Global execution

As more manufacturers turn to global business models to reduce operating costs, they're finding that taking orders and generating production plans at the enterprise level can be risky business—particularly if the people doing those jobs can't determine, in real time, what's happening at every plant around the world.

Denying—or even delaying—access to that information can force a company to choose between angering customers by shipping orders late or stockpiling inventory that may never be sold. Some industry experts say the desire to avoid this untenable position is driving renewed interest in the purchase of manufacturing execution systems (MES).

"Many companies, particularly those wishing to improve their ability to monitor production performance, now consider [MES] more of a strategic investment than supply chain management solutions," says Simon Jacobson, program manager, production operations, with Boston-based AMR Research.

Manufacturers also appear more interested in having a single MES manage all of their production operations.

"Most manufacturers still use dozens of manufacturing applications, but leading companies are either at or near a turning point," says Julie Fraser, principal with Newburyport, Mass.-based analyst and consulting firm Industry Directions. "At the MESA [Manufacturing Enterprise Solutions Association] conference last September, for instance, a majority of users said they have either embarked on an enterprise approach toward MES, or have made the decision to do so."

Fraser says manufacturers offer numerous reasons for their resurgent interest in MES. Some companies believe ERP doesn't deliver the level of plant data necessary to run a global enterprise. Others want an MES to ensure regulatory compliance by tracking work through production, offering the means to trace the exact components used in individual finished goods. Still others want an MES to support lean manufacturing, Six Sigma, or other corporatewide performance-improvement initiatives.

The deluge of corporate mergers and acquisitions—which invariably leave the acquiring companies with a host of disparate applications—has manufacturers considering adoption of corporate MES standards, according to Claus Abildgre, product manager for production & performance management at Wonderware, a supplier of industrial automation software. "Top management at many companies is driving a requirement for a single MES so they can focus on operations to improve profitability across the organization," he says.

Jeff Nestel-Patt, director of marketing at Brooks Software, a supplier of multiple manufacturing management applications, argues that globalization is the single biggest reason why companies want a single MES that can manage all of their production operations.

"Manufacturing is a global game today, and one that demands visibility," Nestel-Patt says. "At many companies, by the time manufacturing receives a plan from ERP, it's out of date. That's particularly true for a manufacturer of products such as cell phones that have life cycles of six to eight weeks. Early adopters are aggressively adopting enterprise standards—including a common MES—as a way to architect a real-time enterprise that is flexible enough to transition from an ERP-focused forecasting business model to a demand-driven business model."

A demand-driven business pegs all of its activities—and production planning in particular—to fulfilling actual orders rather than building inventory to coincide with a forecast that may or may not reflect what customers actually want to buy.

Elcoteq, an Espoo, Finland-based contract manufacturer for the telecommunications industry, strives to be an on-demand business, but not having a standard MES across the enterprise was hindering that goal, according to Geir Einset, director of operations development.

With plants in 15 countries, Elcoteq had deployed several manufacturing management applications. Since there was no uniform way of getting information from the enterprise system to the plant floor and from the plant floor back to the enterprise system, Elcoteq could not get a true corporate view of production. Einset expects that to be remedied once the company completes the implementation of a solution from Visiprise as a corporate execution system standard.

Einset believes this system—called Visiprise Manufacturing—will let Elcoteq function as a true demand-driven enterprise—consistently meeting customer expectations while ensuring its own profitability.

"Using a standard MES will give us an IT infrastructure that promotes agility by streamlining the process of getting plans to the plant floor, as well as delivering the production information needed to make critical decisions at the corporate level," Einset says. "For example, a view of global operations and capacity will enable management to make decisions about whether the company should take certain orders, decide where the work should be done, and at the same time, ensure profitability by making better use of production capacity."

On the customer service side, Einset expects Visiprise Manufacturing to enable in-depth traceability for customers—from order through production. Once the solution is deployed across the enterprise, customers will be able to see which components were used in products, when production took place, and where it took place. Use of the system also will play a vital role in Elcoteq's plans to transfer products and processes across plants on a global basis.

