When ERP isn't enough
Innovative uses of IT stand to change plant-floor performance
By Scott Bury, contributing editor -- Manufacturing Business Technology, 9/1/2006 6:00:00 AM
Elliott Co., an engineer-to-order (ETO) manufacturer of rotating equipment used in petrochemical and power-generation applications, saw a gap in its ability to track labor costs when it installed a new Oracle ERP system in 2004.
"It would track bulk hours—for example, five hours on this job in total—but not the duration of individual operations, nor machines on particular jobs," says John Russo, senior business systems analyst at the Jeannette, Pa.-based company.
With a unionized manufacturing shop, Elliott requires a time & attendance tracking system that can accommodate a host of rules governing pay rates, including limitations on overtime, weekend, and holiday pay. The system also must be able to feed detailed data on hours worked by individual employees—and the appropriate pay rates—both to the costing module of the Oracle system and a Ceridian payroll application.
Oracle's Time & Labor module, while sufficient for tracking the work of salaried employees, just didn't provide the detail Elliott needed. But two applications from Kronos—Workforce Central and Timekeeper Central—did.
A year after adopting these applications, Elliott management has a better handle on how much it spends on each job. "We also have the visibility to evaluate what is wasted time versus indirect labor that is a required part of the production process," says Paul Pawlik, Elliott's IT director.
Elliott's story is just one example of how manufacturers are finding unique methods of improving plant-floor performance.
A division of Tokyo-based Ebara Corp., Elliott has 18 sales and service centers around the world, including Canada, Mexico, Brazil, Europe, Bahrain, Japan, and China.
Elliott foremen and supervisors previously tracked time & attendance on paper, keying information into a home-grown Advanced Manufacturing and Control System (AMACS) running on an IBM mainframe. But the AMACS would only compile schedules on a daily basis, and could not provide a history of attendance records, let alone track labor costs or perform analytics.
Into the present
"We wanted a 21st century ERP system, and chose Oracle's E-Business suite," says Russo.
Elliott subsequently purchased 98 Oracle modules—"We've so far implemented nine," Russo says—and integrated a Lotus Notes database and an Agile Software product life-cycle management system.
The Kronos applications track labor cost for each job Elliott performs, while accounting for all the constraints—such as overtime restricitions—that Elliott must manage with a unionized workforce. These application then feed all job-related details to the Ceridian payroll system, as well as to the Oracle ERP system, for costing and other financial analysis.
Elliott also acquired hardware to streamline time & attendance information gathering. Its 275 hourly employees now log into jobs either by swiping bar-coded ID cards or keying ID numbers and job codes at PC kiosks distributed throughout Elliott's manufacturing space.
Once an employee logs on to a machine, the Kronos applications begin gathering data. The employee's ID number is linked to the specific operation being performed, and details such as the employee's ID, hourly rate, machine or operation ID, and duration of job are fed directly to the Oracle system to calculate labor costs. Indirect labor—such as the time taken for cleanup, training, meetings, and other uses that cannot be directly applied to a customer's project—is not fed into Oracle, but does go to the Ceridian payroll system.
"We even bought biometric readers that could identify employees by their thumbprints and gather information automatically," says Pawlik. "However, contractual obligations with our bargaining workforce restricted us from implementing the obvious benefits of using these devices at this time."
It took a year for Elliott's manufacturing employees and managers to become accustomed to all the new IT systems.
"With the introduction of completely new enterprise systems [both the Kronos and Oracle packages] the adjustment period was longer than expected," says Pawlik.
The payoff
After a year of acclimating to the new systems, Elliott began seeing a real return. Kronos not only tracks the time & attendance of employees and communicates with costing and payroll, but it also provides detailed history reports. Foremen and supervisors have a reliable and flexible tool to show who is on time, who is on vacation, or who is in training.
Costing also is simplified. Using application programming interfaces (API), Oracle can extract Kronos data tables. "We try to use Oracle APIs wherever possible," explains Russo.
Realizing how much data the company had, Elliott acquired reporting software from Noetix to support the following functions:
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Monitoring performance and productivity per employee and per process;
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Reviewing ontime shipments and downtime;
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Comparing costs versus estimates, and;
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Generating yearly history reports.
The applications and the data allow Elliott to see how much time and labor actually is expended making products, or maintaining equipment and IT infrastructure—as well as how much time is spent in meetings, or in training. Managers can now establish reliable labor and productivity benchmarks.
Dashboard effect
Noetix also displays the data in dashboard form so managers can see, in real time, exactly how well the manufacturing floor is performing, where productivity is higher or lower, where the bottlenecks are, and which employees, machines, or processes are performing within or outside of spec.
It's still too early to tell how much Elliott's manufacturing productivity has increased since deploying the Kronos system, but more and better information is allowing the company to develop benchmarks and programs to increase productivity on the plant floor.
"At this point we are contemplating introducing Kronos to our North American service shops as well," says Pawlik.
More to flex
Plant solutions vendor Apriso acknowledges its FlexNet suite of operations solutions takes a different approach. In effect an MES, FlexNet programs communicate directly to ERP through XML.
"We have more integration points to SAP than any other vendor," says Tom Comstock, an Apriso senior VP.
FlexNet applications encompass manufacturing, maintenance, shipping, staging and quality assurance, and supply chain visibility. With solutions for both continuous and discrete manufacturers, FlexNet allows companies to track profitability for each order, displaying key indicators or alarms as dashboards, or sending alarms to a paging system or email box.
For instance, Mitsuba, a Tier 1 supplier to Honda, uses handheld devices to update SAP through FlexNet 100,000 times per day. At each stage of the manufacturing process, the devices update the parts used, and machine or process involved. It also links this information to specific orders. This end-to-end visibility allows Mitsuba managers to track profit for each order and each customer.
Stamford, Conn.-based International Paper uses FlexNet to enable ERP system downtime for maintenance without halting its pulp-production processes. When the ERP system comes back online after a maintenance event, FlexNet knows to update the ERP system on all plant-floor activites that occurred during the downtime.
FlexNet's advantage, according to Apriso VP Chris Brecher, is it can be distributed across all of a company's locations and facilities, running on local servers. ERP systems typically are installed on centralized servers. FlexNet users can develop their own standards and methods, and then distribute them across the enterprise. "You get global coordination with local execution," Brecher says.
Tools like these give manufacturers more options for improving performance on the plant floor, which ultimately translates to more profits for the enterprise.
