Digitizing the manufacturing process via ERP systems can greatly improve ROI. However, it doesn’t come without challenges. For many manufacturers, there is a disconnect between what goes on in their factories, including their engineering departments, and the core business processes supported by their ERP systems. It creates significant lag times for management to access, analyze and act on data from the manufacturing and development processes. Not having this data in real time could create problems with planning, inventory control, the supply chain or meeting customer expectations.
Barriers to incorporating data from machines on the shop floor into ERP are dropping. Much of the newer equipment is now internet-enabled, and some older machines can be adapted for connectivity. Companies like GE and Siemens are working to standardize platforms for machine-to machine communication. The leading ERP vendors have all taken advantage of this new connectivity to incorporate the machine data into relevant workflows.
So why aren’t all manufacturers connecting their shop floors to their ERP systems? The same old reasons for avoiding any significant technology project: cost, resistance to change and lack of understanding of the ROI.
Complexity can be a factor, too. Mike Lackey, global vice president of solutions management for SAP, gives the example of a company that has dozens of machines from multiple vendors. “The true value [of digital transformation] is tying all the machines together to see what they are producing, the cost structure, performance, and the quality of the output,” he says. “You can’t look at the data off the machines in silos.”
Industrial digitization and its impact
“Industrial digitization concerns two dimensions or core processes,” says Magnus Wilkerson, professor of production systems at Matardalen University in Sweden. “First, the order-to-delivery process, or operational process, integrates data across system layers and throughout the value chain. Critical activities are the integration of MOM/MES (manufacturing operations system/manufacturing execution system) layer into the architecture as well as the supply chain data integration. Second, the industrial digitization concerns the product and production development process. It integrates data across development platforms and stakeholders and enable virtual builds of new products and virtual verification of new processes.”
Those stakeholders might be people internal to the organization such as product managers, engineers or planners. They could also be external such as contract manufacturers, suppliers, or partners. Lackey spoke of an SAP customer, a large medical device manufacturer, that was designing and building a large and highly specialized piece of equipment used in cancer treatment. Because the manufacturing and engineering processes were digitized and connected, what SAP calls a component of Industry 4.0, all the stakeholders from the customer to the people designing and building the unit were on the same page.
The stakes were high. “Their client [a hospital] had spent more than $1 million setting a room up for this equipment,” says Lackey. “With S/4 HANA, bottlenecks and shortages were identified sooner allowing the manufacturer to respond faster managing customer expectations and insuring an on-time delivery.”
The tools to measure ROI are available. Robert Sinfield, director of portfolio marketing at ERP vendor Epicor Software, gives the example of rubber and plastics manufacturing. “It’s very repetitive manufacturing, and manufacturers want to maximize efficiency,” he says. “Solutions to measure efficiency give visibility into the manufacturing process. They can detect deviations in small volumes of time that normally you would not be able to identify.”
For example, the system might identify a machine running at 3 percent lower efficiency over the past three days and send an alert to the service department. That drop might not have been noticed if the machine were not connected to the internet with a monitoring solution that was integrated with the manufacturer’s ERP system. This is important, because even a tiny increase in efficiency in a high-volume manufacturing process can yield significant returns.
Scrappage, or material wasted due to quality issues in the manufacturing process, is another area where intelligence at the machine level can improve efficiency. Sinfield says one Epicor customer cut its scrap average from around 4 percent to 1.37 percent, which also contributed to a 3.1 percent decrease in downtime and consequently lower cost of sales. Annual cost savings for this company were $600,000. “This puts the ROI down to months,” says Sinfield.
The benefits don’t stop there, however. “Where it gets clever, [the efficiency data] is presented to finance so that they can understand energy consumption and make judgments about overall equipment effectiveness (OEE) measures. Looking at downtime, they can see if it makes sense to continue servicing the existing equipment or purchase a new machine,” says Sinfield.