"In today's competitive contract manufacturing environment, customers expect the highest levels of quality and consistency," Einset says. "Meeting those expectations has always been a hallmark of Elcoteq. Now, with the Visiprise solution, we know we'll be ahead of customers' expectations."

Even though manufacturers are discovering the value of a single, enterprisewide MES, they also must accept that deploying one is rarely easy. That's because production systems—and the way they are used—differ from country to country and even site to site, notes Susan Lamb, product marketing manager with Camstar Systems, another supplier of production management applications.

It's one thing to deploy a corporate standard MES, Lamb says. But maximizing the ROI on that system—by achieving truly global plant-floor visibility—requires all locations to deploy and use the system in the same manner.

"Management at most sites wants local control, yet corporate management wants control as well—so there's always a potential conflict," Lamb says. "Fortunately, today's manufacturing solutions offer enough flexibility to suit different modes of production within the same enterprise. Consequently, individual plants are able to model production to suit their own requirements while at the same time delivering a uniform way of reporting production data to establish corporate visibility."

Amkor Technology, a Chandler, Ariz.-based provider of semiconductor assembly and testing services, is looking to a special version of Camstar's InSite package to impose uniform processes at its plants—including several high-volume facilities in Taiwan.

The solution will give Amkor managers critical information to meet stringent operating objectives, which include satisfying growing customer demand for complex products, says Gary Swinden, Amkor's VP of supply chain solutions.

Camstar's InSite Semiconductor TAP Edition will provide serial number traceability, real-time work-in-process tracking, and improved visibility for operating management. Additionally, by integrating InSite with SAP ERP and other business applications, Amkor's Taiwan plant managers will have improved operational insight to make more informed business decisions and quickly modify business processes to meet constantly changing demand, Swinden says.

"Amkor's focus on customer satisfaction requires systems that enable us to handle an increasingly complex product mix and optimize electronic supply chain connectivity," says Swinden. "We appreciate the value that Camstar's technology has brought to our manufacturing process in other locations. I expect our Taiwan plants to experience similar results while also meeting the industry's stringent quality requirements in a high-volume production environment."

That sort of corporate control is increasingly valued in industries that require companies to maintain consistent product quality—such as medical device, tobacco, food & beverage, and aerospace & defense, says Wonderware's Abildgre. In those industries, products must be identical no matter where they are made.

"Cigarettes from the same brand, for example, need to look, feel, and taste the same around the world," Abildgre says. "There can't be differences just because different packs of cigarettes were produced in different countries."

While brand continuity enables a company to retain customers, the underlying uniform approach to manufacturing also enables companies to address price pressure that requires companies to get the most out of their existing manufacturing resources.

The primary benefit from having uniform processes and reporting methods across the enterprise is that companies are then able to improve plant performance and also make better use of plant assets while focusing on operational excellence as a means to promote profitability, says Abildgre. "It puts a company in a position to make apples-to-apples comparisons when looking at plants so they can determine why performance varies from site to site and even country to country—and what changes must be made at individual plants to ensure that all facilities can perform at a consistently high level."

Gaining plant-floor visibility—with all plants operating the same way, and reporting the same data—gives a company the agility and speed to manufacture quickly and then later evaluate performance to determine, for instance, if a product got to market fast enough to generate a healthy profit.

"From a corporate perspective, the company can determine profit margins for specific products made at specific plants," Abildgre says. "That allows creating strategies for using manufacturing resources in ways that satisfy volatile customer demand while generating the highest-possible profit margins."

Amkor's Einset looks forward to that type of improved asset utilization. When plants are using the same manufacturing solution, it gives a company the chance to use common definitive measurements for benchmarks to evaluate performance from location to location, he says.

"We operate in 15 countries, and, ultimately, Visiprise Manufacturing will give us the tools to monitor and then improve quality and yield at all of our sites," Einset says. "Improving quality is vital to ensuring continued customer satisfaction, while improving yield will ensure profitability."