Extend the Value of ERP

Jan. 22, 2009
Integration with manufacturing operations promises substantial benefits.

During the past 15+ years chemical companies have broadly adopted Enterprise Resource Planning (ERP) systems and made them their “transactional hubs.” Such systems have shown tremendous business benefits by improving the efficiency of financial transactions and reporting and by enhancing the execution of the customer order cycle. However, the benefits to the manufacturing arena are less defined and a correlation of ERP benefits to manufacturing hasn’t been evident.

This lack of correlation shouldn’t be a surprise, inasmuch as most of the critical manufacturing operations occur outside of the ERP system. The key to achieving manufacturing excellence is integrating these disconnected systems, these “islands of data and information,” to each other and the ERP transactional hub. For peak efficiency and performance, everyone in the organization must have timely access to the data and information as well as the capability to collaborate and communicate across the organization and the entire supply chain.

Creating this integrated/collaborative environment isn’t easy. It requires dealing with many different data sources, data formats, data management issues, etc. ERP vendors and other system providers have made some attempts to create this integrated environment. However, most of these efforts merely represented extensions of existing product portfolios and didn’t focus on the total manufacturing environment.

Industry Initiative
As part of an effort driven by the Chemical Information Technology Council of the American Chemistry Council (ACC), Arlington, Va., the Chemical Industry SAP Users Group (CISUG) was formed in 2005 to focus on how to get more value out of existing investment in SAP and how to ensure that future SAP capabilities addressed critical industry issues. The Americas’ SAP Users’ Group assumed responsibility for CISUG in January 2008 and made it a special interest group, which opened up participation to hundreds of other chemical companies (90+% of the industry) currently running SAP. (For more information about CISUG, visit www.asug.com.)

The CISUG team, which is led by manufacturing, engineering and information technology specialists from ACC member companies and includes representatives from SAP and other suppliers, quickly identified manufacturing excellence as one of the key areas of opportunity. This group also recognized that chemical companies face similar manufacturing issues and problems. It quickly concluded that creating a shared industry vision for the manufacturing environment of the future and working together to “encourage” SAP and the other manufacturing systems providers to deliver needed technologies were crucial. CISUG took a proactive role to ensure that the suppliers know what the industry wants and to avoid duplication of effort and costs and the constant push by vendors to use the “latest and greatest” software.

The first step was to create a vision of the chemical manufacturing environment of the future and to qualitatively and quantitatively define the business benefits this could provide. The team envisioned an integrated/collaborative environment that would bring together manufacturing execution systems, process control systems, predictive control algorithms, legacy and proprietary production systems, environmental, health and safety systems, etc., with SAP and other business and financial management systems. It would give everyone in the organization access in real time or near real time to data and information needed to do their jobs, and provide the ability to collaborate and communicate with everyone in their value chain, including customers and suppliers — to greatly enhance the speed and quality of decision-making. The team envisioned this as “the accessibility, visibility and action ability to manage and analyze all of the data and information available to enable better and quicker decisions to have a positive impact on the bottom line.”

The integration must have three dimensions:

Figure 1. -- Vertical integration: This enables
monitoring an order from when it was placed to
its delivery, and assessing its impact on
financial results.
Click on illustration for a larger image.

1. Vertical. This integration goes from the plant floor to the board room (Figure 1). It connects plant-floor control system data with process management systems, production planning and production control systems, and business and financial planning and monitoring systems. Vertical integration enables a company to monitor a customer order from inception through execution to delivery, and to assess the order’s impact on financial results.

2. Horizontal. Such integration involves connecting all constituents in the value chain — from suppliers, through global manufacturing and businesses systems, to customers — as deeply as desired, guided by mutual confidentiality, legal and security system policies (Figure 2). It provides the capability to communicate on a real-time basis with value chain partners, to react to and deal with unforeseen manufacturing upsets or

business environment changes. It enables problems to be anticipated and solutions created that minimize costs to the company and its customers and suppliers. The company reaps direct financial benefits and also goodwill and credibility that will have a positive impact on the bottom line.

