The electronics manufacturing giant, Celestica Inc., of Toronto, Ontario, Canada, has instituted a wide range of
collaboration activities to communicate across its 45 plants in Asia, Eastern Europe, Mexico and Canada. The company also collaborates with suppliers and customers to share production data and manage inventory.
Increased regulation in the electronics industry is forcing even greater collaboration, as manufacturers grapple with the demand of European Union directives such as the Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) and the Restriction of Hazardous Substances (RoHS) directives. REACH and RoHS require companies to declare the substance content of their products. That means they have to manage material data from hundreds—sometimes thousands—of suppliers.
Without sophisticated collaboration, both internally and externally, managing REACH and RoHS compliance would simply be impossible. “The way we meet RoHS and REACH requirements is to control the data that comes into the plants,” says Harvinder Sembhi, vice president of supply chain strategy and planning at Celestica. “We have a centralized team in Malaysia, and we use a certain instance of the truth for each product. That one version of the truth is visible to all of the plants building the product.”
Celestica also collaborates with customers to share data on production forecasts, purchase orders and inventory. “We do it through our front-end portals, or we can populate our customers’ internal systems,” says Sembhi. “What we shipped yesterday is available on the Web site. Some of our customers also want to see real-time quality data.” That data can also get published to Celestica’s customer portal or sent to the customers’ systems. The real-time data is also integrated with Celestica’s enterprise resource planning (ERP) system.
Celestica recently started to use a third-party collaboration tool. “We took collaboration to the next level with SmartOps to help manage inventory,” says Sembhi. “We want to have the supply there when the order arrives, so we use SmartOps to look at customer demand to see if the customer is over the forecast or under the forecast.”
The SmartOps tools, provided by Pittsburgh-based SmartOps Corp., give Celestica a view of the customer’s demand and inventory allocation. “This gives us multi-stage inventory optimization,” says Sembhi. “We can look at the customer’s supply chain and determine the most appropriate place to put the inventory.” He notes that the visibility provided by the tool helps Celestica position the inventory at the lowest cost possible while still meeting production requirements. “Collaboration across various plants allows us to stock less inventory,” says Sembhi. “You create intelligence so you can fill the order with the lowest amount of inventory.”
Collaboration used to be an efficiency luxury, affordable only for large manufacturers, but in recent years, it has become a necessity for large and small companies alike. Plant control engineers have to collaborate with maintenance and information technology (IT). Plants have to collaborate with other plants across the globe to share production data and inventory levels. Collaborative tools are also being used as part of best practices designed to increase efficiency and enterprise profitability. Companies are also collaborating across the supply chain, especially as they face demanding regulation to trace and track in the pharmaceutical, and food and beverage industries, or to report chemical content in the electronics and chemical industries.
Some companies are using internal applications to facilitate collaboration. ERP vendors such as Oracle and SAP have developed collaborative tools, and control system vendors are also integrating plant systems with ERP and manufacturing execution system (MES) applications for sharing data. Many manufacturers such as Celestica are also using external third-party platforms for specific collaborative work in design or inventory control.
The reasons for collaborating are numerous. Plants are sharing data internally to become more efficient in production and inventory. They’re sharing data externally to optimize inventory and meet compliance demands. “We are now seeing that the walls between maintenance and operations, or IT and manufacturing, are starting to come down,” says Marc Leroux, manager of collaborative production management at ABB Inc., in Norwalk, Conn. “Externally, the relationship with suppliers and customers is being extended to include operational transparency, with each state of the supply chain having the visibility into stages before and after their own.”
Collaborating externally can cause friction between trading partners. “Let’s suppose you’re P&G (Procter & Gamble) and you’re buying additives and chemicals, and you have to put allergen information on your label,” says Alison Smith, research director at AMR Research Inc., in Boston. “You can’t just say it’s red dye number 4. Yet the additive company doesn’t want to give up its recipe. So there’s a negotiation process between the manufacturer and the supplier on what data is shared.”
