Enterprise Resource Planning (ERP) software has gotten a bad rap. During the 1990s, thousands of companies deployed enterprise-wide planning solutions that promised millions of dollars in business benefits. Many found that these projects were grossly over budget, over schedule and underutilized. Horror stories abound.
But with the recession during the first few years of the new millennium, and the global pressures on manufacturing, companies are taking a new look at how to squeeze benefits from their ERP solutions. At the top of the list for manufacturers is connecting real-time data from the plant floor to the ERP system, either directly or through a middle layer of manufacturing execution system (MES) software.
Wild disappointments
“In some companies, ERP is almost a four-letter word. Companies have been wildly disappointed in the ROI (return on investment) of their ERP, and expectations have been scaled back,” notes Kevin Tock, vice president, strategic alliances and programs, at Wonderware, an Invensys company based in Lake Forest, Calif. “This is one reason for the push to integrate with the plant floor. However, manufacturers are not funneling a lot of money into these integrations.”
So the challenge for manufacturers is to integrate disparate systems—automation, production, scheduling, inventory, quality, customer service and accounting—into a broad-based solution that promotes better business decisions, without breaking the bank.
The past year has seen many encouraging developments to help manufacturers make the plant-to-business connection. Standards have been released that provide data models for mapping information from one layer to another. The most notable of these is ISA S95, an Instrumentation, Systems and Automation Society standard for enterprise integration, which incorporates the B2MML standard for Business to Manufacturing Markup Language. A set of XML (eXtensible Markup Language) schemas that implement the S95 data models, B2MML has been successfully employed at several batch manufacturing companies, including Procter & Gamble.
Another encouraging development is that ERP leader SAP AG has “discovered” the plant floor. Initially reluctant to focus product development at the plant-floor level, SAP has embraced this market by actively promoting the S95 standard, extending its NetWeaver platform development program to the shop floor, introducing Manufacturing Dashboards for information aggregation and hosting seminars for users and other third-party software developers.
With 12 million users, 84,000 installations and 1,500 partners, SAP is the world’s largest enterprise software company and the third-largest independent software supplier. Founded in Germany in 1972 by five former IBM employees, SAP introduced its R/1 system for financial accounting, where the “R” stands for real-time data processing. Headquartered in Walldorf, Germany, the company’s current products span accounting, financial, human resources, procurement, supply chain and manufacturing solutions.
To find out where SAP is heading in the manufacturing marketplace, Automation World went right to the source in this exclusive interview with Sudipta Bhattacharya, vice president for manufacturing applications for SAP. Bhattacharya’s impressive credentials include managing post-implementation value assessment practices for i2 Technologies, headquartered in Dallas, and eight years with the Tata Group companies in India, managing manufacturing operations.
He holds a bachelor’s degree in chemical engineering and master’s degrees in manufacturing, chemical engineering and operations research, as well as a Master of Business Administration in finance and operations management.
Automation World: There is finally a lot of attention being paid to integrating plant-floor manufacturing operations with business applications. How is SAP playing a role in this process?
Bhattacharya: Based on a number of customer interviews that we have done, and based on my own personal experiences working in a chemical manufacturing plant—I feel our customers’ pain—we find that manufacturers have a number of silos in their organizations. There are the automation layer silos, the MES layer silos and the business silos.
Manufacturers, however, need to create a responsive business and a responsive supply chain. For example, having a lot of inventory today is almost a sin. Inventories are at a minimum level. The factory must be able to immediately detect a change in inventory level, respond to the change and promulgate a response throughout the supply chain. To do this, manufacturers must have visibility into every process on the plant floor.
If there is a disruption in the process—a quality or maintenance problem, for instance—then real-time notification must occur and corrective action must be taken. There is no longer that cushion of inventory. A disruption impacts customer fulfillment, the supply chain, even health and safety issues. And information for those systems resides mainly in the ERP system.
The greater the latency between a shop-floor event and when the business layer sees that event, the more inefficient the process. Businesses cannot execute with these inefficiencies, and therefore, we’re seeing this increased interest in connecting plant-floor operations to the ERP.
AW: What do your customers want from you?