Connecting people as well as data
Getting a steady flow of actionable data from the shop floor to business managers and back is important, but just having access to that data might not always be enough. That’s why Epicor has embedded a social framework to support teams associated with a project or process. “Social is built into the fabric of Epicor. It supports a fundamental shift to allow interaction both internally and externally,” says Sinfield. “It’s not just about collecting and analyzing information. It’s really about letting a team collaborate around a project.”
ake a custom engineering-to-order project, for example. Working out the specifications would involve engineers, procurement, and manufacturing. Quality assurance personnel might be needed later on. Customer service and sales need insight into the process to make sure product and delivery expectations are met. “These are all normally quite disparate points with disparate systems outside ERP,” says Sinfield.
When something fails during the process, alerts might go to the project engineer, the sales engineer, and maybe an outside consultant. They are all able to dialog within Epicor ERP, pulling in things like business objectives around the project or the original engineering breakdown when needed. If a fault in a material is found, the supplier might also be brought into the loop within the system.
At some point, finance might get an alert that a project is delayed. They can see through the ERP system exactly what is causing the delay and make decisions about planning or change forecasts based on what they see. “That’s where it really starts to make sense to bring [data] together in ways we were never able to do before,” says Sinfield.
Implementation considerations and challenges
Wilkerson outlined four key challenges for companies looking to digitize their manufacturing processes.
1. The integration of digitization into the operational management and improvement systems. “The technology needs to support the production systems of the companies in their continuous improvement and not build additional layers of management systems,” he says.
2. The management and transformation of legacy systems. “In digitizing a ‘brown field’ manufacturing site, you struggle with numerous systems,” says Wilkerson. “Investments are often made in specific situations. It is necessary to use these windows of opportunity in a conscious development towards a smart factory vision.
3. Ensure robustness in the systems and do not build in sensitive technologies that endanger the delivery or quality of manufacturing.
4. Setting up pre-engineering platforms, test rigs, and demonstration capabilities within production development. “This has been a natural element within product development for decades but not seen as necessary in production development,” says Wikerson. “With the emergence of new technologies while maintaining absolute delivery precision in existing processes, pre-engineering platforms for testing and validating new technologies is central to speed up adoption of technology and best practices.”
Sinfield advises companies considering implementing a system to integrate manufacturing intelligence with their ERP systems to consider two metrics: efficiency and quality. “Companies need to take a step back and ask what they want to see,” he says. “They may not know where they need to be focused.”
In manufacturing, new technology can sometimes be a tough sell to the people on the shop floor, but that might not be the case with digital transformation. Lackey told of one high-value SAP deployment. “We thought we would get push-back from the shop floor,” he says. “But the shop floor supported it. It made the job easier, and the project was successful because of that buy-in.” He attributed that support to frustration using existing antiquated systems.
The prospect of having more data available might seem overwhelming to some stakeholders in the manufacturing process. However, the digital transformation of industry isn’t simply about making more data available. It’s about making the right data available when it will do the most good. “We’re living in the age of information overload,” says Sinfield. “Having the concept of in-context information is incredibly important to derive value for the business.”
Michael Nadeau is an analyst and writer in New Hampshire. Published December 6, 2016 by CIO
Departing Premier Emphasises status as non-professional politician
In the end his trader’s instinct told him that the market for John Key futures had reached its zenith and that it was thus time to quit the position.
It was John Key’s good luck to take up New Zealand’s portfolio of prime minister at the precise time that a baby-boomer backbone electorate tired of an extended doctrinal politics and instead required the stability needed to catapult them into an easy retirement.
John Key anticipated by a decade the dismay with professional politicians that is so evident today and he now brought to the job a solid earlier life as an international investment banker.
In the most effective National Party style he was also an outsider who inserted himself onto the inside track of the nation’s natural party of government.
From an everyday working class background his aw shucks everyman manner plus matching quizzical grin and horrible New Zealand accent were all genuine.
He brought to his decade at the top the professional banker’s ability to take his successes with equanimity and similarly his pratfalls.
He now leaves to his anointed successor finance minister Bill English the interrelated boiling pots of expensive urban housing and immigration.
His centrist instincts made him reluctant to introduce a capital gains tax to cool down the domestic property market. Similarly his businessman background meant he was reluctant to cap immigration which he saw as a priority for economic growth rather than petrol on the fire of the nation’s perennial property Klondike.