3. Geographic. Most companies operate internationally and need to be able to quickly respond to the dynamics of the global marketplace. This demands integration of their businesses and operations worldwide, so they can properly address production upsets and market changes (Figure 3).

The Benefits
The team identified key benefit areas from this three-pronged integration:
• reduced cost of manufacture, e.g., from improved plant utilization, lower conversion costs, higher yields, better quality and decreased maintenance costs;

Figure 2. -- Horizontal integration: Close
communication with suppliers and customers
can allow anticipating and addressing problems,
minimizing costs and disruptions.
Click on illustration for a larger image.

• enhanced employee efficiency and performance;
• better customer service; and
• higher morale.

They concluded that the biggest direct impact will come from increased manufacturing efficiency and decreased manufacturing costs. In the CISUG vision, plant staff will be able to anticipate process and equipment problems and be in a better position to respond more quickly and efficiently — in some cases avoiding emergencies and unplanned shutdowns. This, in turn, will reduce product-quality and delivery problems and improve relationships with customers. An integrated/collaborative environment also will allow companies to better leverage their skilled workers and more easily pass knowledge to new employees. Enabling people to do their jobs more efficiently and effectively also undoubtedly will boost morale.

Figure 3. -- Geographic integration: Companies
benefit if they can consider market conditions
and plant operations on a global basis.
Click on illustration for a larger image.

While the exact impact on the bottom line would vary for each company, the number generally would be enormous. In fact, the team worried the benefits would be so huge they might undermine credibility and buy-in at their companies. To mediate this concern, the team decided to go beyond describing the vision and its potential benefits to actually show how the vision would work in a real-world environment. The objective is to have manufacturing and business leadership recognize the benefits of the integrated/collaborative environment and start a question-and-answer dialog. Can we do that? Why can’t we do that now? What do we need to do that? Team members agreed that the answer to the first question would be “No,” and that the answers to the other questions would form the basis for developing a roadmap to create the environment in their companies.

Making the Case
The first step in the plan was to develop an executive-level presentation that describes the industry vision and potential benefits; it covers much of what we have discussed so far. The presentation also explores a real-life scenario — a batch emulsion polymerization reactor experiencing operational problems — to show how an organization could function in an integrated/collaborative environment to predict and respond. The systems and situations typify almost any chemical process.

The problem with the batch emulsion polymerization reactor disrupts planned production and product shipping schedules. Thanks to an integrated/collaborative manufacturing ecosystem involving the control room, plant floor, in-house and third-party maintenance, production planning, sales and the customer, the situation is resolved with minimum impact and significant business benefits.

The integrated/collaborative environment integrates SAP with manufacturing applications such as a process data historian, production scheduler, advanced manufacturing algorithms, predictive quality models and maintenance systems. (An overall solution would include laboratory information management systems and other customer-based proprietary systems.)

This scenario reveals the benefits of the integrated/collaborative environment for:
• preventing an unscheduled shutdown, thus preserving asset utilization and capacity;
• delaying or possibly eliminating a future scheduled shutdown, providing more capacity;
• minimizing required time for shutdown, again adding capacity;
• obviating costs for expedited maintenance;
• avoiding a potential aborted batch, saving on material costs and improving capacity utilization;
• maintaining, if not enhancing, customer satisfaction, thus offering the prospect of increased market share; and
• lessening organization stress through proactive response.

But it’s one thing to discuss the value of the vision and another to demonstrate how it can become a reality. The team recognized that showing the vision in action was crucial to get solid buy-in and support from corporate leadership and, so, created an interactive demo based on the scenario. This illustrates how role-based workplaces — sometimes called dashboards or cockpits — can enable everyone in the organization to have real time accessibility and visibility to the data they need to do their jobs.

