data across a value chain.• Connect themanufacturing execution systems to the planning and schedulingsystem.• Develop a process that allows certain CRMusers to view and exchange datawith thewarehousemanagement and themanufacturing scheduling systems.

� Design,build, simulate, and finalize new stand-alone business processes,using data fromany source.


Key ThoughtCompetitive Advantage – A firm posseses a sustainable competitiveadvantage when its value-creating processes are superior tocompetitors and they have not been able to be duplicated or imitated.

Building a Competitive Advantage

Your information systems should be a collection of best practices but it is a different set of informa-tion and people connections that are required to build a competitive advantage.

Competitive advantage – A few years ago American auto producers required approximately 60months to bring a new car to themarket while Japanese companies could accomplish a full newproduct launch in 30months.That advantage (nowovertaken)was once quite significant in termsofmarket response and newproduct cost.

Competitive advantage – Dell Computer is legendary in their supply chainmanagement efforts,being able to build a personal computer to the buyer’s specification and shippingwithin a fewdays. Internetmarketing and receiving payment when the orderwas placedwere other significantbenefits enjoyed byDell long before other companies could do the same.

Competitive advantage –Within 24 hoursWal-Mart can tell each vendor in their supply chainhowmuch of their product was sold in each store every day.This goes a longway to support thevendor’s responsibility in determining the replacement strategy.

These are not best practices.They are competitive advantages and not available in any equipmentor software catalogue.They can only be developed through an accumulation of innovative bestprocesses built on strategic and tactical use of your assets,most important ofwhich are likely to beyour information technology base infrastructure.

Inmost companies, implementation of these ideas using typical integrationmethodswouldrequire a significant investment in time andmoney,and,most likely, the finished project will notfully satisfy the [company] requirements or objectives.A significant promise of BPM is to radicallyimprove the development and implementation of these ideas by,a) vastly shortening the develop-ment process;b) putting this development partially or fully in the hands of operations; and c) build-ing and implementing processes in away that they can be easily and quickly designed,developed,simulated, revised,and implemented – and then revised again and again as necessary tomeetchanging business needs.

BPM is a far advancement fromhard-programmed,workflow systems,but you are still NOT goingto turn process development over to the janitor.This is very seriouswork that requires not onlyunderstanding the current state of existing processeswithin the company,but also being able tovisualize the newprocesses.A key perspective here is to see BPMas an enabler of business unitprocesses,not as a technology.Whereas applications such as CRM,manufacturing execution sys-tems orwarehousemanagement systems are an assortment of available technology functions,BPM is a tool that allows users to design,build, and implement functions and processes to suittheir needs.AsMicrosoftWord is a tool to create andmanage documents,BPM is a tool to createandmanage processes.


The intention of this paper is tomake an argument for the Business Operations Platform and tofocus on company processes.We are past the timewhen the ERP systemwas the center point ofyour information technology strategies.This new eramust bemore holistic, taking into considera-tion the extended enterprise and competitive advantage requirements, instead of information sys-tem applications.The Business Operations Platform is an assembly of tools that can provide a pre-ferred perspective that will take you toManufacturing 3.0.Begin by assessingwhere you are andhow this technologymight affect your company over the next few years. Examine your ability tomake changes to processes or to even understand how the existing processeswork orwere devel-oped. Think in terms of cross functional requirements that beginwith the customer and concludeas a satisfying financial return. If the vision is adequately holistic and seen from the highest level,the lower level processes and their intersectionwith departmentswill be self-evident.After someinitial assessment it would be surprising if you could not seemajor opportunities for improvementusing these business operations platform tools. Initial demonstrations and proof of concept can fre-quently be donewithin a few days.

The following are suggested for further reference:

The Agenda byMichael Hammer,Crown Business Publisher. 2001Business Process Management, The ThirdWave by Peter Fingar andHoward Smith,Meghan-Kiffer Press. 2007

Extreme Competition, Peter Fingar,Meghan-Kiffer Press. 2006Collaborative Manufacturing:Using Real-time Information to Support the

Supply Chain,MichaelMcClellan, St Lucie Press. 2003


Acronyms

BOP Business Operations Platform

BPM Business Process Management

BPMS Business Process Management Suite

CRM Customer Requirements Management

ERP Enterprise Resource Planning System

MES Manufacturing Execution System

MESA Manufacturing Enterprise Solutions Association

SOA Service Oriented Architecture

Collaboration Synergies Inc.P.O.Box 871555

Vancouver, WA 98687

360.833.8400

www.cosyninc.com

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cosyn white papers2 - cosyninc.com · 2 ManufacturingEnterprise3.0: TheNewInformationManagementParadigm BuiltOnProcesses ExecutiveOverviewItistimetoreevaluatehowwelookatourinformationmanage