He was the first New Zealand leader to get on buddy terms with a United States president and nobody doubts that more golf games will soon be launched from his and similarly retiring president Obama’s Hawaii holiday homes.
The blots on his premiership are mostly made up of the bizarre.
There was the case of the Auckland café meeting photo-op in which coalition boondoggling was revealed by a hidden tape recorder lurking unseen near the tea pot. This incident then became compounded when enforcement authorities ostentatiously went after the tapes,
There was the Dot Com affair in which a North European IT entrepreneur was allowed to settle in New Zealand with a view to gingering up the digital scene, only to become the subject of a US extradition warrant.
The subsequent and continuing series of events presented and continues to present a Keystone Kops style of unwitting entertainment to the nation at large.
Then there was John Key’s personal campaign to change the flag. This was the most bizarre of all because it was so obviously bungled in that Mr Key was unable to advance any clear reason why there should be a flag change in the first place.
Such as, for example, the near universal confusion over the look-alike Australian and New Zealand flags.
Not all his positive efforts fell into the public spotlight.
His deft hand on his exclusive right to dispense patronage was one such example. His ability to conceal what he really thought, notably in dealing with only semi-informed questioners, was another.
Japanese IT equipment and services company, Fujitsu, has announced the launch of an IoT solution, FUJITSU Manufacturing Industry Solution VisuaLine, that visualizes the operational status of the manufacturing process based on log data of operating results collected from a factory’s equipment.
This solution collects log data from the manufacturing equipment, and visualizes the operational status for each individual product in a variety of formats, such as graphs. The users can see the portions of the process that are taking more time than usual by comparing these graphs on a daily basis, and enable them to quickly discover anomalies. This helps users in discerning the problems based on the log data, such as allowing the failing equipment to discover new places and improve the manufacturing facilities or to establish policies.
Features of VisuaLine
These are difficult times in Saudi Arabia.
The long slump in the price of oil is eviscerating the economy. Neighboring countries are plagued by violence and extremism. Saudi Arabia’s air force has been raining death and destruction on Yemen for 19 months, with no end in sight. The kingdom’s regional struggle with Iran shapes every decision in international affairs. Inside the country, the Islamic State has been recruiting so intently that the police have established a direct emergency phone number, 990, for families to call when they think one of their sons is about to go to Syria to join up. Social media outlets are alive with complaints, mostly anonymous, about the way the ruling family is managing the country.
This is not to say that Saudi Arabia is politically unstable or faces any immediate crisis. Saudis are generally patient people, and they abhor disorder. But in the aggregate, the government is facing stern tests of its ability to manage the country as power passes from one generation of the Al-Saud family to the next. The economic slump is the most pressing issue.
Signs of Distress
To a visitor, the signs of economic hard times are visible all across Saudi Arabia’s sprawling capital—empty buildings, deserted construction sites, idle equipment, shuttered shops. The sharp decline in oil prices and the contraction in government spending that followed have sucked the vibrancy out of the Saudi economy. Billions of dollars in purchasing power have dried up.
In the past, a drop in the price of oil was eventually followed by a turnaround, enabling the government to wait out the slump, insulate the population from hardship, and maintain the undisciplined spending that has been a fixture of Saudi life since the 1940s. This time, the government said it would be different: economic policy would not be driven by the price of oil. The people would do more to support themselves and the state would do less. The government has cut salaries and bonuses of the public-sector employees who dominate the work force, cancelled billions of dollars worth of construction and service contracts, and announced plans to levy a value-added tax next year on a population long accustomed to life without taxes. But Saudi Arabia’s decision at the recent meeting of the Organization of Petroleum Exporting Countries to drive up the price of oil by cutting production sent a strong signal that the cash crunch may force some revision of this new policy.
The kingdom has simultaneously embarked on an ambitious plan to restructure its economy from top to bottom, building a new foundation on private enterprise, foreign investment, capital accumulation, and greatly increased productivity in its labor force, including women. In theory, at least, the sinecure government job is out as the primary engine of employment; private enterprise, hard work and competence are in.