The solutions to the security challenges of collaboration are often built into the collaborative tool itself. In a case such as food flavoring, collaboration can trample on intellectual property (IP). “If I use the supplier’s product in my formula, I want to know what the ingredients are, for compliance,” says Rory Granros, director of product marketing for process industries at Infor Global Solutions, an Alpharetta, Ga.-based enterprise software supplier. But those ingredients constitute the IP. The solution for protecting IP while disclosing ingredients is limiting who can see what during the collaboration. “The ingredients get validated, but it’s masked, so very few people in the organization get to know the detail,” says Granros.
Different industries are in different stages of adopting collaborative practices. The pharmaceutical industry has long led adoption simply because of its heavy regulatory environment. “The pharma industry is definitely ahead,” says Charlie Rastle, industry manager of CPG for vendor Rockwell Automation Inc., in Milwaukee. “The FDA (Food and Drug Administration) regulations for batch records has put them ahead.”
Other industries are catching up, as new regulations such as REACH and RoHS force more electronic data sharing along the supply chain. “Different industries focus on collaboration at different times,” says Paul Giaconia, vice president of development at Oracle Corp., the Redwood Shores, Calif., enterprise software vendor. “High tech recognized the need for collaboration quickly, but the construction industry is still using paper-based collaboration.”
During the first several years under REACH, the average chemical company will handle thousands of compliance documents, including substance registration and reports on usage and management of products. In order to present full disclosure on substances in their products, manufacturers will need to report on the chemical content of materials from their suppliers. This will require massive data sharing along the supply chain.
In anticipation of this large new need for collaboration on product content, SAP AG, the Walldorf, Germany-based enterprise software supplier, has developed a substance volume tracking functionality to help its customers minimize the risk of non-compliance. The chemical producer, BASF AG, in Ludwigshafen, Germany, began to deploy the SAP tool in 2003. “Due to the complexity of our operations and the number of substances involved, compiling reports using manual processes just wasn’t viable,” says Andreas Gypser, BASF’s manager of Environmental, Health and Safety Systems. “It would require a huge number of costly staff hours on an ongoing basis, and we’d also run the risk of reporting errors and inaccuracies.”
SAP’s REACH compliance tool was developed to include supply chain collaboration, because manufacturers have to obtain and manage data on substances from suppliers. “We’re trying to build compliance and collaboration into the processes, instead of that being an afterthought,” says Vivek Bapat, vice president of manufacturing, supply chain and PLM at SAP.
One industry that’s ramping up quickly on collaboration is food and beverage. Strong track-and-trace needs are forcing collaboration as a way to respond to recalls. Quick response—through a strong collaborative system—can mitigate damage to the brand. “Investing in track-and-trace collaboration is like insurance,” says Claus Abildgren, program manager for MES and enterprise manufacturing intelligence (EMI) at automation software supplier Wonderware, in Lake Forest, Calif. “If you can respond in two hours, you’re alright. If it takes a couple of days, it damages the corporate image.”
A number of manufacturers are taking collaboration routes similar to Celestica, which includes a blend of integrated internal systems and third-party collaborative platforms. Often, internal systems are used for internal data sharing, while the third-party system is operated to share data with trading partners.
Part of the attraction of the third-party system is the ability to control who sees what. Boomi Inc. is a collaboration platform company in Berwyn, Pa., that helps manufacturers share inventory data with retailers. “There is a general trend of manufacturers saying, ‘Enough already’ to using internal applications to collaborate with trading customers,” says Rick Nucci, co-founder and chief technology officer at Boomi. “Now they want to use tools that don’t disrupt current applications.”
Using a third-party system ensures the trading partner is not actually accessing the manufacturer’s IT network. Within the platform itself, there are also security measures to protect the data that’s being shared. “We do intrusion tests,” says Nucci. “We’re constantly focused on the problem of security.”
However collaboration is done, internally or externally, through internal or third-party systems, it’s becoming a business necessity. New regulations affecting a wide range of industries are pushing even more companies onto collaboration platforms. While collaboration used to be the province of large global companies, it is now being pushed down the supply chain as manufacturers ask their smaller suppliers to begin sharing data electronically.
Catalyx: Collaboration Through Third-Party SaaS
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