The demo starts with the workplace for an executive, so leaders can see what their workplace might look like and what capabilities they can have in the integrated/collaborative environment. It’s pointed out that the workplace is secure and can be customized to an individual’s needs and preferences, enabling access to business and performance issues crucial to the particular executive. Typically it will contain high-level safety and environmental performance data as well as rolled-up business and financial data. It also can include information and links to customer, supplier and competitor material or, for that matter, to any other desired internal and external sources of data and information. It can provide alerts to abnormal situations or deviations from standards or plans — as well as drill-down capability to investigate these and to immediately connect to the appropriate people in the organization. It’s emphasized that everyone in the organization has a similar workplace and drill-down and collaborative capabilities based on that person’s role and job responsibilities.

Then, a red indicator for an abnormal situation lights up in the production performance section of workplace, and the demo goes through all the efforts required to deal with the problem. This involves 38 distinct steps and collaboration with operations, maintenance and sales staff and a customer; these are detailed in a sidebar below.

The demo concludes with a discussion of how leaders can follow-up to validate and quantify the value of an integrated/collaborative environment in an organization and define the steps to create an implementation plan. The initial step is to pinpoint short-term opportunities to enhance the performance of the ERP system and to determine, quantify and prioritize specific areas of manufacturing improvement. The process will identify gaps in a company’s process, personnel and systems that need to be addressed, and thus enable developing a roadmap to fill these gaps. The key message is to leverage what an organization has and to start small and grow, but get started.

Improve your Vision
CISUG has developed an interactive presentation of the vision that demonstrates the value of an integrated/collaborative manufacturing environment. This demo serves as the cornerstone for showing the tangible benefits of such a strategy. The reactor scenario is just one of several that were created by the CISUG team as possible demo candidates. The demo is available in a flash-drive version that describes the situation and depicts how an integrated, collaborative team would respond. It also is available online. Contact either of us by e-mail to get access to the demo.

A Real-World Scenario

Here’s how a problem in an emulsion polymerization reactor could play out in an integrated/collaborative environment:

1. Time is 0730 on Thursday, June 15. During turnover from the 12–8 shift, one of the control-room operators notes the current status of each of his four units. Reactors A and B each have about three hours remaining to completion, Reactor D is being discharged to drumming, and Reactor C has just been brought online and catalyst addition had been activated.
2. The oncoming operator accesses his operator workplace, validates the status of each unit, and assesses his key reaction indicators. He notices that the catalyst feed rate for Reactor C is showing erratic behavior. In addition, the online prediction models indicate a worsening future trend.
3. He accesses the history of the catalyst feed rate. At the same time he “pings” the mobile unit of the plant-floor operator to alert him to the potential problem.
4. Reacting to the ping, the plant-floor operator downloads the P&I (piping and instrumentation) schematic for Reactor C on his way to the unit.
5. From the catalyst feed-rate history, the control-room operator notices that the feed rate has been in control but fluctuating with a high frequency and trending downward. The future predictions confirm this assessment.
6. The control-room operator downloads this information to the plant-floor operator, who observes some seal leakage at the catalyst feed pump and high chatter from the pump-discharge pressure gauge.
7. The plant-floor operator isn’t able to stop the seal leakage. He pings the control-room operator to update him on the situation and enters a maintenance order for future repair of the surfactant pump.
8. The repair order is automatically entered into the SAP maintenance system and notification is automatically sent to the plant maintenance manager.
9. The control-room operator continues to observe erratic catalyst feed rates but, although the key reaction parameters are still within specifications, he’s concerned about the catalyst feed pump’s ability to support the next scheduled production batches. Process stability and quality predictions indicate that there’s a higher than normal risk that production won’t meet the committed plan.
10.  The control-room operator pings the plant maintenance manager requesting an estimate of earliest pump repair and expected outage of Reactor C.
11.  The maintenance manager, upon seeing the request from the control-room operator, calls up the repair history for the catalyst feed pump and e-mails it to the control-room operator. The manager estimates that the repair, if it only involves the seal, will require six hours after turnover of the pump to maintenance.
12.  The control-room operator calls up the production plan for Reactor C and observes that it’s scheduled for three more batches, back to back, over the next five shifts. He enters an eight-hour outage for Reactor C into the plan (two hours to prep for maintenance and six hours to repair the seal).
13.  He reruns the plan. The result shows that all reactors are scheduled at full capacity and that at least two customer orders will be delayed by the eight-hr. outage for Reactor C.
14.  The control-room operator pings the plant-floor operator to check on the condition of the pump seal.
15.  The control-room operator also notices that catalyst flow rate still is erratic.
16.  He activates the catalyst-flow-rate prediction model, which shows that Reactor C will reach the critical minimum flow in six shifts. In addition, process prediction models indicate that production will be at 50% of maximum on Reactor C until it is repaired; decreasing linearly with catalyst flow over the next six shifts.
17.  This result from the model automatically triggers an alert to the operator, to the master production planner, and to the maintenance manager indicating that the catalyst feed system for Reactor C will need to be shutdown for cleaning and pump repair in six shifts.
18.  The alert also indicates three options for repairing the pump and cleaning the catalyst feed system:
a. only repair the pump, four hours;
b. replace the pump and perform routine maintenance on the feed system, six hours; or
c. replace the pump and compete cleaning of the feed system, 20 hours.
19.  The alert to the master production planner automatically triggers a rerun of the production plan for Reactor Train 1 using each of the three alternatives and compares it to the current plan.
20.  The master production planner also reruns the production plan for Reactor Train 2, to double-check available capacity, using an eight-hr. outage for Reactor C.
21.  The results identify two customer orders that will be delayed.
22.  The master production planner pings the sales representative for the customer whose orders may be delayed with a request as to whether the customer would entertain a change in shipping schedule.
23.  The sales representative is on the road and receives the message on his Blackberry.
24.  The sales representative runs a query for the customer in question and finds that these product shipments are part of a biweekly shipment schedule. It’s possible that the customer may be able to take a one day delay.
25.  He clicks the auto dial for the customer and is connected to his customer’s voice mail.
26.  He leaves a voice mail for the customer to contact him either by mobile phone or e-mail.
27.  The customer responds via text messaging that he’s available at his mobile phone number.
28.  The sales representative calls the customer, discusses the situation and gets approval for up to a three-day delay in shipment.
29.  The sales representative e-mails this information to the production planner with copies to the control-room operator.
30.  With the customer able to allow a three-day delay, the production planner reruns the production plan. The results indicate that Reactor C can be shut down for up to 28 hours with no further product delays. Eight hours is required for the catalyst feed pump replacement and cleaning of the feed system, during which time routine impeller maintenance also can be completed. The planner questions whether the shutdown should be extended to do a complete impeller replacement.
31.  The planner pings the maintenance manager with the question.
32.  The maintenance manager pulls up the maintenance records for the impeller on Reactor C and finds that the impeller isn’t due for replacement for five months.
33.  He responds to both the production planner and control-room operator that he recommends proceeding with only routine maintenance during the outage.
34.  He also responds that he has contacted his maintenance team, alerting them to the pending shutdown and repair. They have responded that they can be in position for the repair in four hours with all parts and labor available.
35.  The production planner reruns the production plan and schedules the shutdown to begin at the conclusion of the current batch in Reactor C, estimated in seven hours. This reduces production rate losses and shortens the two identified customer delays by 12 hours.
36.  The modified production schedule is automatically sent to the control-room operator and the maintenance manager.
37.  Appropriate maintenance orders, production orders, etc. are also automatically updated and issued.
38.  Notification is automatically sent to the sales representative, who notifies and confirms the change with the customer.

Fred Reever, recently retired from DuPont, is a Delray Beach, Fla.-based member of CISUG. Frank Kochendoerfer is director of the chemicals industry business unit for SAP Labs Inc., Newtown Square, Pa. E-mail them at [email protected] and [email protected].

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