Bhattacharya: What our customers are telling us is that they have multiple systems—for example, a quality system, an SAP ERP, a LIM (laboratory information management) system—and they reconcile information among these systems in a manual way, often using a spreadsheet or other tool. Our customers have asked, “Can you provide us with a simpler way to do this, in an integrated manner, but without having to strip out our existing systems?”
The SAP solution includes the NetWeaver integration platform, which provides the ability to connect applications and leverage standards such as XML and Web Services. A core part of NetWeaver is SAP Xi (eXchange infrastructure), which contains the standard mappings to move data between the automation layer and the ERP layer.
SAP Manufacturing provides software solutions for planning, execution, quality management, maintenance, health and safety, and dashboards. These Manufacturing Dashboards are consolidated, role-specific portals into the manufacturing process. Dow Corning, for example, is implementing the Plant Manager Dashboards in its facilities to drive intelligent decision-making based on alerts and KPIs (key performance indicators). (See page 46 for more on this application.)
AW: The major automation players are all touting integration benefits. What does SAP bring to the party?
Bhattacharya: SAP is not encroaching on their space—the automation layer is not where we want to go. What we want from the automation layer is the real-time and near real-time information that can be captured and sent to the SAP system, which allows the ERP to better trigger the workflow orders.
For example, a quality alert, captured at the automation layer, is pushed into the supervisor’s dashboard or portal, where the appropriate action can be triggered. At the end of a shift, this information can be aggregated, and reports created to give the business an overview of performance. By attaching this data to the cost information in the ERP, businesses can pinpoint the products, shifts, equipment, operations—even plants—that are profitable or losing money.
AW: At the World Batch Forum in May 2004, Procter & Gamble presented a paper on how to implement B2MML standards with SAP ERP software. The presenter said at that time that SAP was not interested in developing a standard B2MML interface. Has SAP changed its position?
Bhattacharya: The short answer is yes, we’ve changed our position. The onus of the integration from the shop floor to the business applications should not be with the customer, it should be with the vendor
community. Because SAP is a de facto standard at the business layer, we were hearing a lot about integration issues and the new B2MML standard.
Developments in 2004, including discussions at the Hannover Fair in Germany and other trade events, convinced us that we had to take a stand to actively promote the adoption of S95 and B2MML.
The standards bodies will drive the evolution of the standards, not SAP. We will support and adhere to the base standards in our software. Users will benefit by having to develop less custom software to integrate their manufacturing and business operations.
We recently held an S95 workshop, moderated by ARC Advisory Group, to promote awareness and adoption of the standard. Anyone, even other ERP vendors, is welcome to join these workshops.
AW: Last October, SAP announced a partner program of companies that leverage SAP NetWeaver for shop floor applications. How is that program progressing?
Bhattacharya: The connectors into the plant-floor—the PLCs (programmable logic controllers), SCADA (supervisory control and data acquisition) systems, DCSs (distributed control systems), and so on—are owned by the traditional automation layer. Taking the data from these systems, performing some initial contextualization and aggregation, and feeding that information to SAP through the NetWeaver integration platform is what we mean by shop-floor-to-top-floor connectivity.
We have formally announced a partner program for the shop floor, with the value proposition for customers that they no longer have to do the integration on their own. Last October at the APICS conference (an association for operations management), we announced four companies that have been certified for the program, including Lighthammer, NRX, TechniData AG and Vendavo, and several others, such as Apriso and IndX Software, that are pursuing certification.
AW: What best advice do you have for a global manufacturer looking to squeeze integration benefits from a collaborative software structure?
Bhattacharya: Manufacturers need to step back and take a holistic view of their operations. What most struggle with, or don’t fully understand, is that an event on the shop floor has a lot of business implications. Think through the manufacturing process. Identify the six or seven events that are causing 80 percent to 90 percent of the shop-floor problems; don’t view them in isolation.
If manufacturers understand the problem-causing events, and their interactions, they can put into place the business processes that can resolve these events quickly and profitably.
The more you wait, the greater the latency between the shop floor and business layers, and the more value is lost.
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See sidebar to this article: Dashboards Drive Improved Performance at Dow Corning