Vision 2030
The program, known as Vision 2030, may be politically risky because it would change the fundamental relationship between the rulers and ruled. The people of Saudi Arabia have long accepted the national bargain imposed by the founding king, Abdul Aziz al-Saud, in which they are disenfranchised but acquiesce in political powerlessness because the state provides them with security and a comfortable life. Now they are being asked to do more for themselves while the government does less, regardless of the price of oil. In effect, Vision 2030 proclaims that Saudi Arabia will cease to be a classic “rentier state,” living off the wealth that comes out of the ground.
Vision 2030 was introduced in April by Deputy Crown Prince Muhammad bin Salman, the 31-year-old son of King Salman who has quickly become the most powerful man in Saudi Arabia other than his father. He is minister of defense, but more importantly he chairs an interagency committee that controls all economic planning and decision-making. If Vision 2030 fails, it will be his failure.
Interviews with a broad spectrum of business executives, academics, journalists, and government officials indicate that Vision 2030 was received with considerable public enthusiasm when first announced, but that enthusiasm has waned as reality set in. At best, the jury is still out on both Vision 2030 and on Prince Muhammad, its sponsor and chief implementer.
Vision 2030 “is an ambitious but achievable blueprint, which expresses our long-term goals and expectations and reflects our country’s strengths and capabilities,” the prince said when he presented it to the public. “The future of the Kingdom, my dear brothers and sisters, is one of huge promise and great potential, God willing. Our precious country deserves the best.”
In that future, the prince proclaimed, Saudi Aramco, the giant state-owned company, will be transformed
from an oil producing company into a global industrial conglomerate. We will transform the Public Investment Fund into the world’s largest sovereign wealth fund. We will encourage our major corporations to expand across borders and take their rightful place in global markets. As we continue to give our army the best possible machinery and equipment, we plan to manufacture half of our military needs within the Kingdom to create more job opportunities for citizens and keep more resources in our country.
Together we will continue building a better country, fulfilling our dream of prosperity and unlocking the talent, potential, and dedication of our young men and women. We will not allow our country ever to be at the mercy of commodity price volatility or external markets. We have all the means to achieve our dreams and ambitions. There are no excuses for us to stand still or move backwards.
Implementing the Vision
Outside the kingdom, those lofty aims inspired some cynicism among analysts of Saudi affairs, who have heard previous versions of such plans for decades. Inside the country, however, Prince Muhammad’s program was initially welcomed as necessary and long overdue, analysts in Riyadh said. Seven months later, they added, many people question what is actually being accomplished besides trimming the purchasing power of much of the population.
The principal tool for achieving Prince Muhammad’s “vision” is a 112-page “National Transformation Program.” Among its ambitious objectives are: generating 450,000 jobs in non-government sectors; reducing the wage bill of government workers from 45 to 40 percent of the state budget; increasing the state’s non-oil revenue from 163.5 billion Saudi riyals annually to 530 billion (at 3.75 riyals per dollar); boosting public assets from three trillion to five trillion riyals, a 67 percent rise; maintaining oil production capacity at 12.5 million barrels per day, while raising natural gas production from 11 billion cubic feet to 17.8 billion cubic feet daily; building an international complex for marine industries that will provide 80,000 jobs and cut imports by $12 billion a year; cutting more subsidies for goods and services, saving 200 billion riyals; raising the value of non-oil exports from 185 billion riyals annually to 330 billion; cutting the unemployment rate for Saudi men from 11.6 percent to nine percent; raising the proportion of women in the job market from 23 percent to 28 percent; and increasing foreign investment in the economy from 30 billion riyals to 70 billion.
The plan sets specific performance goals and timetables for each cabinet department and government agency. By all accounts Prince Muhammad has full authority from his father to enforce these benchmarks, dismissing senior officials if necessary.
“Before we did not live realistically,” said Ziad Aazam, an official of the Ministry of Planning. “Now there’s a new generation and new thinking.”
“It would have been better to do this when we had plenty of money,” said Fahad Alturki, chief economist of the Jadwa Investment Group. “Now there’s no choice.”
Assessing the Vision
In September, Alturki’s widely respected research department issued a comprehensive and generally optimistic assessment of the economic plans. “We believe that several fundamental factors will drive this new economic model, including human capital development, regulatory reform, and entrepreneurship,” the report said.
These reforms will contribute to a competitive and highly productive private sector, particularly Small and Medium Enterprises (SMEs), which will help attract foreign capital and contribute to further knowledge exchange, investment, and employment. This dynamic should result in higher disposable income, robust credit growth, and liquidity. The increasingly competitive tradable private sector would potentially export new goods and services, boosting both economic growth and net external wealth. Eventually, this would improve investor confidence toward the Kingdom, thereby creating a positive loop, as more capital inflows improve the non-reserve financial account and reduce the pressure off official foreign reserves.
The JADWA analysis said that “significant structural reform should boost investment in non-oil industries over the same period. Vision 2030 aims to make the Kingdom a logistical trading hub, catalyzing exports and re-exports of non-oil goods, and supporting national companies in the fields of banking, telecom, food, healthcare, and retail by promoting their products abroad.” It praised the government’s plan to create a $4 billion venture capital fund as a potential boost for small business and for entrepreurial ventures.
Less-enthusiastic analysts were understandably reluctant to be quoted by name in their criticism and doubt. In the aggregate, they raised multiple issues about the viability and implementation of the restructuring project:
Promoting the Vision
Prince Muhammad is also widely seen as having worked harder and done better at promoting Vision 2030 outside the country than inside it. He has given extensive interviews to business-oriented foreign publications such as The Economist and visited several foreign capitals, including Washington, to talk up his plan. What he has not done is travel around Saudi Arabia to promote the plan among ordinary people or explain to them why they are already paying the price for it, through salary cuts and reduced subsidies, while not yet reaping any benefit.
One attempt to reach the public backfired. Senior officials appeared on Saudi television to talk about Vision 2030 and succeeded mostly in angering viewers with comments that did not go down well. Civil Service Minister Khalid Al-Araj said that state workers were productive for no more than an hour a day but see their jobs as a right. Mohammad Al Tuwaijri, the deputy economy minister, said that without the austerity measures, the kingdom would have “gone bankrupt in three to four years.”
In reality, there is no prospect of “bankruptcy,” because even after the recent sale of $17.5 billion in bonds on the international market Saudi Arabia has very little debt. According to John Sfakianakis, who has lived in the kingdom and analyzed its economy for many years, Saudi Arabia’s ratio of debt to GDP “is among the lowest in the world at 12 per cent. In contrast, Italy and Portugal have surpassed 125 per cent and Greece is at 177 per cent.”
No one who was interviewed predicted that Vision 2030 or the National Transformation Program will be fully implemented. The uncertainty concerns how much will actually be done, whether that will be enough, and what the public response will be over the next few years.
“The ‘glass half full people’ and the ‘glass half empty people’ are both right,” one prominent businessman said.
Written by Thomas W Lippman in LobeLog - Dec 5 2016
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Pilz Australia launched its new website which incorporates a new E-Shop for its customers in Australasia.
E-Shop will allow customers to not only browse the company’s vast portfolio of products, it enables them to access the latest technical information, view product images, and download the most up-to- date technical data sheets.
The new E-Shop covers the full portfolio of products that is Pilz, with all the technologies and application areas along with a quick and easy way to view associated accessories or add on features for its products.
Organic producers and exporters in New Zealand and China are set to benefit under a new bilateral agreement.
The Mutual Recognition Arrangement for Certified Organic Products was signed by the two countries in China late last month.
New Zealand exports of organic produce to China are currently valued at NZ$27m per annum, with this figure tipped to rise thanks to a reduction in compliance costs under the agreement.
“Our organic sectors should experience growth, not only with increased export and import opportunities but also a wider range of organic ingredients available for processed foods that would be available for sale domestically and for export," said Peter Thomson, director of plants food and environment at New Zealand’s Ministry for Primary Industries (MPI).
Thomson said the arrangement would also provide greater assurance for consumers in New Zealand.
"New Zealand consumers can have increased confidence in organic food imported from China because MPI has assessed the Chinese system and found it to be robust,” Thomson explained.
"This new arrangement and the assessment required to conclude it, provides MPI with knowledge and confidence in the supply of organic produce from China.”